THE OPEN

November beans: 1/2 lower

December meal:  .30 higher

December soyoil:  2 lower

December corn:  1 1/2 higher

December wheat:  6 higher

The markets opened as called with prices trading higher once again before turning mixed in the soy complex.  Grains led the way higher, with corn triggering buy-stops at the open.  Corn prices attempted to catch up with gains in beans to correct the ratio, which has been moving heavily in favor of beans.  

SOY

• The soy complex opened as called with prices turning higher after the open.  November beans traded again to new highs over $9.80 while products were more subdued.  
• December soyoil remained in congestive trade under 34c but found fund buying on bean strength, gaining on meal.   
• Of note was a continuing strong bean spread, with Nov/Jan narrowing into 3 1/2c as more business announcements were made.  Dec/March meal spreads were also firm trading into $1.70 out to $1.90.  
• October crush traded to 74.49c/bu while oilshare values traded to 34.57%.   
• Increased movement has been noted with November bean prices into new highs over the $9.80 target.  
• Meal prices remained well bid but almost largely ignored.   Meal remained steady against a later declining soyoil market, where it appears that funds decided to take a few profits before the report tomorrow.  Funds remain extremely long soyoil and beans.  

GRAINS

• Higher wheat prices put a floor under the corn market where more fund buying activity took place.  
• Rising world premiums and dryness concerns in the Black Sea, Russia, and Argentina gave the wheat market support, as did positive technical trade. More active demand was also noted, with more countries looking for wheat.   
• Corn charts remain more constructive as prices near the $3.55-$3.58 level, which triggered more fund buying activity when tops were taken out at $3.65.  The bean/corn ratio seems to have to correct a bit, which led to a buy corn/sell bean trade.  
• Spreads narrowed with Dec/Dec corn trading into 21 1/2c from 25 3/4c and Dec/March trading into 9 1/2c from 10 1/2c.  Dec wheat/corn traded from 1.85c to 1.91c.  
• Wheat prices jumped higher on mostly technical considerations as the 200-day moving average hold resulted in short-covering and new buying activity.  The report tomorrow is expected to be supportive for corn, but more neutral for wheat.  EIA report showed ethanol production up 2% in line with expectations at 941,000 bbl/day, utilizing just under 5.0 bln bu of corn.  Inventories fell more than expected, down 4.3% to 840 mln glns, a four-week low.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                 HI                           LO

November beans: 1 lower                        9.82                       9.74 1/4

December meal: .20 lower                       319.40                   316.80

December soyoil: 4 lower                        3343                       3306

December corn: 4 higher                         3.66 3/4                 3.59 1/2

December wheat: 4 higher                      5.56 3/4                 5.42 3/4

November canola: 4.80 higher                507.00                   502.60

OUTSIDE MARKETS

The stock market was up 100 pts at the beginning of the session as crude oil prices traded down to $37.17/barrel.  The US dollar weakened again, trading down to 92.70.  Stocks churned either side of unchanged throughout the trading session in quiet volume, but later sold off over 200 pts.   

CLOSING COMMENTS 

The September WASDE is typically not a market mover, leaving final yields up to the October report after harvest takes place.  However, this year is different, with a dry August and a derecho event taking down yields and production at the same time China has been a major buyer.  Funds are now entering this report an estimated 190K contracts long beans, which is close to a record.  Therefore, the WASDE will have to have bullish numbers to avoid house-cleaning.  However, even if breaks are in store, they will likely be met by willing buyers who believe that China will continue to buy, and that the October report may reflect continuing ongoing lower production/yield numbers.  The continuing weaker US dollar remains price positive for US exports, and all the story lines remain extremely positive for prices.

Corn yield guesses are in circulation from 175.0 bpa-180.00 bpa, with yields now having to come in below the lower end of estimates in order to keep corn prices aloft at these upper levels. A bean yield below 51 bpa is going to reinforce the up-trend.  However, any large break resulting in more bearish numbers, as stated before, is going to see short-covering from the bear, and buying interest from the bull.  Look to see hard breaks purchased. 

As for today, the bean market suddenly looks tired.  Nov. beans need a close under $9.40 and Dec corn a close under $3.45 to inflict damage.  Until then, keep short positions swift and look to get long on house-cleaning breaks of size.

 

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