Jan beans: 6 1/2 lower
Dec meal: 3.30 lower
Dec soyoil: 20 higher
Dec corn: 2 2/3 lower
Dec wheat: 3 1/2 lower
The markets opened as expected with the uncertainty of trade war negotiations pressuring beans. Bean bulls were discouraged by negative technical action as well as macro pressure, as commodities in general were weaker. Traders continued to unwind previous buy soy/sell grain trade on the back of the Nov. 8 WASDE report.
- The soy complex was mixed in early trade as traders continued to buy soyoil/sell meal, and sell beans.
- Nov beans will expire on the 14th, and bulls were heading for the exit in further signs of trade war delays, negative technical signals, more rains in Brazil, and a neutral to slightly bearish November WASDE.
- More negative Chinese economic data pushed the Shanghai stock market lower, which in the past has been a catalyst for lower bean trade as well.
- Pressure from beans and meal slowly bled into the soyoil market as well, which followed the path lower from morning highs, keeping oilshare values in check. Jan oilshare traded to 34.30% as lower bean prices pushed crush values up to 96c/bu.
- Bean spreads were weaker with Jan/March trading out to 13 1/2c from 12 3/4c, while heavier deliveries for Nov. took Nov/Jan out to 12 1/2c from 11 1/2c.
- Meal spreads ran firmer with Dec/March narrowing into $4.60 from $5.10.
- Dec soyoil tried to keep itself distant from the rest of the board, but pressure in the soy complex generated profit-taking as funds remain long soyoil.
- Grains traded lower but most of the pressure was related more to bean liquidation than those wishing to add new sales at current trading range lows. Basis remains firm as quality bushels remain scarce.
- Dec/March corn traded out to 10c but found buying interest with the spread moving back into 8 1/2c as the Goldman roll continues. At this point, most of the volume for corn is in the spread, though funds have been light sellers today.
- There has been more hedge pressure from areas of the west and central, with better amounts if weather clears over the next few weeks.
- Dec 19/Dec 20 spread trade was wider pushing out to 25 1/4c from 23 3/4c.
- Dec corn found short-covering in initial trade, but a macro-negative day of trade invited new fund selling.
- Dec wheat pushed down towards overall lows as well, testing major support in Dec at $5.05, which was later violated as buyers stood back and more fund shorts were added.
- Dec/March wheat spreads traded into 3 1/4c, and out to 4 3/4c later in the session.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
Jan beans: 13 lower 9.29 9.17
Dec meal: 4.10 lower 304.10 300.40
Dec soyoil: 5 lower 3189 3141
Dec corn: 3 1/2 lower 3.77 3.73 1/2
Dec wheat: 5 3/4 lower 5.10 1/2 5.04 1/2
The Dow opened 85 pts lower but at noontime was mixed. Last week, Chinese officials said both sides had agreed to roll back tariffs if the trade talks progressed. However, over the weekend Trump said that reports of how far the US was willing to go to roll back tariffs were "incorrect". Negative economic news pushed the Shanghai stock market lower, which sometimes can correlate to weaker bean trade. For today, that and numerous other factors pushed beans to new trading range lows.
The market is attempting to define value levels based on the November 8 WASDE that did not offer up many positives for the market. Given the recent slow export pace for corn, the smaller yield and supply was not enough to force the hand of the bear. The larger question becomes what will the funds do with their bean length? The position is actually fairly small in scope, and would be quite easy to flip. If trying to find the trends that could stick, soyoil values could remain firmer over meal, while corn and beans fight it out for new crop ratio strength. In terms of seasonals, beans remain firmer over corn. In this regard, still think that a further sell-off may invite a new bull back to the bean table, while corn shorts will have to think about how low or reasonable it is for corn to move down much more. If short beans, today's break could be a nice opportunity to get a partial short covered, at least in beans. You never know when the next twitter could turn the page to a new direction.
Happy Veteran's Day, and thanks to those that have served.