Prices continue to trend lower on technical follow-through though meal is higher against soyoil. Soyoil futures head lower following a weaker overnight palm oil performance and crude. The continued rise of more covid – variant cases gives rise to caution. Corn heads lower linked more closely to energy markets as well. December futures expire at noon.
Showers in South America, particularly Brazil, helps in crop development. Business remains slow as it is the end of the year, and China is waiting patiently for bean harvest in Brazil. Seasonally bean prices do begin to decline which starts the Jan/Feb break. Traders continue to cut ties with long positions Monday – Tuesday as lower prices are placed.
Inspections yesterday were better for corn, with China taking 206 tmt off the PNW and 69K from the Gulf. Year-to-date corn shipments stand at 10.206 mmt vs. 12.093 mmt yr ago. Bean inspections remain around 21% behind vs. yr ago,. China loaded 107 beans from the Gulf and 471 beans off the PNW.
Geopolitical jitters continue to support wheat which has otherwise had a good technical break based on its topping pattern. Russian troops continue to pose a threat to Ukraine, and until the situation is resolved will be a thorn in the wheat bear’s side. Any problem with wheat exports from this region will feed into higher wheat prices, as some are already concerned over supply constraints. Corn is impacted as well, as Ukraine has shipped 7.9 million metric tons of corn for the crop year to date, with more to go.
WEATHER – Scattered showers across SA this weekend helped to bolster soil moistures but the next 10 days are looking to trend drier for Southern Brazil and eastern Argentina. Weather is neutral now, but could lean friendly if forecasts verify.
ANNOUNCEMENTS
Brazil’s bean exports for the month of December has a daily average of 143.2 tmt/day vs. 12.46 tmt/day yr ago, according to Brazil’s gov data.
Brazil’s IMEA estimated 21/22 Mato Grosso bean forward sales at 46.4% of the expected production, behind 49% long term average, and vs. 66.5% yr ago. Forward corn sales are at 40.9% of the expected production, which is ahead of 39.7% yr ago.
DELIVERIES
wheat: 39
soyoil: 11
Calls are as follows:
beans: 1-2 higher
meal: 3.00-3.30 higher
soyoil; 30-40 pts lower
corn: 1-2 lower
wheat: 4-6 lower
Outside markets have weaker crude oil at $70.54/barrel with the US dollar trading to 96.09. Stocks are up 20 pts.
Tech talk:
Soy: Jan beans continues sideways and after testing the top end of the range at $12.70 has traded into visual trendline support at $12.35. Trading below $12.35 would take out a long term support line drawn from below $12.00 and therefore trigger further selling activity. Volumes are dropping off as the market trends lower, and the 100 and 200 day moving averages are well over the market starting at $12.80 which gives the market room to rally. The meal chart continues to look impressive and is consolidating around its 200 day moving average of $363.00. Meal breaks remain well supported and would expect another rally back towards $370.00 as the corrective pullback has been shallow with prices in the green against soyoil. Jan soyoil chart values drops to a new low of 5256c which is testing lower support. Would look for the possibility that this low could hold for a rebound trade, but new lows beget new lows and any further drop could also imply we see a target trade of 51c hit, which traded back in June.
Grains: March corn continues to trend sideways after turning lower from peak highs of $5.94/$5.95. Prices remain sideways with very good support at $5.75 should we go there. Would look for corn to stay in the comfort range from $5.75-$5.90 into year’s end, but all in all the reluctance for corn to head much lower is more positive than negative in terms of price action. Would continue to own or price good dips, particularly any trade back towards the $5.68-$5.75 level. March wheat prices are lower again and this chart is attempting to determine if the drop to $7.70 is low enough for now. The ADX trend continues to leak lower, now at 21 from what was a strong higher trend with an ADX of 35. Would note that channel support and the 100 day moving average cross at $7.60, which should be looked at closely if / when we would get there. For now the market has established a somewhat lower trading range from $7.70-$8.15.
JANUARY SOYOIL: Funds remain longest this position, which is a problem now as prices are trending lower. There is no chart stability as the 53c level is now breached and new chart lows are placed. Double lows at 51c represent the next shelf of back support, and it is not much. HOwever, major benchmarks often halt a decline so would look for 52c-5250c to invite some profit-taking first, and then 51c should we get there. The market is still not terribly oversold with an RSI of 34%, (anything under 30% is oversold), while the downturn has now strengthened the ADX suggesting that possible new bears are in the mix.
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