THE OPEN

Jan beans:  7 1/2 higher

Jan meal: 1.10 higher

Jan soyoil: 30 higher

March corn:  2 1/2 higher

March wheat:  1 1/2 higher

The markets opened as expected with a surging soyoil market and oilshare cushioning beans.  Buy soyoil (on the back of higher palm and energies) and lower meal all taking oilshare higher.  Buy beans/sell corn and wheat trade was also a feature for most of the session.  Stats Canada was positive for canola, with acreage dropping, which added to soyoil strength as well.  

SOY

• The feature of the day was the path of higher soyoil futures, which triggered buy-stops when prices traded back over 31c in the Jan market.  Funds were net buyers of beans, meal, and soyoil in yesterday's trade, with open interest rising in each, which suggests that new longs have now climbed on board.  
• Overtures from China continue to underpin values, and technically speaking, beans were ready for an upside correction.  March beans traded close to target highs of $9.10 and found new buying interest on pullbacks mostly off the strength in soyoil.  
• March oil charts returned to a more friendly price structure after poking through 31c for the March contract, ready to move to the next level of resistance from 3140c to 3150c.  
• March meal traded to the 100-day moving average of $304.00 before losing to soyoil.  
• March crush margins are still very good at 1.07c/bu, while oilshare jumped to 34.20% on oil/meal spread trade. 
• The EPA also announced it would send their biofuel mandate targets for 2020 to the OMB by the end of the week, implying an announcement could be released before the year end.  
• Spreads tightened up a bit with Jan/March narrowing into 14 1/4c from 15 1/4c, while March/May beans continued to widen out trading between 14 1/4c to 15c.  March/May meal widened back out to $3.10 from $2.50.  

GRAINS

• The path of least resistance for grains was lower, as prices continued to return to key support points, which eventually triggered stop-loss orders.  
• March wheat triggered stops under $5.22 while March corn fell back to test key support near recent trading range lows of $3.75.  
• Despite an announcement of business to Mexico, the fund flows were on the sell side as a hedge against new bean length.  
• Stats Canada did provide a small cut in corn production to 13.4 mmt vs. 14.1 mmt in Sep., but charts were the focus of trade.  
• March wheat prices continued to find weekend long liquidation, which weighed on corn as well.  
• Spreads were narrower with Dec/March narrowing into 9 1/4c from 12c, while March/May narrowed into 5 3/4c from 6c.  March wheat/corn weakened down to 1.44c as wheat lost to corn and beans.  Funds still hold an estimated net short position of 130K corn and a small long in wheat. 

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                      HI                                        LO

Jan beans:  5 higher                  8.94                                     8.84 1/2

Jan meal:  1.90 lower                303.90                                  298.50

Jan soyoil:  68 higher               3120                                     3049

March corn:  1 1/2 lower           3.79 1/2                                3.75

March wheat: 3 3/4 lower         5.26 3/4                                5.19 1/4

March canola:  4.20 higher      469.70                                  463.30

OUTSIDE MARKETS

The Dow opened 220 pts higher and continued to gain during the session on good economic numbers and ideas that a deal could still be in place into the Dec 15 tariff deadline.  At midday, the Dow is up 349 pts.  Crude trades up to $59/barrel, new highs for the move up, with the US dollar at 97.35 lows.  

CLOSING COMMENTS

Short-covering remains the name of the game for beans, which work higher following a strong soyoil trade that appears ready to close this session out with solid gains.  We do get the commitment-of-trader's report out tonight that will probably continue to show funds short beans, corn, and meal.  Funds maintain a light long in wheat, and a very large position in soyoil.  Look for further short-covering into the close for beans as some bears may be underwater now, and see little reason for soyoil to back away from its highs.  

The bean market needed to alleviate its oversold status, but more importantly now is that it seems there could be new longs aboard.  Beans may have gotten too cheap at market lows, and funds still remain short.    A mixture of old shorts and new longs will put beans in a sideways trade from lower, which is constructive, and suggest that meal could have found its ctr lows as well.  Can't really say the same for corn and wheat, but would look to head out the door perhaps on grain trade lows with soyoil and beans staying in the green.

 

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