THE OPEN

Jan beans:  3 1/2 higher

Dec meal:  .70 higher

Dec soyoil:  33 higher

Dec corn:  1 1/4 higher

Dec wheat:  steady

Prices traded higher on the day extending gains after the open.  The feature of the day turned out to be more short-covering in corn after some key lows were reached yesterday.  Beans were firm, but later buy corn/sell bean trade (unwinding prev. spreads) benefited corn more than beans.  Ideas that the latest break turned beans, corn, and wheat into more competitive territory helped to underpin prices as well.  Export sales on Thursday may show a better pace for corn and wheat.  December options will expire on Friday. 

SOY

• The soy complex opened higher today but the leader was once again in December soyoil, which moved back over 31c.  
• Jan beans tested key resistance levels at $9.17, but beans were clearly following soyoil strength.  Jan bean charts now offer up stiff technical resistance from $9.18/$9.20 in the form of a 200-day moving average, coinciding with a down-trend channel.  
• Bean spreads remain firm, with Jan/March firming into 12 1/2c from 13c.  
• A strong bean basis continues to play out across the Midwest, even as futures head to the lower end of trading ranges.  Mildly supportive information came from Cordonnier, who lowered bean production just slightly in lieu of adverse starting conditions.  
• Dec meal charts continue to work sideways while soyoil rallies.    
• Bull-spreading was also noted in Dec soyoil, where Dec/March traded into 44 pts from 47 pts.  
• Jan crush firmed to 1.00c/bu while oilshare firmed to 33.80% on soyoil's technical strength.  
• Traders will continue to monitor the weather in SA (currently viewed as bearish), and currency as well as politics.  Traders and analysts estimate that Brazilian farmers have contracted around 35% of their 2019/20 bean production.    

GRAINS

• Futures opened firmer, which triggered a short-covering rally on a technical basis, but also in terms of prices turning more competitive.  There have been two larger corn sale announcements this week, (up to 300,000 mt), and export inspections were better for wheat yesterday.  The reduction in winter wheat ratings and a lack of meaningful precipitation in Kansas also helped to trigger a rally.  
• Shorts in KC were forced to cover something in as prices traded higher, with KC helping Chicago prices as well.  
• Volumes in terms of spread trade remain extremely large, with Dec/March corn moving back out to 10c from highs of 7 3/4c on the Goldman roll.  Dec 19/Dec 20 remains a congestive trade from 23 1/2c to 25 3/4c.   Dec/March wheat traded into 3c from 4 1/2c.  
• Ideas that corn futures were oversold combined with the second slowest harvest pace in a decade helped to offer up a house-cleaning rally in corn, with settlements today extremely important.  A close over $3.80 March corn promotes a rally back towards $3.86, while a close over $5.15 Dec wheat triggers a trade towards recent highs from $5.20/$5.23.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                        HI                         LO

Jan beans:  3 higher                   9.17                      9.10 1/2

Dec meal:  1.40 higher               303.40                  301.50

Dec soyoil:  30 higher                3124                     3057

March corn:  4 higher                3.82 3/4                3.77 1/4

March wheat:  6 higher              5.18 3/4                5.09 1/4

Jan canola:  2.40 higher            466.50                  463.00

OUTSIDE MARKETS

The stock market opened 33 pts higher but headlines about more snafus between China and the US generated a profit-taking sell-off by midday, with futures off 98 pts.  Crude oil trades down to $55.53/barrel while a continuing weaker US dollar (down to 97.75) remains price supportive for commodity prices, and wheat specifically.  

CLOSING COMMENTS

The market has turned into an extremely technical trade.  With yesterday's selling, funds are probably long only 25K beans against a short 150K corn.  Funds are also probably long 80K contracts soyoil vs. a short of 39K contracts in meal.  It was of little surprise that the key levels of support yesterday for beans, corn, and wheat held, as they were important levels in the past, (i.e., March corn at $3.78 and March wheat at $4.98).  However, until the fund shorts are chased out of corn combined with good fundamentals, (e.g. better export pace) would look for grain rallies to still be viewed largely as good selling opportunities.  On the other hand, would probably refrain from selling beans into the lower levels of trade, though price action today has not been very impressive.   

Closes today will be important, but charts have their work cut out for them if rallies are going to be able to sustain, particularly in grains.

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

 

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