World Perspectives
feed-grains soy-oilseeds wheat

PM Post - Searching for the Bottom

THE OPEN

Jan beans:  1 3/4 higher

Jan meal:  1.00 higher

Jan soyoil:  3 higher

March corn:  1 lower

March wheat:  3 higher

Prices opened as expected with more unwinding of recent spreads.  Corn gained on wheat and beans, oilshare was steady, and in the macro space what seemed like a sell equities/buy grains trade emerged.  Comments from Trump during the session only served as a catalyst for worry, as investors shed length over trade negotiations.  

South America still has a benign feel to it, which is capping off a bean recovery.  Dr. Cordonnier left his Brazilian corn and bean crops unchanged at 102 mmt and 123 mmt, respectively.  Argentina's corn and bean crops were also left unchanged at 49.0 mmt and 54.0 mmt, respectively.

SOY

  • Bean prices opened as called and price action entered into higher trade with short-covering and bottom picking surfacing.  
  • Oversold conditions at 20% added to a market bounce, albeit the path higher was not very aggressive.  
  • Soybeans saw support from a positive crush report, and traders unwinding previous buy wheat/sell bean trades.  
  • Wide carries moved a bit narrower with Jan/March moving into 14 1/2c from 15c, while March/May beans traded from 14 3/4c out to 15 1/2c. The majority of volume in Jan beans is now coming from spread activity, with the roll beginning his week.  
  • Jan bean open interest now stands at 342,274 ctrs with March at 204,033 ctrs.   
  • January soyoil found short-covering activity as well, with major lines of support crossing near the day session lows of 3012c, which created new buying interest from those wanting to be long oilshare.  
  • Jan meal found good commercial pricing activity as well as prices firmed off ctr lows of $295.60.   
  • March crush moved up to 1.05c/bu and oilshare back below 34.0% to trade to 33.93%.  

GRAINS

  • The wheat market ran out of buyers during the session while corn prices continued a steady climb upward.  
  • Wheat prices gave up all night session gains to break key support in March at $5.35, triggering more selling activity and a downward correction. Later in the session it was published that Egypt purchased Russian wheat, which triggered more sell-stops into lower support levels.  
  • Chicago and KC wheat adjusted lower with 5-8c losses by midday vs. Minneapolis wheat, which was up 4c.   
  • March corn dropped into key support at the close of the PM session at $3.80, but higher trade from that start suggested that shorts were beginning to cover positions in earnest given the recent steady-to-higher chart patterns.  March corn triggered small buy-stops over recent highs at $3.84, extending the trading range higher. 
  • Spreads continued firm for corn with basis levels still strong, and producers not selling yet at current levels.   Dec/March corn continued to trade into 8c from 8 1/2c as we head into expiration on December 13.  March wheat/corn traded down to 1.44c from highs of 1.57c on wheat's losses.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                       hi                                     lo

Jan beans:  2 1/2 higher             8.75 3/4                           8.68 1/4

Jan meal:  1.10 higher                295.40                             293.40

Jan soyoil:  17 higher                 3043                                3012

March corn:  1/2 higher              3.84 3/4                           3.80 1/4

March wheat:  8 1/2 lower          5.41 1/4                           5.26

March canola:  .50 higher          464.50                             461.80

OUTSIDE MARKETS

The Dow opened down 300 pts but continued to lose more as trade negotiations appear to stall.     At noontime, the Dow is down over 400 pts as investors fear that a deal is going to be pushed back to 2020 elections.   

CLOSING COMMENTS

Prices continue to skirt along the bottoms of trading ranges with prices having broken to levels that could begin to hold.  Jan beans at $8.68 comes close to a cycle low of $8.65.  Jan soyoil futures tested major trendline support at 3012c, which for the day has held.  Recent lows will still have to verify that they can hold, and we may spend the balance of this week doing just that. 

The January roll will begin on Friday as traders spread more of the open interest to all March contracts.  Many remain on the sidelines with so many different takes on trade comments.  The USDA will have more to say on December 9, but the big picture direction will probably still take place in the January final.  What does it mean that we still have so many unharvested fields in the northern areas?  It could mean that we are fleshing out trading range bottoms right now.  So if short, would probably be best to cover something in while the trade jitters take center stage.   

Possible trading ranges in March futures given price action up to now includes:

March corn:  $3.73-$3.93

March beans:  $8.80-$9.35

March wheat:   $5.10 - $5.50

Sell signal still generates for wheat at the end of the month.  Could be it is starting early.  

 

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