THE OPEN

Jan beans: up 3 3/4

Dec meal: up 1.50

Dec soyoil:  down 18

Dec corn:  up 1 1/4

Dec wheat;  up 3 1/2

Prices opened as called with many traders unwinding previous spread trade.   More position - evening was noted after the bell, as traders unwound previous buy bean/sell corn and buy soyoil/sell meal trade.  Traders also took profits on recent buy wheat/sell corn trade, making corn the buy leg of most spread activity. 

SOY

• The soy complex started the day on a firm note, but after the open more liquidation in the bean market and profit-taking in soyoil futures sent prices into two-sided trade.  Jan oilshare moved back below 34% to a corrective 33.60% trade, while crush values in Jan firmed to 1.04c/bu.   
• Bean spreads continued to widen with Jan/March trading out to 14 1/4c from 13 3/4c, while oil spreads for Dec/March traded from 46 to 49 pts.  Meal spreads were firmer with Dec/March narrowing into $4.50 from $5.10.  
• Funds sold opening strength in beans as weather in South America and lack of trade negotiation progress kept bulls from entering the picture.  
• Moreover, charts suggested that more potential bean weakness was ahead with values not even approaching resistance today at $9.15.  Jan beans dropped to the major benchmark of $9.00 on fund selling, while Dec soyoil plummeted to the start of the overall rally back at 3050c.  
• Given the exports this morning, bean sales on the books stand at 11.352 vs. 11.737 mmt year ago.  Of that total, China comprises 4.449 mmt with unknown at 3.102 mmt.  

GRAINS

• Buy corn/sell bean and wheat trade was the main feature.  Helping corn was a fairly decent export sales report showing that corn is indeed becoming more world competitive.  
• USDA reported another sale of 106,000 mt of corn sold to unknown for 2019/20.  However, helping corn mostly today were traders unwinding previous buy bean and wheat/sell corn trade.  Dec wheat /corn traded from 1.51c down to 1.41 3/4c.  
• Chicago wheat rallied into key resistance at $5.22 3/4 before the buying activity stopped and futures turned back into the middle of the trading range.  Minneapolis wheat trades down to oversold levels close to 20%, which is deeply oversold having now traded through $5.00.   
• Capping off a more zealous corn rally was an announcement from the International Grains Council (IGC), which raised its forecast for global grain production driven by higher production forecasts in the US.  IGC forecast grain output for 2019/20 at 2.162 bln metric tons, up from 2.157 bln in Oct, raising US production by 3 mmt.  Some analysts had expected IGC to lower grain output due to cuts in Australia's wheat crop. IGC forecast 2020/21 world wheat areas to expand by 1%.   
• Corn spreads narrowed into 10c from 11 1/2c as we approach first notice day next Friday.  As corn rallied there were more reports of increases in corn movement coming out of the west, where farmers have been able to better catch up on harvest.  
• AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                  HI                                 LO

Jan beans:  3 3/4 lower                          9.09 1/4                       9.00 1/4

Dec meal:  1.80 higher                          302.60                         299.70

Dec soyoil:  60 lower                              3125                            3057 

March corn:   2 higher                            3.80 1/4                        3.76 3/4

March wheat:  4 lower                            5.22 3/4                        5.13 1/2

OUTSIDE MARKETS

The Dow opened 10 pts higher but is 25 pts lower at midday.  Crude trades higher and is a major feature, trading up to $58.28/barrel.  The US dollar trades down to 97.72.  

CLOSING COMMENTS

Not a surprising day of trade as managed money heads to an even position in beans and covers a few shorts in corn.  The large open interest in soyoil finally got the better of this market today, sending it into correction mode.  Look for a large sideways trade to begin, but soyoil could still be a bull story heading into 2020.

Traders want to see progress made on a deal, and if that happens many traders forced to liquidate beans may have to buy them back. There are still some good rallies left in this market, and any sign of a trade deal will find bean prices quickly tacking on gains.  However, trading ranges continues to edge lower given ample supplies (IGC verifies) and lack of a weather problem in South America.  If short, would probably be taking something in at this level given many oversold extremes and US prices becoming more competitive.  

FYI DEPARTMENT

Some early Dec seasonals includes buy July meal (early Dec) and buy March soyoil for exits at the end of Dec and early January, respectively.  A sell March wheat signal kicks off end of December.  

Have a good evening........

 

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