World Perspectives
feed-grains

PM Post - Buy Wheat, Sell Corn

THE OPEN

November beans:  3 lower

December meal:  1.30 lower

December soyoil: 25 higher

December corn: 2 lower

December wheat:  3 lower

The markets were called to open higher but funds came out as sellers.  Funds continue to adjust positions heading into the October 12 WASDE report.  Technicals broadens the range to the downside for corn as funds are seeming to liquidate current length.  Today is day 2 of the Goldman roll, which is pressuring bean spreads.

World that an agreement had been reached to extend the government's borrowing authority into December sent stocks higher with a quick recovery in crude, which underpinned soyoil pieces and oilshare.  

SOY

The soy complex was called higher but quickly turned lower as funds took morning strength to get something sold.  Bean bullspreads remain soft as harvest continues across the Midwest.  The Goldman roll continues with November beans spread forward to January.  The weakness noted at the open was a bit of a surprise after the healthy export sales report numbers this morning, but funds are now taking any items that are friendly to adjust positions.  Bean sales now stand at 23.365 mmt with China taking 11.665 mmt of that.  Combined sales plus shipments reached 25.367 mmt which is 38% behind yr ago.  Spreads soften up with Nov/Jan trading out to 11 1/4c from 10 1/2c.  The Nov 21/22 trades out to a 7 1/2c carry from 2c, while Nov/March widens out to 20c from 18 3/4c.  Dec crush trades higher to 1.34c/bu while oilshare trades to 48.38%.  December meal gives way once more to lower price action as higher oilshare once again becomes a feature of trade.  Crude firms to $78.00/barrel on word that there is an agreement to raise the debt ceiling which sends soyoil futures traveling sharply higher, with Dec over 61c again.  November beans respond, which will begin to suggest that new support is forming at the $12.30-$12.35 trading range lows.

GRAINS

The feature of the morning was that of fund selling in corn, as charts continue to test the lower end of recent ranges.  Funds remain long corn, and were noted sellers at the open before the announcement of a deal between Republicans and Democrats stabilized macros, which in turn helped ag prices.   However, Dec corn saw some technical damage breaking the $5.30 level which triggered sell-stops and took prices back to the lower end of range ideas from $5.25-$5.27.  End-users were able to take advantage of corn weakness.  December wheat futures trades lower to trendline support at $7.39 1/2, finding willing buyers at that level.   Dec wheat/corn trades from a high of 2.17c down to 2.10 1/2c.  Technically speaking corn and wheat charts remain in congestion mode, with weak ADX trend signals keeping prices sideways.  Today is a larger test for the Dec. wheat chart, where prices broke lower but still retained a possible bull flag formation.  Dec/March corn spreads widens out to 9c from 8 1/4c, while Dec/Dec trades from a 7 1/4c inverse to 4 1/4c.  Dec/March wheat spreads are weak trading out to 13 1/2c from 12 1/2c.  Demand remains active for wheat as more tenders continue to surface, as the push for feed wheat and quality is evident. The unknowns of the Russian export situation will continue to be price friendly in lieu of tightening world supplies.

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                                HI                            LO

Nov beans:  3 higher                             12.49                       12.33 1/2

Dec meal: 1.40 lower                          324.90                      320.30

Dec soyoil:  110 pts higher                  61.72                        59.82

Dec corn:  steady                              5.35 1/4                    5.27 1/2

Dec wheat: 2 lower                              7.52 1/2                    7.39 1/2

Nov canola:  1.80 lower                       928.90                     912.70

OUTSIDE MARKETS

Stocks are up over 500 pts at midday with crude oil bouncing to the upside as well at $78.34/barrel.   The US dollar weakens to 94.08 which is friendly for Ags.  Higher macros definitely had an impact on Ags today, with soyoil futures in quick recovery taking beans along for the ride.

CLOSING COMMENTS

The markets continue to define highs and lows heading into the October 12 report next week.  Looks like funds would like to lighten up on corn length in case the yields are higher than expected.  Funds seem there to buy wheat weakness.  

Rolling of Nov. contracts forward brings mechanical weakness, but beans could continue to follow soyoil, which is a strong market.    Macros continue to have an impact, as traders watch the outside trade.   At midday, higher crude is adding a nice comeback to the soyoil and oilshare trade.  Good crush margins will invite crushers to do all they can.  

Rains will cross the eastern Midwest which may continue to slow harvest there.  Dryness in Argentina continues and Brazil corn planting remains slow.  All in all, the focus will turn more to SA weather if a true problem arises.  For now, it's a background feature.

China will be back from holiday tomorrow and there is chatter that they are making inquiries for corn / ethanol.  

Think that the markets may break, but they are finding good pricings as some want to get coverage ahead of the report.  Funds that opened as sellers appeared ready to buy those contracts back as outsides strengthened. The major theme is that of choppy trade, but that is part and parcel of markets now willing to carve out highs and lows, which think they are close to doing.  A good close in beans today will go a long way towards adding some chart support.  Think Dec. corn from $5.15-$5.25 is value as well.

FYI DEPARTMENT

Baltic freight index at new 13 year highs, cotton and oats stay firm as well.    

 

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