THE OPEN

Nov beans:   9 higher

Dec meal:  1.00 higher

Dec soyoil:  70 higher

Dec corn:   3 1/2 higher

Dec wheat:  10 higher

Prices continued to journey higher after the open on upside technical follow-through.  The Gulf is once again getting another thrashing, with 4-10" rains courtesy of Tropical Storm Nicholas.  Into the early hours, wheat prices traded higher vs. corn, and soyoil vs. meal as oilshare once again found bargain -hunters at the lows of the move.

SOY

• The major feature in the soy complex was that of higher oilshare.  Soyoil continued to rally on higher canola, higher crude, and higher palm oil prices.  Higher crude oil prices, (firmer on the back of the storm), and higher canola, (from the Stats Canada report), helped to underpin soyoil and send it sharply higher.   Dec. oilshare trades higher to 45.46%, while crush values trades higher to 94.98c/bu.  
• The major support for the bean market was chatter that China had purchased cargoes out of Brazil and the US overnight.  Gulf values were firmer, reflecting a possible export business scenario.  November bean prices finds upside follow-through towards the $13.00 level, but also finds interested sellers given recent technical weakness.  
• December meal futures take a dive from early highs of $347.00 to test the $340.00 level.  December soyoil charts offer the bull a nice uptrend scenario as prices have now rallied from 55c lows towards 58c.  Nov/Jan bean spread trade is back in the red trading from 8 1/4c to 9c carry.  Nov 21/22 inverse trades from 26 3/4c from 33c.  At midday, prices turn mixed for beans, lower for meal, with soyoil still maintaining strength.  

GRAINS

• Grains were higher today led by the wheat market.  Technical strength was noted for both Chicago and KC wheat, which were each 10-11c higher by the mid-session hour.  Some strength for wheat was noted from the Stats Canada report this AM, while a weaker US dollar was also price supportive.  Technicians note the strong recovery off what appears to be a cycle low at $6.77 for December wheat.  It could be that wheat found some demand on the cycle down low, which may be reflected in export sales activity.  Tenders remain active for wheat, with firm cash globally.   
• December corn prices put in a good showing, but the chart will still not find fund buying until a better performance is noted.  Prices may trade into $5.25/$5.28 for Dec corn, but a settlement over $5.30 likely kicks off better program buying.  
• In the meantime, spreads are firmer with Dec/March corn trading into 7 1/2c carry from 9c, while the Dec 21/Dec 22 trades from an inverse of 18 1/4c down to 14c.  Dec wheat/corn trades from 1.74 1/4c to 1.84c.

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                               HI                                      LO

Nov beans:  2 higher                             12.97 1/2                           12.81 3/4

Dec. meal:  3.00 lower                           347.30                               341.60

Dec soyoil:  105 pts higher                    57.95                                 55.92

Dec corn:  6 higher                                5.20 1/2                                5.13

Dec wheat:  1 higher                            7.01 1/2                            6.85 1/4

Nov canola: 12.00 higher                     900.00                               859.80

OUTSIDE MARKETS

Stocks are off 180 pts at midday as crude oil rallies to $71.22/barrel.  Inflation fears continue.  The US dollar falls to 92.32.  

CLOSING COMMENTS 

Warm and dry weather across the Midwest is allowing for harvest to continue to progress at a good pace.  Those crops that need to mature are finding this weather picture perfect.  Traders are watching Tropical Storm Nicholas as it may add a 1-2 punch to already difficult issues in the Gulf.  While some delays are expected, the impact on price is barely noticeable.  

Think in the big picture price action now speaks to broad trading ranges, which may have difficulty exciting the bull, while bears may also be frustrated as a nice rally today could confirm that last Friday's lows could hold for a bit.    Have to say that corn prices usually go back to double check this, and would not be surprised even with today's rally we are setting up for some very broad ranges, particularly into the important Sep. 30 quarterly stocks report.  End-users remain below the market, hoping for another break, while farmers are looking for better recovery values that currently are not there in order to participate.  Harvest pressure may still be felt on rallies.

US corn and beans still remain the cheapest globally.  Wheat tenders remain active as well.  Some analysts theorize that China could be looking for another big break to try to book more beans for coverage.  They may have to wait a bit longer based on today's activity.  

In the meantime, think we are in for spread trade interest to buy soyoil/sell meal, buy bean/sell corn, and perhaps buy wheat/sell corn trade as well.  

South American maps are leaning drier again over the next 10 days with the best rains in far northern areas of Argentina, Paraguay, Uruguay and far southern Brazil.  Brazil could use some good soaking showers, even as discussion about La Nina persists.  Demand and SA weather will be key to the next big rally.  

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

 

TAGS – Feed Grains, North America