Nov beans: 3 higher
Dec meal: 1.30 higher
Dec soyoil: 15 higher
Dec corn: 1 lower
Dec wheat: 4 lower
Prices opened as called but oilshare quickly found more selling pressure as traders bot meal/sold soy oil. The markets continued to find fund selling at the open which took values into new trading range lows for beans, and back towards the bottoms for grains. Spreads were also weaker.
The FOMC will kick off a two-day meeting starting today. Traders are eying interest rate direction. As outside markets lost upside steam, Ags did as well, guided by lower soyoil which was impacted by crude trading under $70/barrel again. Around the midday hour beans and meal reversed direction as a quiet market led to some short-covering and perhaps some pricing activity.
- The soy complex started the day on a steady note, but technical weakness emerged after the open led by soyoil futures. Crude oil broke down under $70/barrel as variants continue to spread and overall demand remains in question. The situation at the Gulf continues to impact exports, without any purchases for beans announced this AM. Funds came out as sellers at the open on market strength in beans and soyoil early.
- Nov. beans advanced towards the 200-day moving average at the start of the day at 12.66, but as prices turned lower it now becomes resistance. Nov. beans made a new low at $12.57 1/2 early as Dec soyoil fell towards 54c with a morning low of 5425c. December meal prices trades higher as traders buy meal/sell soyoil. Dec oil share trades to new lows at 44.37% in lieu of weaker energies. Dec crush trades to 86.26cbu.
- In the mid-morning, futures rallied for beans and meal, which stabilized soyoil and brought some stability to grains. The rally is the first indication that the bean market was getting oversold and in need of a relief rally. Nov/Jan beans trades into 8 1/2c from 9 1/2c, while Nov 21/22 inverse pups back up to 27 3/4c from 20 3/4c. The rally could also imply perhaps that some bean business has been transacted?
- Corn and wheat prices were weaker from the outset of trade as funds returned as sellers. National corn harvest was as expected, and wheat plantings are on a fast pace. Lack of corn business continues to weigh along with harvest. China is on holiday still, which does not help the bullish sentiment.
- December corn quickly takes out minor support at $5.15 which triggers another round of chart-based selling activity. Wheat prices struggle against the $7.00 level which triggers more traders to perhaps put on some new short positions. Dec. wheat breaks support at $6.95 which triggers a fall towards the lower end of the range at $6.80.
- Spreads were weaker at first but found some buying interest, as Dec/March corn carry trades from 7 3/4c to 8 1/2c. Dec 21/Dec 22 corn inverse trades down to 16 1/2c but also stabilizes as bean spreads firm. Dec wheat/corn trades from 1.82c down to 1.71c. At midday, corn and wheat prices are not joining the bean rally, but the downside flow seems to have abated somewhat.
AT MIDDAY THE MARKETS ARE AS FOLLOWS:
November beans: 10 higher 12.75 1/4 12.57 1/2
December meal: 2.40 higher 342.90 339.00
December soyoil: 8 higher 55.56 54.25
December corn: 4 lower 5.22 3/4 5.12 3/4
December wheat: 11 lower 7.01 6.86
November canola: 2.30 lower 865.80 853.50
Crude oil trades down to $70.58/barrel with the US dollar weaker to 93.05. Stocks are up 210 pts.
All eyes are going to be on the Fed this week to look at interest rates, and on China's return from their autumn holiday to see how they will handle the problem with Evergrande. In the meantime, rains are complicating harvest, but these are due to subside which should allow for farmers to re-enter fields. Extended outlooks look perfect for end-of-Sep., October harvesting.
The Sep. 30 quarterly stocks report is around the corner, and in front of it the market is losing more length. Technical weakness is pervasive, but beans are showing somewhat of a bounce down at new market lows. End-users are getting the coverage they need in corn. Would begin to look for some technical signal that we are going to enter a stabilization trade, such as an outside day closing higher, double or triple lows, etc. For today, beans show promise but it is not entirely convincing. Until then, buyers remain patient which is part and parcel of a lower trending market.
This is the first sign of choppiness at market lows which is actually positive. Beans need to close over $12.85 in Nov. to head into a trading range, corn over $5.25 Dec., and Dec wheat back over $7.00. Until then, good bounces can be had, but they also may find willing sellers in lieu of recent trends.
Have a good evening..........