THE OPEN

Jan beans:  6 1/4 higher

Jan meal;  .80 higher

Jan soyoil:  15 higher

March corn: 1 higher

March wheat:  3 1/4 higher

The market opened as called with more short-covering activity in the soy complex that set the tone for a buy bean/sell corn spread trade.  The catalyst for higher beans was part technical and part trade negotiation chatter, as the narrative flipped back to a more optimistic tone on reports from Bloomberg that a phase one agreement might be expected ahead of the Dec 15 tariff deadline.  

SOY

• The soy complex extended gains present in the night session on short-covering activity related to talk that a deal could still be ahead before the tariff deadline on Dec 15.  
• Deeply oversold indicators and prices trading towards key resistance levels triggered more interest to own market pullbacks.  
• March beans now designate $8.80 as the lower end of a potentially higher trading range, Jan beans firm off $8.65.  
• January meal rallied during the session on short-covering as well with good commercial pricing activity on contract lows, and charts posting double lows at $292.60.  
• Spreads were narrower with Jan/March meal trading into $2.80 from $3.30.  Jan/March beans saw some buying interest as well, with the spread narrowing into 14 1/4c from 14 3/4c, and values that had been out to 15c.  
• Jan soyoil also found new buying interest near the recent lows from 3011-3015c, with overhead resistance still a bit away at 3080c, but very do-able.  
• March oilshare continues to find support just under the 34% benchmark.  An announcement of soyoil to Morocco helped to underpin Soyoil.
• Rumors were in the market that China had purchased Brazil beans as a firmer Brazilian Real (vs. the weaker US dollar) helps to shut off selling for the bean rally.  

GRAINS

• Corn became the sell leg of the market today against beans and wheat.  Technically speaking, March corn was beginning to stall against $3.83/$3.85, while deliveries and a bearish ethanol report finally triggered sell-stops under $3.80.   
• EIA data released later in the morning found production a bit higher up 0.1% to 1.060 mln bbl/day, a five-month high, which would consume 5.58 bln bu of corn.  
• Inventories grew to 20.639 mln barrels, up 362,000 barrels from a week ago, which pressured corn.  
• Buyers continue to sit below the market in corn, while producer selling ideas remain above, creating air in the market as sideways trade is maintained.    
• March wheat continued to trade higher for much of the session, with March wheat/corn trading to 1.49c from 1.42c.  Spreads continued to widen with Dec/March corn trading out to 10c, and March/May out to 6 1/2c from 5 3/4c.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                              hi                             lo

Jan beans: 6 higher                         8.80                          8.71 1/2

Jan meal:  2.50 higher                     298.00                     294.90

Jan soyoil:  11 higher                      3042                        3015

March corn:  3 lower                       3.83                          3.77 1/4

March wheat:  1 higher                   5.29 3/4                    5.22 1/4

March canola:  .80 higher               464.90                      461.70

OUTSIDE MARKETS

The Dow opened 130 pts higher but is currently up 196 at midday.  The US dollar continues to weaken, trading down to new lows not seen since November at 97.43.  Crude firms to $58.66/barrel.  Both higher energies and a weaker US dollar should continue to support wheat and soyoil futures.    

CLOSING COMMENTS

The 2020 bean/corn ratio had been trending in favor of farmers planting corn, but typically this time of the year tends to experience a rise in the price ratio favoring beans.  Funds moved to a short bean position on the back of good growing conditions in Brazil and Argentina, but the season is far from over.  Headlines lean bearish one day and bullish another.  A bean carry-out of 450-475 mln bu is not bullish, but we are far from the 900 mln bu a year ago. 

The soy complex has not given much up heading into the midday hour, and a close over $8.80 Jan beans or $298.00 Jan meal would promote more short-covering and squeeze the bear a bit.  Not surprised to see these levels tested, but if we don't trade over them the price action may entice a few more shorts to get out on pullbacks.  The mix of old bears and new length could create some trading range lows.  Think this week prices could be on the road to some chart stabilization given the breadth of recent declines.  If short would think about pullbacks to take a profit.

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

 

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