THE OPEN

Jan beans:  1 1/4 higher

Jan meal: .90 higher

Jan soyoil:  39 lower

March corn:  1 1/2 higher

March wheat:  5 3/4 higher

The markets opened mixed with the theme of the week that of liquidation.  Short-covering was noted for corn with a buy grains/sell soy spread trade.  Oilshare corrected to the downside as negative chart patterns and a large long combined to pressure prices.  Wheat continued to trade higher on positive chart signals and buy wheat/sell corn trade.  

News stories are more optimistic as regards US/China negotiations, with China reportedly raising penalties on violations of intellectual property rights while also looking at lowering the thresholds for criminal punishments for those who steal IP, according to government guidelines.  The Global Times reports that China and the US have basically reached a broad consensus on a phase one trade deal.  As usual in recent weeks, the story was more positive for stocks than for beans where fund flows are turning bearish due to better weather in South America.  Additionally, the trade delegation will not be visiting Beijing this week.  

At 10:00 export inspections were released as follows:

Beans:  1,942,761 mt vs. 1,537,619 mt week ago

Wheat:  420,813 mt vs. 462,780 mt week ago

Corn:    604,592 mt vs. 651,147 mt week ago

Inspections leaned fairly friendly for beans and neutral to bearish for grains, but any firmness added to bean trade was quickly sold in lieu of continuing good weather in South America and negative chart patterns.  

SOY

• The major feature in the soy complex was that of profit-taking in oilshare, with soyoil long liquidation pressuring beans and pushing meal prices upward.   
• March crush values firmed to 99c/bu while oilshare fell to 33.60% from values that were well over 34%.
• The topping formation in January soyoil elicited a negative trade and an eventual break of key support at 3050c which set off sell-stops.   A sharply lower soyoil trade weighed on January beans that fell further on the charts to new lows despite more positive trade rhetoric, bucking the more positive seasonal for beans to rally the week of Thanksgiving.  
• Grain inspections offered brief support, as they came in over the expected.  
• Spreads continue fairly wide with Jan/March trading out to 14 1/4c.  
• Trade turned extremely technical as funds continued to add to short positions as beans worked to new chart lows.  
• Jan/March beans continue to widen out trading to 14 1/2c.  March beans are now heading down towards the $9.00 benchmark level where the next line of support is likely to surface.  Jan/March meal trades from $2.60 out to $2.90 on more bear-spreading activity.  

GRAINS

• Wheat prices remained well bid after the open, with some chatter about increases in China's wheat imports helping to sustain higher trade, along with positive chart signals as prices work over recent tops.  
• March wheat built a base of support at $5.11 and is now working towards recent high trades at $5.40.  
• Concerns over Australia's lower production fuels speculation that China may need to lock down imports.  
• The well bid market spilled over into corn, which seemed to have some basing action of its own.  Basis levels remain strong and selling ideas still remain well over the market.  March corn trades sideways to higher now, and may become the market willing to bounce into Thanksgiving instead of beans.  
• March wheat/corn trades from 1.42 3/4c up to 1.48 1/2c.  Dec/March corn firmed into 9 1/2c where profit-taking was noted, allowing spreads to ease back over 10c by midday to 10 1/2c.  Dec 19/Dec 20 corn trades from 23c to 24 3/4c.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                             HI                               LO

Jan beans:  3 1/2 lower                      9.02 1/2                      8.93

Jan meal:  .40 higher                         302.70                        300.60

Jan soyoil:  55 lower                          3126                           3047

March corn:  1 1/2 higher                  3.82 3/4                       3.78

March wheat:  15 higher                    5.34 3/4                      5.18 3/4

Jan canola:  4.00 lower                     465.30                         459.00

OUTSIDE MARKETS

The Dow opened 70 pts higher and continued to tack on gains after world stocks rallied due to optimism on trade negotiations.  Crude oil prices traded to new highs at $58.08/barrel while the US dollar continued to firm to 98.38 against weaker world currencies. 

CLOSING COMMENTS

It looks like the theme of this week is going to be mostly about housecleaning activity heading into first notice day for December contracts.  The expiration of December options took a good chunk of open interest out of the markets.  March wheat trade remains impressive on the chart, forcing more bears out of the market, and perhaps causing a few new longs to hop on board.  Beans are getting down to levels that should begin to offer up some support, though the funds continue to lay into the sell side of this market.  Helping that out is soyoil, and the close today will be interesting as prices quickly traded down to the neckline of a possible head and shoulders top.  However, until price close definitely underneath the neckline, more downside could be limited.  But the negative chart formation did its work to prompt the house-cleaning that this market badly needed.  Wheat and soyoil have one thing in common as we saw today; when everyone wants out the exit can become very crowded.  

If wanting to be long soyoil in lieu of still friendly fundamentals would exercise some patience at this juncture.  

Crop progress will be released tonight and it should show beans about done at 96% and corn harvest around 85%.  

Thanksgiving schedule includes a full day of trade Wednesday, closed Thursday, with a hard open Friday morning at 8:30.  

 

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America