THE OPEN

Jan beans:  19 1/2 lower

Dec meal:  10.60 lower

Dec soyoil:  79 lower

Dec corn:  12 lower

Dec wheat:  12 3/4 lower

The markets started a much-needed correction to the downside on a macro risk-off day of selling pressure, which also brought about a higher US dollar.  Charts were a bit more on the negative side with small reversal patterns showing which prompted long liquidation, and the start of correcting extremely overbought conditions.  The mission of the market now is to define an appropriate trading ranges from the top.  

SOY

• The soy complex traded lower on the day as technical profit-taking took place in order to correct extreme overbought conditions.  End-users helped to cushion morning losses as prices did not extend losses from the start of the session.  
• January beans held key support at $10.55, as funds sold into commercial pricing activity in an exchange of ownership.  
• December meal approached key support at $370.00 but found a good deal of support from those needing to price as well as those wanting to purchase the market or bottom pick at lower levels.  
• Crush margins popped higher again after the open with Jan pushing back to 1.25c/bu while oilshare traded around 31.0% on meal's morning comeback.  
• December soyoil also found support near the 33c level, with a 3320c trading range low, despite weaker crude, canola, and palm.  
• Spreads were weaker with the Jan/March inverse falling to 13 3/4c from 16c, while Dec/March meal traded back to $19.40 from a low of $16.10.  Continued good crush margins are likely to keep meal breaks well supported, while soyoil futures may have more to prove in terms of holding a trading range bottom.

GRAINS

• Funds sold into scale down commercial pricing activity following a weaker overnight trend led by wheat.  
• Better rains in Russia and a higher US dollar were price negative, as were charts.  
• December wheat breaks key support at $6.15 and tests the $6.00 level which offered up perhaps a better than expected bounce.  
• December corn prices triggered sell-stops under $4.11 to trend towards the $4.00 benchmark, where end-users were also waiting anxiously to price.  
• Spreads remained on the weaker side with Dec/March trading from 1/4c to 1 3/4c carry, while Dec/Dec moved from 19 3/4c to 24 1/2c inverse.  The Dec wheat/corn spread traded from 1.94 1/2c to 2.03c.   
• The EIA report seemed like an afterthought for the day given the correction to this bull market, with stats relatively neutral.  Ethanol production was up 3% to 941,000 bbl/day, which would consume 4.98 bln bu of corn.  Stocks fell slightly to 823 mln glns, which is a new four year low.  
• At midday, prices continue to hold their lows, which is technically constructive. If needing to price something, would not hesitate to do so.

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                        HI                              LO

Jan beans: 14 lower                   10.75 3/4                   10.55 1/4

Dec meal:  4.80 lower                 383.60                       371.30

Dec soyoil:  66 lower                  3411                          3320

Dec corn: 11 lower                      4.15 1/4                     4.03 3/4

Dec wheat: 5 lower                     6.14 1/2                     6.00 3/4

Jan canola: 8.80 lower               544.90                       514.00

OUTSIDE MARKETS

The Dow was down 575 points in the early going with losses accelerating into the early part of the session as the election uncertainty and rising covid cases created selling pressure.  Traders were caught having to unwind previous buy energies/sell the US dollar trade.  A firmer US dollar was net negative for all the markets, particularly wheat. At midday, stocks are over 800 pts lower.

CLOSING COMMENTS

This is one of the better breaks that the bull market has seen since its start.  End-users continue to get something on the books, which would be the correct thing to do, as reversal activity alleviates overbought conditions, but has yet to confirm a market top.    Will China eye these lower levels of trade and jump in?  They have before, so they may again if only to ensure enough supply between now and Brazil's massive harvest.  

Technically speaking, the pressure today does not seem to be waning, and there are small gaps above the market as better selling suggests that prices may have peaked.  While the gap in corn and beans is small, we have seen what can happen in markets when even these tiny spaces are left open.  

Given the strength of the recent bull market, would look for these trading ranges to form:

December wheat:  $5.90-$6.38 1/4, new ctr high

December corn:  $3.98/S4.02 to $4.22, new trading range high

December meal:  $365.00-$392.70, new ctr high

December soyoil:  32c-35c

January beans:  $10.45-$10.88 1/2, new contract high

Closes below these levels would confirm the likelihood of a market top.  Until then, these could be our comfort ranges heading into the SA growing season, and at least into the November USDA report.  If short, would take advantage to cover something on a scale down basis.  If wanting to be long, could do so with tight stops.   Funds still remain long, and could defend money flows on the slightest suggestion of a weather snafu, or a returning La Nina. 

 

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