World Perspectives
feed-grains soy-oilseeds wheat

PM Post - Soyoil Strong into the Close

 

Note: The Technical Perspectives launch period will be closing soon and your access to these reports will end on Tuesday, 17 September 2019. To continue accessing this information, please let us know by emailing Matt Herrington at mherrington@agrilink.com

THE OPEN

Nov beans:  3 lower

Dec meal:  1.40 lower

Dec soyoil:  29 higher

Dec corn:  2 1/2 higher

Dec wheat:  1 1/2 higher

The markets opened as called with soyoil values trading sharply higher on the heels of firming crude.   Buy corn/sell beans and buy soyoil/sell meal trade were features for the day.  Fund buying was noted from the open in all the markets, but volumes were surprisingly subdued.  The release of strategic oil reserves by the US helped to moderate energies, but prices in that sector feel as though they will remain on a strong slant into the close of biz.

At 10:00 export inspections were released as follows:

beans:  666,490 mt vs. 977,914 mt week ago

corn:     421,803 mt vs. 612,065 mt week ago

wheat:  459,258 mt vs. 412,608 mt week ago

Inspections were low end for beans, and good for wheat.

SOY

  • The major feature of the day was that of sharply higher soyoil values, which moved in line with crude oil prices.  Traders continue to monitor the events in Saudi Arabia that unfolded last night leading to new highs in crude, and a gap-higher trade in Dec. soyoil.   
  • Buy soyoil/sell meal trade continued into the noon day hour, with Nov crush falling to new lows at 80.83c/bu while oilshare traded back to 33.55 percent, new highs for the move up.   
  • Dec soyoil charts continued to tack on gains trading into new highs for the move up, and towards the last spike high at 3101c.   
  • Bean spreads were a bit softer with Jan 20/March 20 trading out to 12 1/2c from 11 1/2c, and Nov/Jan from 12 1/4c to 13 3/4c.  
  • At 11:00, NOPA’s August 2019 report was released with crush over the expected at 168.085 mln bu vs. an expected 162.0 mln bu, and vs. the prev. month at 168.09 mln bu.  Soyoil stocks were 1.401 bln lbs vs. an expected 1.410 bln lbs, and vs. the prior month at 1.467 bln lbs.  Meal exports were 699,212 mt vs. 879,319 mt month ago.  Crush was supportive for beans, but without a better rally heading into the report prices, reacted with some weakening.  Soyoil stocks remain low, and with the crude oil jump, oilshare should continue to see buying interest on pullbacks. 
  • Soyoil futures could be set up to test the previous trading range highs at 3101c, while Dec meal triggered sell-stops under trendline support at $299.00, sinking back into the previous trading range.  
  • Nov beans also found selling activity after prices could not hold over $9.00 Nov.  For the day, beans were a follower of meal.   

GRAINS

  • Buy corn/sell bean trade remained a feature of the day in its affiliation with the energies sector.  
  • Both Dec corn and wheat prices moved higher today on technical buying and short-covering activity.
  • Though grain inspections were viewed as bearish, traders continued to own pullbacks as charts sport a more upbeat look.  
  • Farmer selling continues light in lieu of this careful rally.  
  • Chicago wheat buying was also technically based when prices turned to test key support at $4.83 ½, triggering small sell-stops that bears seemed to then buy.  
  • Dec/March corn continued firm narrowing into 12c from 12 3/4c while Dec 29/Dec 20 traded to 35 1/4c from 38 1/4c.   
  • With harvest continuing, higher corn prices will see some hedge pressure when prices move upward.  As for conditions, traders expect corn conditions to decline tomorrow.   We will also get a first look at harvest.  Corn in the Delta said to be coming in above expectations.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                             hi                          lo

Nov beans:  1 higher                       9.04 3/4                 8.94 1/4

Dec meal:  1.30 lower                      303.30                   297.50

Dec soyoil:  68 higher                      3030                     2960

Dec corn:  4 higher                          3.74                       3.67 1/2

Dec wheat:  4 higher                       4.89 1/4                 4.82 1/4

Nov canola:  4.00 higher                 453.90                   449.80

OUTSIDE MARKETS

The Dow opened 88 pts lower but continued to add to losses down over 100 pts on the attack.  At the midday hour stocks are down 127 pts with crude oil still firm with a high at $63.34/barrel.  Gold prices are back towards the highs up $11.60/oz to $1506.80/barrel on geopolitical concerns.  The US dollar trades higher to 98.71.

CLOSING COMMENTS

Geopolitical risks are always part of the marketplace, but we haven't seen one like this come along in quite a while. Traders may opt to fade crude oil at some point, but the market now has to consider that 6 percent of the global oil supply could be impacted and would have implications for transport costs and petroleum-based products.  That in turn could fan the flames of inflation.   

The grain markets still have the bulk of harvest left to go, and therefore ag rallies may feel some weight at key points of interest.    Upper targets remain at $9.15 Nov beans, $3.77/$3.80 Dec corn, and $4.92/$4.95 Dec wheat.  

Funds remain net short across the board, though the soyoil rally may take them closer to even.  Market bears will be watching carefully now, as the next leg up is sure to come from technically breeched lines of resistance more than anything else.   Mission of the markets now appears to be to carve out trading ranges into the next report.  Benign weather for now and harvest may keep better rallies under wraps.  

Look for soyoil to probably continue strong into the close, and for weaker meal to trend the same way.  Beans may continue to split the middle. 

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

 

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