Nov beans: 5 higher
Dec meal: .50 lower
Dec soyoil: 35 higher
Dec corn: 1 higher
Dec wheat: 1 higher
The markets opened as called with further strength as traders lifted shorts in beans on the back of a continuing strong soyoil performance. Grains were followers at first but more selling showed in wheat which turned mixed on the day.
The key feature in the soy complex was that of continuing higher soyoil prices and oilshare. December meal prices dropped to a new trading range low of $318.00 as traders continue to buy soyoil/sell meal. December oilshare trades to 49.27% with crush at 1.24c/bu. Margins are still very good for crush. November bean prices respond in kind to higher soyoil, retaining a bid into the session. Rumors continue to float that China has been looking, but no confirmation or sales announcements today. December soyoil targets 63c as prices jump higher. Crude oil prices traded to a high at $80.11/barrel, and other vegoil values are firm globally. November spreads continue to find weakness as traders spread out of Nov. Nov/Jan bean spread trades out to 11 1/2c carry from 11c, with Nov 21/22 trading from 1 3/4c carry out to 6 3/4c. Nov/March trades out to 21 3/4c. At midday, soyoil futures are finding profit-taking, which is tempering morning gains in beans. Meal prices are firmer on oilshare profit-taking, as end-users use the break to get more coverage.
Grains open firm and continues to be a follower of the stronger soy complex values. December corn prices continue to find little direction, while December wheat heads to the downside on fund selling. Wheat is the weak market out today, trading both sides unchanged. Dec wheat/corn spread relaxes a bit trading from 2.08 1/4c to 2.00c. December corn spreads are firmer with Dec/March trading into 8 3/4c from 9c, while the Dec 21/22 inverse trades from 9 1/2c to 6 1/4c. Wheat loses ground at midday, and with it comes a more bearish trade as the chart begins to break down. A Bloomberg article stated that the Russian wheat export tax would increase to $58.70/ton next week from $57.80/ton. Russia started the floating tax from June 2, with a $28.10/ton levy. Rumors are that China is making corn inquiries, but once again there was no business announcement and a fairly open weekend for harvest. Corn is trying to hold, but the unwinding of the prev. buy wheat/sell corn spread takes its toll here too. Funds are entering the weekend an estimated long 175K futures / options combined corn. At midday, wheat futures remain weaker with profit-taking, weighing on corn.
AT MIDDAY PRICES ARE AS FOLLOWS:
November beans: 5 higher 12.62 1/2 12.45 1/4
December meal: .20 higher 322.80 318.00
December soyoil: 12 higher 63.08 61.73
December corn: 1 higher 5.38 3/4 5.33
December wheat: 1/4 higher 7.46 1/2 7.35
November canola: 1.50 lower 935.90 925.30
Stocks are down 50 pts. with US non-farm payrolls at 194,000 vs. 500,000 expected. Unemployment fell to 4.8% vs. 5.1% expected.
Tuesday will be a big day for the markets, as the October report can provide some fireworks. Funds will enter slightly long beans, longer corn, even to long wheat, long soyoil, short meal. It may not take much to turn the funds into a bean short if the report is bearish and prices make new lows. For the day, think that the parameters for corn, wheat, beans, meal, and soyoil are set.
Trends remain in place, ie higher oilshare, and some buy corn/sell bean trade. Traders are expecting the report to be more friendly wheat, neutral to slightly friendly corn, and neutral to slightly bearish beans. There are a lot of neutrals in there, so after the report the determining factor for price direction will be up to what funds want to do with current positions. Typically, we do find our lows this time of the year into the SA growing season.
Trading ranges for now:
Dec corn: $5.25-$5.50
Dec wheat: $7.22-$7.60
Dec meal: $318.00-$325/$330.00, could work lower
Nov beans: $12.30-$12.70, could work lower
Dec soyoil: 58c to 63c, could work to 64c/65c
Have a good weekend......