Grain and Oilseed Market Update 10/9/19
Patrick White of AA Commodities - InsideFutures.com - Wed Oct 09, 3:18PM CDT

Market Update October 9, 2019

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Corn

Dec. Corn: +8^6 at 395^6

Fundamentals: Corn was set back slightly on Wednesday. Traders kept the trade pretty quiet as they anticipate the WASDE and snowstorm on Thursday.

On Tuesday President Trump announced that the ethanol agreement for next year is "going to be, I guess, about, getting close to 16 billion ... thats a lot of gallons. So they should like me out in Iowa." Currently the RFS for 2020 would require use of 15 billion gallons of Ethanol. An increase of this size could amount to an additional 350 million bushels of corn used for ethanol. The revision is not finalized until the end of November. The increase also hinges on there not being any SREs given out next year.

A broad frost is expected to hit the NW Midwest Friday-Sunday of this week. The frost line is supposed to extend to the middle of Iowa and into NW Illinois and most of Wisconsin. The Dakotas are forecasted to see 6-12+ inches of snow. Extreme NW Iowa and parts of Minnesota may also get some snow. Just how much damage can a frost/snowstorm on October 10-11th do? The Dakotas and Minnesota are home to 2.6 billion bushels of corn, 35-40% is black layered as of the Oct. 6th crop progress report. Harvest progress and dry-down will really speed up for many producers after Friday, but it's looking ugly into the weekend.

On Thursday October 10th at 11:00am the USDA will release the October WASDE report. The report is expected to bring updates in both yield and harvested acres. Due to the large unknown surrounding this year's crop it could be a volatile report. The report estimates can be found here.

In Brazil's Mato Grosso, 1-2 inches of precipitation have fallen the past two weeks with the heaviest rainfall in the western 1/2 of the province. Going forward .75-2 inches is expected for the next two weeks with the eastern part of the province missing out on the majority of the rain. Dry conditions are still dominant overall. The dryness could be a larger factor down the road.

Corn Crop Progress: 10/6/19

Corn Condition: 56% G/E vs. 57% last week and 68% last year

Corn Dented: 93% vs. 99% five year average

Corn Mature: 58% vs. 85% five year average

Corn Harvested: 15% vs. 27% five year average

Technicals: The Dec. contract rallied above the 393 resistance level on Tuesday. Barring a shock lower from the WASDE on Thursday, look for continued strength until 399-401 in the Dec. contract. Selloffs down to 392, 386 should be supported by longs.

Trend: Sideways..............Support......Resistance

Dec. Corn: ......................386^0, 392^0...... 399^6, 405^0

Corn Managed Money

Total Net Short: -126,174 contracts (33,716 shorts covered)

Corn Weekly Export Inspections

466.5 K T. vs. 500-700 K T. expected

Corn Weekly Export Sales

562.6 K T. old crop vs. 400-800 K T. expected

2.5 K T. new crop vs. none expected

Soybeans

Nov. Soybeans: +3^2 at 923^6

Fundamentals: Soybeans rallied sharply overnight and found sellers during the day on Wednesday as it was announced that the Chinese are offering a partial trade deal with the U.S.. The Chinese would like to get a deal on the smaller issues that both sides agree on. The larger issues surrounding intellectual property, subsidies, and industrial reforms would be negotiated at a later date in 2020. The Chinese offered an additional 10 MT. (367 million bu.) of soybean purchases if the deal can be made. The U.S./Trump said previously that they do not want anything but a full deal. Will China be able to buy their way to an interim trade deal? Higher level talks are set for Thursday and Friday.

Expect volatile reactions to trade headlines this week.

On Thursday October 10th at 11:00 am the USDA will release the October WASDE report. The report is expected to bring updates in both yield and harvested acres. Due to the large unknown surrounding this year's crop it could be a volatile report. The report estimates can be found here.

Monday morning it was announced that 198 KT. of soybeans were sold to China and another 240 KT. were sold to unknown assumed to be China. The total announced sales since the goodwill purchases started is at 2.838 M T. (104 Million bu.). More purchases are expected as up to 6 MT of soybean purchases are rumored.

In Brazil's Mato Grosso, 1-2 inches of precipitation have fallen the past two weeks with the heaviest rainfall in the western 1/2 of the province. Going forward .75-2 inches is expected for the next two weeks with the eastern part of the province missing out on the majority of the rain. Dry conditions are still dominant overall. The dryness could be a larger factor down the road.

Soybean Crop Progress: 10/6/19

Soybean Condition: 53% G/E vs. 68% Last year and 55% Exp.

Soybeans Dropping Leaves: 72% vs. 87% five year average

Soybeans Harvested: 14% vs. 34% five year average

Technicals: Nov. soybeans broke out of the 923 resistance level on Wednesday morning, and tested the 932 resistance area only to fall back. The 920-923 region is near term support. If 932 is taken out, Nov. soybeans should go to the 941 area which is near the (945) high in made back in June.

Trend: Higher... ....Support...Resistance

Nov. Beans:........910^0, 923^0........932^0, 941^4

Dec. Meal:.......302.0, 304.8.........309.5, 312.5

Dec. Soy Oil:........28.80, 29.40..........30.05, 30.30

Soybean Managed Money

Total Net Short: -8,730 contracts (32,958 shorts covered)

Soy Weekly Export Inspections

1.038 M T. vs. 900 K 1.400 M T. expected

Soy Weekly Export Sales

2.076 M T. old crop vs. 900 K 1.400 M T. expected

Wheat

Dec. Chicago Wheat: +-0^0 at 500^2

Fundamentals: Wheat rallied and fell back on Wednesday as traders get ready for the WASDE on Thursday.

On Wednesday morning the Russian agriculture minister announced that he sees the Russian wheat crop at 78 MT. vs. the USDA at 72.5. In addition, he saw wheat exports at 36 MT vs. 34 MT that the USDA is projecting. The large Russian crop continues to be a headwind for U.S. wheat exports at this time.

On Thursday October 10th at 11:00 am the USDA will release the October WASDE report. The report is expected to be a reminder of the large supplies of wheat in the U.S. and the world. The report estimates can be found here.

Late this week the Dakotas are set to receive 6-12 inches of snow. Traders are concerned over harvest challenges in North Dakota and Canada. Still 9% of the HRS wheat crop needs to be harvested. Will that be able to get harvested after the snow event this weekend? An unharvested crop problem will show up in the futures price, a low quality crop is likely to show up in the cash price only.

On Tuesday it was announced that Egypt purchased 260 KT. of Russian and 115 KT. of Ukrainian wheat. Last week Egypt did not get their full tender offer bought due to thoughts of lower prices ahead. This week Egypt was a strong buyer due to thoughts of higher prices ahead.

Crop progress: 10/6/19

Spring Wheat Harvested 91% vs. 94% expected vs. 99% 5-year average.

Winter Wheat planting progress: Planted 52% vs. 54% expected vs. 53% 5 year average

Emerged - 26% vs. 26% 5-year average

Technicals: December Chicago wheat was able to rally above the key $5 psychological resistance level but found sellers at the 200 day moving average at 504^4. The market is maintaining its bullish posture but traders are pausing at $5. The 510 area is the next level of resistance. Look for selloffs down to the low 490s to continue to be supported.

Trend: Higher...Support..............Resistance

Dec. Chi.........482^0, 491^0..........500^0, 510^0

Dec. KC....... 390^0, 412^0......... 410^4, 420^0

Dec. Minn.......515^0, 530^0...........544^0, 555^0

Total Wheat Managed Money

Total Net Short: -66,739 contracts (7,766 shorts covered)

Wheat Weekly Export Inspections

385.2 K T. vs. 400-600 K T. expected

Wheat Weekly Export Sales

328.5 K T. old crop vs. 200-600 K T. expected

Cotton

Dec. Cotton: +0.77 at 62.09

Fundamentals: Cotton traded higher along with stocks on Wednesday as it was announced that the Chinese are looking for a partial trade deal. Traders are keeping cotton inside its range as trade talks resume. In addition, traders are taking notice of stronger export sales for cotton. Export sales are at 56.9% of the USDA forecast, with the 5 year average at just 48.8%.

The 6-10 and 8-14 day forecasts are showing warmer and drier conditions in Texas into October 17th as harvest continues. The weather should keep cotton harvest above the 5 year average harvest pace.

Cotton Crop Progress: 10/6/19

Cotton Condition 39% G/E vs. 40% Last week and 42% last year

Bolls Opening 83% vs. the 75% 5 year average

Cotton Harvested: 25% vs. the 20% 5 year average

Technicals: Dec. cotton tested the 62.66+ level last week and found selling pressure there to close well off the highs. The $60 continues to be solid support in Dec. Cotton. Rally attempts have been stopped at 62.70 so far. If 62.70 breaks, then 64.55 is the next level of resistance. Bulls do not want to see a close below $60.

Cotton Weekly Export Sales

177.9 K bales old crop

7.5 K bales new crop

Trend: Sideways...Support................Resistance

December..............60.00, 61.40.............62.66, 64.55