The markets opened lower in the PM led by soyoil futures. Funds purchased around an estimated 25,000 contracts of corn, 4,000 beans, and 10,000 wheat yesterday, and beans and meal prices worked both sides of even from lower throughout the evening. This is the behavior of markets that could work higher, as weaker markets do not have the ability to come back. The surprising rally likely caught some traders off guard, and would look for more position-evening into tomorrow’s trade.

Funds were in a buying mode in corn after trading above $5.50, which triggered further technical strength. Program buying set in as funds added to long positions on good turnover. The market had certainly stalled out at the bottom after establishing good trendline support. The market behavior was hinting at a rally, but not the size of the advances. Reasons for the rally certainly include more profitability in the ethanol sector, which may imply that the USDA has to hike numbers in the upcoming November WASDE. End-users were likely active at market lows in both beans and meal this week. Harvest is about 2/3rds complete for corn, but an estimated 5 bln bu could still be left out in the cold. Wet weather will likely delay harvest this week. Ideas also float that some crops could have been damaged by storms this week.

Soyoil futures continued lower as funds took profits on current length on the back of weaker energies. November bean continues to liquidate heading into first notice day on Friday. Small deliveries are expected. Spread activity continues to be a major feature as soyoil/meal goes back and forth. Buy bean/sell corn trade also flips back and forth. The bean/corn ratio for 2022 is extremely low at 2:2:1, which tells farmers to plant more corn. Concerns over fertilizer costs have allowed the ratio to trend in corn’s favor, but perhaps it is time for the bean market seasonals to take over and for prices to continue to stabilize and slowly improve. While Brazil is off to a good season, it is only the beginning. Seasonally good demand strengthens the bean ratio, and in years of great demand it has gone as high as 3:1:1.

REPORTS
Export sales
beans: 21/22 net 1.18 tmt (vs. an expected 1.3-2.0 mln mt)
meal: 21/22 net 161,500 tmt and 22/23 net 500 tmt (vs. an expected 150-400 tmt)
soyoil: 21/22 net 14,600 tmt (vs. an expected 0-25 tmt)
corn: 21/22 net 890,400 tmt (vs. an expected 740-1.3 tmt)
wheat: 21/22 net 269,300 tmt (vs. an expected 200-550 tmt)

Sales were good as expected for beans, though low end for grains.

Wheat – Sales down 26% vs. prev. wk and 31% from the 4-wk ave. Increases primarily for Mexico. Sales are low end and disappointing as other origins are cheaper.
Corn – Sales down 30% vs. pre. wk. Increase primarily for Mexico and Colombia.
Beans – Sales down 59% vs. pre. wk with increases from China at 1,081,000 mt, including 449,000 switched from unknown. Exports were up 9%, with China taking 1,790,600 mt.
Soyoil – Sales better to South Korea, the Dominican Republic, and Mexico.
Meal – Sales primarily to Philippines and Canada

WEATHER – Showers continue to create harvest delays in the Midwest. Isolated showers could create delays in the Delta.

Global – favorable weather continues in Brazil, but more showers are needed for Argentina.

ANNOUNCEMENTS
China called for the removal of “enormous” farm subsidies in some developed countries as part of Beijing’s push for reform of the WTO. Ag subsidies are allowed for developing countries, but are capped at 10% of the value of production.

Egypt’s strategic vegoil reserves are now enough for five month’s coverage, they stated.

Calls are as follows:
beans: 4-6 lower
meal: 1.80-2.20 lower
soyoil: 50-6 lower
corn: 1 1/2-2 1/2 lower
wheat: 1 1/12-2 lower

Outside markets show further weakness in crude, which trades down to $80.58/barrel. Stocks are up 60 pts, with the US dollar trading to 93.96.

Tech talk:
Soy: January beans continue to trend slowly sideways/higher, and would use halfway back marks from $12.20-$12.60 to see support given the rally. Like the Dec. corn market, a nice uptrend line is forming on the chart, and buyers may now be there to own or price against it. For the day trendline support is located at yesterday’s low of $12.36 should we go there. Bears want to see this support level give way. December meal pops higher stabilizing lows at $310.00. There is new trendline support forming on this chart as well, crossing today at $325.00. Given the rally to new trading range highs at $335.00, think these pullbacks should hold, and that end-users will want to be there to get something priced. December soyoil futures corrected back to major support at 6060c, and so far is holding. Given the strength of this market and the fact that the 100 day moving average is there, would cover a partial short or price, as the major direction here is most definitely higher.

Grains: December corn chart extends the range to the upside as it continued to build support at $5.30 for two weeks. The important level of support moves up from $5.20, and that level also took some time to be tested as well. December corn likes to return and test major break-out level, which for this market is from $5.45-$5.48. Should we go there, think it holds as the market may still have room to move to the upside. December wheat trades lower with good trendline support under the market at $7.45, and a line of new resistance the bottom of which crosses at $7.65. The trendline support has been around longer than the resistance, so have to give it more merit, which suggests the market can trade back up again to test recent highs towards the $7.65/$7.67 level. Trade over $7.65 targets $7.75/$7.78.

DECEMBER CORN: The market had formed new trendline support for two weeks at $5.30, indicating that the path of least resistance could be higher. ADX strengthens to 17 with the pop upward in price action, and would expect the market to now move lower support up to the 100 day moving average at $5.45. Open interest increases on high turnover reactivates an uptrend, and therefore would look for pullbacks to see further support. Having said that, major trendline resistance crosses at $5.68, and would expect to see it hold on a first time basis should we go there. The market is not yet overbot with an RSI at 58%, so would expect to see the possibility of once again testing $5.65/$5.68. Trading range has been extended to the upside, and $5.30 is now the defined low in a possible $5.30-$5.70 market.

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