THE OPEN
November beans: 2 lower
December meal: .40 lower
December soyoil: 14 lower
December corn: 1 1/2 higher
September wheat: 4 1/2 higher
The markets opened as expected with more short-covering in grains and profit-taking in oilshare. Traders were unwinding previous buy soyoil/sell meal, and buy corn/sell wheat. Corn shorts were certainly not panicking as prices traded into key resistance, with all the markets entering into a consolidation phase of trade into tomorrow's August 12 WASDE.
SOY
- The major feature in the soy complex was that of more profit-taking in oilshare generated by technical signals. A key reversal presented as a friendly tech signal in meal, while December soyoil charts turned sideways with prices trading slightly below trendline support.
- The more friendly technical signal for meal and negative price action for soyoil, (moving through trendline support levels denotes weakness), set the stage for a further pullback in oilshare. October crush traded to 96.16c/bu while oilshare values traded back below 35.0% to 34.60%.
- November bean prices moved higher from morning session lows on the back of a firmer meal trade, but also found some selling interest on a push towards the $8.80 level of resistance.
- Bean spreads widened out with Sep/Nov trading out to a 3 1/4c carry from 2c. Sep/Dec meal widened out to $5.40 from $4.80.
- The trend has been for funds to lighten up their exposure to the long side of the market. Would look for prices to stay range bound into the report, traveling around the $8.75 level. Later in the session more soyoil weakness was noted as sell-stops were triggered as prices moved back under key moving averages.
GRAINS
- Grains were in consolidative trade on the back of light short-covering volumes. September wheat charts are attempting to post a triple low at $4.90, with lower spring wheat ratings providing some support.
- Chicago Sep. wheat prices will typically head back and test the $5.00 level once it has been breeched. The stabilizing price movement for wheat still does not suggest that the overall lows are in for the cycle lower trade. Sep/Dec wheat spreads trade weaker to a 9c carry from 8 1/4c.
- Later in the session and to no one's surprise, the Egyptian wheat tender was awarded to Russia, where prices are just more competitive.
- Corn prices were lifted over resistance levels on the wind event in Iowa with trade into the $3.27-$3.28 level. The derecho event which crossed Iowa, Illinois, Wisconsin, and Indiana created damage to crops and real estate. Most of today's comments noted crop damage in Iowa. Corn spreads tightened on short-covering with Sep/Dec narrowing into 11 3/4c from 12 1/2c.
- However, strength overall did not last, as the report tomorrow is going to probably show higher yield and production estimates for corn. The only question is how aggressive the USDA will be in raising yields, and typically it is the October report that more closely nails final yield potential. The Dec wheat/corn spread traded from 1.75c to 1.82 1/4c.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
Nov beans: 1 higher 8.77 8.70 1/4
Dec meal: .90 higher 292.90 288.60
Dec soyoil: 21 lower 3091 3042
Dec corn: 1/2 higher 3.27 1/2 3.22 1/2
Sep. wheat: 4 higher 4.98 3/4 4.90 1/2
Nov canola: 3.20 lower 488.50 485.10
OUTSIDE MARKETS
The Dow rallied over 300 pts today, and at midday is up 280 pts. Crude oil trades to $42.94/barrel, with the US dollar trading down to 93.17.
CLOSING COMMENTS
In general, the sentiment is more bearish than bullish as we move through mostly ideal weather, although the unusual wind event caused a soft rally. Hard to feel that prices can hold under impending harvest, and southern harvest that is showing a pretty ideal looking corn crop. If this weather event had occurred in a tight - supply scenario, corn prices would be through the roof. Bean prices would also be much higher if weather did not suggest that big supplies are on the way.
It was Interesting again that meal chart price action, which threw off friendly tech signals and is still finding follow-through, while the foreshadowing of soyoil moving through trendline support created more long liquidation. At noontime, prices continue to see follow-through with the largest feature of the day that of lower oilshare.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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