THE OPEN

Jan beans:  1 higher

Jan meal:  1.90 higher

Jan soyoil:  38 higher

March corn:  1 lower

March wheat:  3/4 lower

The markets opened as expected but encountered profit-taking from the start of the session.  Pressure was noted as December contracts continue to liquidate heading into first notice day.   Trade was choppy and on both sides of the market, with end-users taking advantage of breaks to price something.  Spreads were weaker.  Lower volumes are able to promote larger swings, and volume was relatively light for the day.  Corn was weaker in the night session, and the reverse price action in wheat from higher to lower created more downside, pressuring the soy complex as well.  

SOY

• The soy complex opened on a firm note but funds are long and were noted booking profits, with higher oilshare values returning as a key feature of trade.   
• Jan meal posted a new contract high at $401.30, but once again the ability of prices to stay over the $400.00 level is problematic for the meal bull.  Dec. meal and soyoil contracts continue to liquidate providing pressure for the market.  
• Dec/March meal inverse falls to $2.30 from $3.80, while the Jan/March meal spread trades at a 2c carry from 1c.  Jan crush trades to 1.00c/bu, slightly firmer, while oilshare trades firmer as well to 32.47%.  January soyoil prices remained higher with firm energies and palm oil values supportive.  
• Jan soyoil trades around 38c and prices may continue to congest around this into the end of the day, though into the midday hour soyoil is rallying again.  
• Jan beans triggered small sell-stops at $11.85 which sent chart prices to test visual trendline support levels, but if soyoil continues to rally will probably put a floor under beans.  A close under $11.75 in Jan beans would now make the chart more vulnerable and send prices into a deeper corrective pullback towards $11.65, but would be more surprised to see that happen. Given fund length would look for small rallies to be seen as a selling opportunity as the market grinds out its trading range.  
• Weakening crushing margins in China and ideas of the possible wash-out of sales remains an issue, but the key to bean price direction will still come from SA production.  If rains do not pick up in SA, bean prices will bend but not break.  

GRAINS

• As in the soy complex, profit-taking was a major feature for both corn and wheat, though not unexpected given the length of the fund long in corn.  
• Wheat prices remain in a large sideways trade as has been the case for this market.  Technically speaking, March wheat remains in its wide sideways chop, giving all the gains from yesterday to push through $6.00 today.  News is scarce except that Russia's production is steady and there are some rains in the Black Sea.  
• In other items, Egypt's finance ministry said wheat importers will continue to pay value-added-tax on inbound wheat cargoes until the law is amended to dismiss those charges.  March corn came into the session on a mixed note, with more downside follow-through into the noon hour.  
• Funds are taking something off the table into a shortened holiday week, in case better rains can make a showing in SA.  As wheat prices crack lower, corn has no problem in following, but there remains a good deal of commercial pricing interest as funds sell.  
• The EIA report was released at 10:00, with production up a surprising 3% vs. an expectation of 1%, to 990,000 bbl/day rate, which would consume 5.25 bln bu of corn.  Ethanol stocks featured a large 3.3% build to 876.5 mln gallons, which is a five-month high.  
• Corn spreads continue to widen, with the Dec/Dec inverse trading down to 10 1/4c, and Dec/March corn back out to 8c as first notice day approaches on Monday.  At midday, March wheat is posting an outside day of trade, and a close below trendline support at $5.98 would be extremely negative suggesting that prices could target $5.85.

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                HI                               LO

Jan beans:  6 lower                             11.98 1/2                    11.83 1/2

Jan meal:   2.10 lower                           401.30                        393.80  **new contract high

Jan soyoil:  34 higher                          3828                           3766

March corn:  4 lower                            4.34 3/4                      4.27 1/4

March wheat:  19 lower                        6.22 3/4                      5.98 1/4

Jan canola:  .40 lower                           579.90                        573.50

OUTSIDE MARKETS

The Dow opened 60 pts lower and is 192 pts lower.  The major feature is the start of further weakness coming from the US dollar as prices trade down to 91.92.  Buy energies/sell the US dollar remains a key feature of trade, with crude trading to $45.72/barrel.

CLOSING COMMENTS

There is a seasonal tendency for the markets to rally into Thanksgiving and give back for the Jan/Feb. time period.  This year, prices will remain on edge and geared for further upside if SA weather remains too dry and production losses continue.  However, major trends are higher and some house-cleaning was certainly in order.  End-of-month position squaring is going to continue to find markets in a choppy trade.  At this point, one still has to take advantage of breaks that occur to get something on the books until charts break down further.  The major bull trends and a still weakening US dollar are intact.  

Trading ranges are as follows for now:

Jan Beans:  $11.70-$12.00, but could work higher depending on SA weather.  A reversal is in play today, but a top is not set.  A close under $11.75 would reward the bear - low trading range is $11.65.

Jan Meal:  $380.00-$401.30, new contract high.  Though prices are lower at midday, the presence of a new high is still bullish.  A close under $388.00 would reward the bear.

Jan Soyoil:  Trading range is 37c -39c, a close under 37c makes the chart appear to have set a temporary top.

March Corn:  Trading range is from $4.23 to double tops at $4.35 3/4. Low end of the trading range is $4.19. 

March Wheat:  Trading range is from $5.90 - $6.25.  Funds may continue to use wheat as a hedge against corn and bean length, and in terms of vulnerability remains the weaker trade. Target low is $5.85 if prices close on the lows. 

The next LCF report will be on Monday, November 30.   Have a wonderful Thanksgiving, and see you next week!

 

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