World Perspectives
feed-grains soy-oilseeds wheat

PM Post - Holding Bottoms

THE OPEN

Jan beans:  2 1/2 lower

Jan meal:  2.90 lower

Jan soyoil:  42 higher

March corn:  4 lower

March wheat:  3 1/4 lower

The markets opened on a mixed note and into tentative trade, with mostly defensive trade except in soyoil.  Higher oilshare was the feature of the morning.  Grains slipped lower led by weaker wheat trade.  

SOY

  • The soy complex traded mixed today with beans and meal lower against a firmer soyoil market.  January oilshare traded to 32.88% on the back of higher Asian oil prices, tightening vegoil balance sheets, and sharply higher palm oil trade.  
  • Palm oil traded into a new contract high, with November palm oil stocks forecast to be down by 2% with production down by 10%.   March crush traded back to 97.75c/bu.  BUy soyoil/sell meal spread trade continued as a main theme for much of the day.    
  • Jan beans slipped under the 20-day moving average at $11.62 which triggered sell-stops and a very quick move down towards major support from $11.55.  The lack of any business announcements found the Jan/March bean spread in a congested phase from a 1 1/2c to 2c carry as the basis remains strong.  
  • The March/May meal inverse traded from $3.00 to $2.50.   
  • Jan soyoil slipped back under 38c, but also continues to find a good bid.  Expect to probably see gains continue in soyoil and a likely strong close.  In news headlines, Safras Mercado said that Brazil's farmers had already sold 56.5% of their expected 20/21 bean crop by Dec. 4, which is above the 34.5% average and 37.8% year ago.  The company also forecast the 20/21 bean crop at a record 133.5 mmt.   

GRAINS

  • Grains were lower as traders returned to a buy corn/sell wheat trade.  
  • Corn prices broke lower at first beneath $4.20, but also found willing end-users.  A sale of corn this AM helped to keep corn prices supported.  
  • SA corn production continues to be in question, which is supportive for US prices.    AgRural made its third cut to the production estimate for Brazil's first corn crop, with productivity possibly hitting a 7-year low due to La Nina conditions namely in the south.  
  • March wheat prices break towards prev. lows of $5.74 3/4 and attempt to hold onto those lows.  Funds were net sellers again for wheat extending a possible net short position.  March wheat/corn trades down to 1.53 3/4c from 1.55 1/2c.  Corn spreads remain fairly firm with Dec/March trading from 3 1/2c to 4 1/4c while March/May trades into a 2c carry from 2 3/4c.  

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                               hi                          lo

Jan beans:  4 lower                           11.72 1/2               11.57 3/4

Jan meal:  2.80 lower                        390.30                   385.60

Jan soyoil:  38 higher                       28.32                     37.52

March corn:  4 lower                         4.26 3/4                 4.19 1/4

March wheat: 8 lower                        5.85 1/2                5.75 1/4

Jan canola: 5.80 higher                     599.00                  589.20

OUTSIDE MARKETS

The Dow is up 110 pts. as the US dollar continues under pressure trading down to 90.47.  Downside targets for the US dollar now include a move to 89.50 which is close to 2018 lows.  The weaker US dollar continues to be very constructive for Ag exports, though by the look of wheat you would not know it.

CLOSING COMMENTS

Weather watchers will be looking at rains very carefully in SA over the weekend.  Rains are forecast to move over northern Brazil this weekend, and if the precip. is as expected could be a weight around the bean market.  However, Argentina now turns drier, and it along with southern Brazil will need to see adequate rainfall amounts in December. The moisture profile in Argentina has been the best now due to recent rains lately.   Sub-soil moisture in BA is rated favorably and in the Northeast.  The southern and western areas of Argentina remain in drought conditions, and is the hot spot to watch.  Missed rains over the next week will be problematic next week as hotter temperatures will also take place.  Thus, prices continue to reflect some weather premium for now.  

Funds remain long but this week has been a good test for the market bulls.  Reversal signals at the start of the week resulted in a good market correction, (badly needed), and beans and corn have had the ability to rebound.  That is constructive, but if prices close on the lows today this week's stability may not last.  A close under $4.22 will be another reversal for March corn, while any close under $11.60 for Jan beans will make the charts more vulnerable to further downside trade.   There are now probably a number of new shorts in Jan beans who have buy-stops positioned over $12.00, and around $4.35 for March corn.  

Trading ranges for now:

Jan beans:  $11.35/$11.40 up to $12.00, a close under $11.60 may find prices back at the lows

Jan meal:  $380.00-$400.00, a close under $380.00 targets $371.00

Jan soyoil:  37c-39c, pivot around 38c but could trade up to 3850c

March corn:  $4.14-$4.29 1/2, but a close under $4.22 may find prices back at the lows

March wheat:  $5.74-$6.00, but targets are still underneath starting at $5.72.  Close under that targets $5.60.

 

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