THE OPEN
November beans: 2 lower
December meal: .10 higher
December soyoil: 14 lower
December corn: 1 higher
September wheat: 3 1/2 higher
Prices opened as expected with more unwinding of previous buy bean/sell corn trade. The forcing of the closure of the Chinese consulate in Houston over IP theft issues triggered negative comments and threats of retaliation from China, which weighed on beans, while more business announcements put a floor under technical weakness. Oilshare entered into profit-taking mode as well.
SOY
- The key feature of the soy complex was that of more long liquidation in beans, as traders were nervous after renewed tensions flared between the US/China. Beijing has vowed to react with countermeasures, which may create a dip lower.
- Business announcements cushioned prices as they drifted lower. Technically, November beans continued to press up against resistance at $8.95 for most of the morning, which was more positive than negative given tensions. That beans did not fall apart on this news continues to show that demand is under the market.
- Nearby bean spreads remained firm with August/Nov pushing up towards the 5c inverse morning high in the early going. Sep/Nov also found bull-spreading interest narrowing into 3/4c from 2c. Traders continued to buy meal/sell soyoil, pushing oilshare down to 34.0% while crush traded to 74.94c/bu.
- December soyoil back and filled after reaching an evening high of 3105c to trade back towards 30c.
- EIA headlines were more bearish for crude, which added 4.9 mln barrels. The EIA report added to energy weakness as prices fight to stay above the $40/barrel benchmark. December soyoil prices responded in kind with more weakness as well as prices trended closer to 30c.
GRAINS
- Wheat prices were firmer from the start of the trading session in a well bid market. Price action continued to trend higher towards the 100-day moving average of $5.35 as prices turned decidedly sideways.
- There was a round of buying interest in wheat with 92K in sales to Taiwan, as export activity turned a bit higher on the break. Argentina and now Australian wheat production problems continue, which could impact supply while harvest results out of Russia are monitored. Some private firms are estimating much lower Russian wheat production.
- Higher wheat helped Dec. corn to firm off its lows of $3.30, a level that funds were not able to penetrate for much of the week.
- Spreads were slightly firmer in corn as well, with Sep/Dec narrowing back into 7c from 8c. Sep. wheat/corn traded from 2.02 1/2c up to 2.10 1/2c as wheat gained on corn. Sep/Dec wheat narrowed into 4 1/2c from 6c.
- EIA reported production falling (vs. expectations for 2% higher), to 908,000 bbl/day which would consume 4.81 bln bu of corn. Ethan inventory unexpectedly saw a draw-down of 4%.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
November beans: 2 higher 8.98 8.88 1/4
December meal: 1.10 higher 295.30 293.00
December soyoil: 18 lower 3105 3019
December corn: 3 higher 3.34 1/2 3.30 1/4
September wheat: 4 higher 5.34 1/2 5.23 3/4
November canola: .20 higher 487.00 483.50
OUTSIDE MARKETS
The stock market opened 40 pts lower but turned higher in the early morning trade. At midday, the Dow is up 71 pts. A weaker US dollar continues to be price positive for Ag exports and wheat, specifically. The US dollar breaks down to 94.82.
CLOSING COMMENTS
The trade put in a constructive day of trade, particularly where beans were concerned. On one hand, beans opened lower despite good sales announcements, but the fact that they did not fall apart via tensions between US/China with the closing of the Houston location spoke volumes. Inherently weak markets would have embraced that news to trade sharply lower. Instead, beans churned at market lows with more congestion trade. Technically that is quite positive.
Corn futures finally firmed as prices could not crack the month-long sideways trading range in Dec. from $3.30-$3.40.
The biggest negative for now, (and it is a big one), is weather, where rainfall patterns continue to offer up good production potential. US farmers continue to be patient, waiting for a larger weather rally before selling something. Clearly futures are not ready to break to the downside given one more month of weather to wade through. Farmers may get another crack at a rally still.
Have a good evening........
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
Most Apparent Solution The EU’s organic sector wants the bloc’s officials to take more action to ensure they achieve the target of 25 percent of agricultural output being organic by 2030. Specifically, they want a campaign to increase consumer demand for organic food so that organic...
Yesterday, the Animal and Plant Health Inspection Service (APHIS) issued a federal order requiring testing and reporting of highly pathogenic avian influenza (HPAI) for the interstate movement of lactating dairy cattle. Specific guidance will be issued at some point today, and the order will go...
Corn, soybeans and soyoil all closed lower after trading up the previous three sessions. July soymeal made it a fourth trading session higher, and wheat remains on a tear with a fifth trading session closing higher. The mood around wheat sees supply concerns developing in North America and in t...
Cow-calf producer margins are discussed less frequently in these pages than their downstream counterparts of feedlot and beef packer margins, but this doesn’t mean they are less important to understanding the beef industry’s current state and outlook. Additionally, discussion of thi...
