World Perspectives
feed-grains soy-oilseeds wheat

PM Post - Testing New Tops

THE OPEN

Nov beans:  12 higher

Dec meal:  5.00 higher

Dec soyoil:  2 higher

Dec corn:  6 higher

Sep wheat:  1/2 lower

The markets opened strongly as called except for wheat, which has become the sell leg of inter-market spreads.  Oilshare struggled as traders booked profits.  Bean and meal prices strengthened throughout the day remaining well bid.  Corn saw more short-covering activity, along with a few bargain-hunters.

SOY

  • The feature in the soy complex was that of weaker oilshare as firmer meal prices dominated trade space.  
  • October crush traded to 95.58c/bu while oilshare values sold off further to 34.62%.  Profit-taking was noted in Dec. soyoil as prices climbed once again towards the 31c level, posting a new high for the move up at 3182c.   Dec meal prices sprinted higher along with beans.  
  • With the report out of the way, bean prices were able to respond to the series of recent business announcements that have been positive for prices.  The two reversal trades in meal and beans set the market on a higher path with a combination of short-covering, pricing ideas from buyers, and bargain hunters.  The reaction to the report set the up-trend in motion, with lower FSA acreage numbers resulting in what may be a slightly adjusted trading range to the upside.  We are certainly testing the upside quickly for both bean and meal markets.  
  • There were fresh sales announcements for beans, with more chatter about cargoes being purchased today as well.  August/Nov bean inverse traded from 9c to 7c.  Sep/Nov beans traded from a 2 3/4c to 4c carry.  Sep/Dec meal traded from $5.40 out to $6.70.  
  • November bean prices remained well bid throughout the session as prices neared the 200-day moving average at $9.03.  

GRAINS

  • Corn prices traded higher on the positive reversal off the ctr lows of $3.20 in Dec. corn, and prices north of $3.30.  A flash sale of 110K to unknown and ideas that China could be in the market created a short-covering wave of trade.  Also noted that China auctioned off another 4.0 mmt of corn, which will tighten stocks again.   
  • December corn found buying interest on pullbacks throughout the trading session, finally triggering buy-stops when prices traded over the 100-day moving average at $3.39.  The last gap level which was open from $3.42-$3.44 now serves as key resistance and would look to fill it but for prices to find stiff resistance.  
  • Wheat prices tried to follow with strength in corn, finally triggering a few shorts to cover, with prices over the $5.00 level after printing new lows at $4.89.  While the rally in wheat was noted, it was difficult to believe in any technical strength this market had to offer given its failure to maintain a rally over the last several weeks.   
  • Dec wheat/corn traded from 1.62 3/4c up to 1.71c.  Buy corn/sell wheat trade continues as a fan - favorite trade.   Corn spreads remained slightly firmer with Dec/Dec narrowing into 30 1/2c from 35 1/2c, and from values that were as wide as 40c.  Sep/Dec widens back out to 13 1/2c.  Wheat spreads remain weak with Sep/Dec trading out to 9 1/4c.

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                 hi                                 lo

November beans:  18 higher                9.02 1/2                       8.83

December meal:  9.40 higher              299.50                          290.00

December soyoil:  18 lower                 3182                            3120

December corn:  12 higher                 3.40 3/4                        3.27 1/2

September wheat:  7 higher               5.00 3/4                        4.89

November canola: .40 higher             486.50                          483.70

OUTSIDE MARKETS

The Dow was down 43 pts. and remains slightly lower in congestive trade throughout the trading session.  Crude oil backs down to $42.12/barrel with the US dollar at 92.92.  

CLOSING COMMENTS

The markets are now heading into trading ranges with defined market lows in place, which may last into harvest.  China continues to make daily purchases to fulfill their Q4 needs and may be even looking to purchase corn.   While beans have pushed higher, one must be cautious with the well-advertised August 15 phone call looming.  If things don't go well, it could spell trouble for recent bean gains.  However, the FSA acreage number, Chinese business announcements, and interested bean bulls kept the market well bid into the noon-time hour.  The reversal trade in beans and meal both have resulted in higher trade.  

At this point, the only market to have really broken out of its previous trading range is corn, finally closing in on the previous gap from 3.42 / $3.44 in Dec.  Gaps have a natural pull towards them once prices have started to close them.  Expect that $3.40-$3.45 now becomes a level of resistance for Dec. corn that may prove hard to move past.  Dec. soyoil continues to trend higher, and the chart here does not look complete to the upside despite today's pullback from new highs.  Target high is still close by at 3212c.  

 

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