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Morning Market Review for Nov. 13, 2019

Wheat retreats, soybeans hold firm. (Comments are updated by 7:30 a.m. Central Time.)

Overnight trends:
Corn: Down 1
Soybeans:  Steady
Wheat: Down 3 to 4

Mixed messages on trade keep markets unsteady

Grain futures are mixed this morning after brief short-covering rallies in corn and wheat took a break. Soybeans held firm though no one is sure of the status of negotiations to end at least part of the trade war with China.

More snow is moving out of the western Corn Belt this morning, though accumulations don’t look especially heavy with this system. Moisture this week looks fairly light, giving growers a chance to try to wrap up harvest. Official 6 to 10 and 8 to 14-day forecasts out yesterday aren’t quite as warm as previous runs but still show a return to above normal precipitation, with the latest updates from the ensemble model warmer.

Growers posting Feedback From The Field this week continue to report mostly decent soybean yields with corn also a little above USDA’s estimate last week despite weather challenges.

Click this link to tell us what’s happening in your area.

The stock market rally around the world ran out of gas yesterday after comments by President Trump on trade at a speech in New York and selling accelerate in Asia and Europe today. U.S. stock index futures point to losses on Wall Street today, with the focus on inflation. Federal Reserve Chairman Jerome Powell begins two days of testimony before Congress, where impeachment hearings kick off.

Safe havens are back in vogue today, with gold, Treasuries and the dollar all firming. Crude is lower, but holding above $56 a barrel.

Corn prices are a little softer today, after December bounced off its October support line Tuesday on the gains in wheat.

Corn harvest is running at the third slowest pace on record, with states in the upper Midwest and Plains lagging far behind their normal rate. Just 15% of the crop is harvested in North Dakota so far.

Export inspections improved to 22.1 million bushels but that’s still well below the level needed to reach USDA’s forecast for the 2019 marketing year, which the agency trimmed last week. Year-to-date inspections are off 62%, with shipments at the lowest level in more than 30 years. Business continues to be focused around Mexico and the Caribbean, as some normal customers in Asia like Taiwan and South Korea buy mainly from Brazil and Ukraine.

Corn basis was firm at rail terminals headed west yesterday, while holding steady in the river system. A little softness was noted at ethanol plants.

The preliminary report from the CBOT showed daily futures volume up 5% Tuesday to 469,234, and 115,819 of that was done in the December-March spread on the Goldman roll, when traders following the index move positions out of the nearby. That positioning ends Thursday.

Open interest rose 44 lots despite that liquidation and active fund short covering as traders continue to actively liquidate December puts ahead of expiration at the end of next week. Options volume fell 46% to just 46,574, 60% of it calls as implied volatility in at-the-money December options dropped nearly 1% to 15.76%.

Overseas markets are mixed today. January futures in China dropped 2 cents to $6.661 while March Paris futures are up three-quarters of a cent to $4.702 after adjustments for volumes and currencies.

Bottom line: Friday’s USDA reports are the last chance in two months for an injection of bullish news. But strong basis in many areas is a marketing opportunity, because buyers are scrambling. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans are holding so far, staying above this week’s six-month lows as traders wait for more news on the trade war. While mixed signals on tariff rollbacks continue to emerge from the White House, the market found support overnight on news of Chinese buying despite confusion over how the government’s waiver on imports from the U.S. is supposed to work.

Export inspections slipped to 48.9 million bushels, but that was still above the rate forecast by USDA. China accounted for 57% of the movement.

The pace of harvest remains below average in all major states except Louisiana, Tennessee and North Carolina. Nationwide the average rose to 85%, up 10% from last week but 7% slower than the five-year average.

Deliveries against November fell to just 25 contracts today, all along the Illinois River, as November prepares to go off the board at noon Thursday. Lower barge freight rates and strong demand helped firm bids in the export pipeline with processors also upping bids.

The preliminary report from the CBOT showed daily futures volume down 29% to 142,087 while open interest was up 5,151 with light funds buying noted.

Options volume fell another 59% to just 28,881, 62% of it calls with liquidation noted in the March $10.20 call. Implied volatility in at-the-money January options fell to 11.19%.

Vegetable oil markets in Asia were down sharply today as profit-taking from the big rally kicked in again. January soybean oil futures in China lost a third of a cent to 41.491 cents per pound and January palm oil futures in Malaysia  was nearly a quarter-cent lower at 28.25 cents.

Oilseed markets internationally are mixed. January soybean futures in China were off 6.3 cents to $13.194, February rapeseed futures in Paris afternoon trade is up 2.5 cents to $9.725 and January Winnipeg canola overnight held steady at $7.901 after adjustments for currencies and volumes.

Bottom line: The full extent of Chinese demand is still unknown, making supply the best hope for rallies. But more news about that won’t be coming until January, which could leave the market drifting. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Wheat prices are lower, giving back some of yesterday’s short-covering rally. While winter wheat contracts broke through chart resistance yesterday, Minneapolis did well just to hold near six-week lows despite USDA’s 42-million bushel cut in spring wheat production last week.

Winter wheat ratings reported Tuesday were mixed but a little lower overall, with our yield models ranging from 48.3 to 50.5 bushels per acre. USDA said 92% of the crop is harvested, in line with average, but emergence of 78% was 3% off the five-year average.

Export inspections eased a little last week but at 19.4 million bushels were again above the rate forecast by USDA for the 2019 crop. Total inspections are 11% ahead of last year, while USDA forecasts only a 2% increase for the marketing year.

The preliminary report from the CBOT showed SRW volume down 1% to 162,475 with 36,251of that done in the December-March on the Goldman roll. Open interest rose 895 despite modest fund short covering.

SRW options volume fell another 27% to just 13,940, 52% of it puts as implied volatility in December at-the-money options rose to 18.78%.

Volume in HRW wheat was 20% higher at 127,165 with 28,976 done in the December-March. Open interest fell 2,200

Overseas markets are mixed. January futures for Eastern Australian Wheat were up nearly a penny at $6.389 while December wheat futures in Paris afternoon trade eased to $5.331 after adjustments for currencies and volumes.

Bottom line: Look for opportunities in the cash market, because futures should stay sluggish until exports pick up. For more details on the outlook, see the Wheat Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

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Pivots111319.jpg

Investopedia says a pivot point is a technical analysis indicator, or calculations, used to determine the overall trend of the market over different time frames. The pivot point itself is simply the average of the high, low and closing prices rom the previous trading day. On the subsequent day, trading above the pivot point is thought to indicate ongoing bullish sentiment, while trading below the pivot point indicates bearish sentiment.
 
Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Advisor. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association. And you can follow Farm Futures throughout the day on Twitter at www.twitter.com/farmfutures, and be sure to like or follow the new Farm Futures Facebook page.
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