THE OPEN

November beans:  2 1/4 lower

December meal:  .40 lower

December soyoil:  3 lower

December corn:  1 14/ lower

December wheat:  1 3/4 lower

The markets opened as called and jumped either side of even with beans and corn supported by good export sales and more business announcements to China.  More fund buying was again noted at the open in very good turnover as corn, beans, and meal climbed to new market highs on a fundamental and technical basis.  The strong trend in bean prices remained the catalyst of support for other markets except for soyoil, which was at the mercy of buy meal/sell soyoil trade.  

SOY

• The soy complex once again opened into tentative trade, but funds were back to buying at the technical congestion level from $10.05-$10.07.  
• New contract highs were scored again in November beans on a technical basis as the upward momentum carried into the midday hour.  The components of the bull market remain intact, with rising open interest, good volumes, and new high prices.  
• The other key feature of the day was that of profit-taking in oilshare.  The December meal took out its double high at $328.00 to climb to a new trading range high as well as traders bought meal/sold soyoil.  December soyoil was the only market lower into the 11:00 hour, with oilshare at 34.77%  and crush at 81.31c/bu.  
• While the Nov/Jan bean spread remained steady from 3 1/2c to 4 3/4c, Jan/March values inverted to 2 3/4c from 1/4c.  Farmer selling in the bean market has been fairly steady, the $10.20 and higher level should lead to better movement.  Upward momentum carried the day into the noon hour, as prices accelerated to the upside for beans and meal, with soyoil climbing back to unchanged. 

GRAINS

• US corn prices rose towards the PM session highs at the open based on new Chinese buying announcements.  US values continue to follow sharply higher Chinese Dalian corn prices, as domestic supplies remain tight due to falling reserves and recent typhoons.  
• Export sales were a supportive feature at the open, as a variety of buyers were noted along with China, including Japan, South Korea, and Columbia.  Corn prices did not falter at the open, but instead responded to a rising bean market with gains of its own.  
• Funds are probably long about 50K corn, but higher prices could tack on more length, as the position remains modest as compared to record bean length.  
• Spreads again narrowed with Dec/Dec trading into 15 1/2c from 18i 3/4c, while Dec/March firmed to 8 1/2c from 9 1/4c.  
• Wheat prices turned after major support at $5.42 held, (also multiple moving average convergence there), led to a round of new buying as well as short-covering.  Dec wheat popped over $5.48, leading to better gains over corn.  Dec wheat/corn traded from 1.67 1/4c to 1.75 1/4c.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                              HI                            LO

November beans: 18 higher              10.32 1/4                   10.05

December meal: 7.30 higher             335.90                    323.40

December soyoil:  18 lower              3519                         3467

December corn:  2 higher                 3.76 3/4                    3.68

December wheat:  6 higher               5.54                         5.37 1/4

November canola:  1.60 higher        533.80                      526.60

OUTSIDE MARKETS

The stock market opened 300 pts lower with Fed statements pointing to a struggling US economy for the foreseeable future, and interest rates therefore are likely to stay close to zero percent.  US housing construction fell a surprising 5.1% in August after 3 months of solid gains. By the midday hour, stocks came back to trade either side of even.  Crude rose to $41.22/barrel.

CLOSING COMMENTS

Beginning October 1 China will be on holiday, so the massive stocking up for beans and corn could begin to slow.   At the same time, prices could begin to peak.  This does leave room for a higher target in November beans at $10.35, and it seems that we are getting there very fast.  A cool down in China buying would be the first sign of market weakness, but for now bulls are being fed a daily dose of biz announcements.    

As noted previously, beans have a habit of tacking on at least 20c when a benchmark is passed, and often 35c.  History repeats itself and finds at least the first part accomplished.  The still weak US dollar is also price friendly at a time when demand is heightened and production unknown. 

As to momentum, the charts have yet to post a reversal trade from the top, and yesterday's outside day closing higher set the stage for further advances today.  RSI in beans climbs back to 84% and the total open interest in the funds will have to be watched come Friday when we get the commitment-of-trader's report.  An RSI at 85% and total open interest over 20% for fund control could spell trouble for the bean rally, as well as the upcoming holiday in China.  Targets at $10.35 Nov beans, $3.80 Dec corn, and 3550c Dec soyoil are noteworthy resistance levels, but it appears we are going to give them a try.

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

 

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