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Morning Market Review for Nov. 14, 2019

Quiet markets search for clues. (Comments are updated by 7:30 a.m. Central Time.)

Note: Report late due to technical issues.

Overnight trends:
Corn: Up 1
Soybeans:  Down 1 to 2
Wheat: Mixed

Traders turn cautious as markets try to hold

Grain futures are little changed this morning, reflecting a mood of caution, or perhaps even boredom with markets that lack direction. After obsessing over trade wars, Brexit and weather there’s little to move prices one way or the other so far this week.

With the latest brief storm in the Midwest already gone, farmers should have mostly dry weather for harvest over the next week. Official 6 to 10 and 8 to 14-day forecasts out yesterday show above normal precipitation returning to most areas along with above normal temperatures in the western half of the country. The latest updates from the ensemble model are warmer and wetter ahead of Thanksgiving.

Growers posting Feedback From The Field so far in November report average yields a little above those put out by USDA last week, with corn at 169.6 bushels per acre and soybeans running 48.9 bpa.

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Stock markets traded mixed in Asia and Europe today, with U.S. index futures starting to point to a soft open on Wall Street today. Safe havens, including the dollar, gold and Treasuries are firm while crude oil is also posting modest gains.

Traders have mixed ideas about what the government’s weekly petroleum inventory will reveal about the direction of crude oil and diesel inventories this morning in a market that remains unsettled by uncertainty over the direction of global growth.

Corn prices are posting small gains as December futures tries to reverse higher following Wednesday’s pullback.

Better weather for harvest could add some hedge pressure to markets late in the session and more bushels are also starting to show up in the cash market. Though basis firmed at the Gulf yesterday, bids were steady to a little weaker in the river system, with some western terminals also fading.

Some ethanol plants continue to push to obtain feedstocks, with eastern plants premium futures. This morning’s report on ethanol production for last week will show how plants responded to margins that improved on average last week.

The preliminary report from the CBOT showed daily futures volume down 10% yesterday to 424,357

and 89,655 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 today.

Open interest rose 16,907 on moderately active new fund selling. Options volume rose 29%, 60% of it puts as traders continue to liquidate December options that expire at the end of next week while adding January and February puts. Implied volatility in at-the-money December options dropped to 15.08%.

Overseas markets are also quiet today. January futures in China were up 1.6 cents to $6.675 and March Paris futures are unchanged at $4.678 after adjustments for volumes and currencies.

Bottom line: The Nov. 8 USDA reports were 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 lower today as January trades an inside day after a test of its 100-day moving average on Wednesday.

While trade reports suggest Chinese buyers are booking more cargoes this week, there was no confirmation yet from USDA. The agency did report the sale of 4 million bushels yesterday to unknown destinations under its daily reporting system for large deals. The regular weekly export sales report is delayed until Friday due to the Veterans Day observance Monday.

November futures go off the board at noon today with basis mixed. Registrations fell by 74 lots Wednesday and deliveries today rose to 214 lots, most in Chicago where basis is still 25 under. But there were also scattered deliveries along the Illinois River, where bids are premium to the board. Basis firmed at the Gulf yesterday on export demand, and that strength flowed up the Mississippi and Ohio rivers.

The preliminary report from the CBOT showed daily futures volume up 29% yesterday to 183,056 while open interest was up 5,715 on light new fund selling.

Options volume rose 46% to 42,175, 53% of it puts as traders liquidate December puts that expire at the end of next week while adding January puts. Implied volatility in at-the-money January options rose to 11.46%.

Vegetable oil markets in Asia remain volatile. January soybean oil futures in China dropped nearly a penny to 40.872 cents per pound but January palm oil futures in Malaysia  gained back a quarter cent to 28.44 on hopes for exports to India.

Oilseed markets internationally were also mixed. January soybean futures in China lost 3.2 cents to $13.157, February rapeseed futures in Paris afternoon trade are down a penny at $9.716 and January Winnipeg canola overnight gained a quarter cent to $7.898 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 mixed this morning with little movement overnight. While soft red winter wheat futures trade in a narrowing wedge, HRW remains stuck at its 100-day moving average and Minneapolis is again testing its $5.15 low.

Ukraine has the lowest offer in today’s tender by Egypt, with French originations also looking competitive. U.S. costs out of the Gulf remain priced out of that big market by a dollar a bushel.

The preliminary report from the CBOT showed SRW volume down 12% yesterday to 143,719 with 34,361 of that done in the December-March on the Goldman roll. Open interest  fell 8,999 on that liquidation despite light new fund selling.

SRW options volume was up 1% to 14,105, 55% of it calls with new interest noted in February and March out-of-the-money puts. Implied volatility in December options fell nearly 1% to 18.20%

Volume in HRW wheat fell 6% to 119,304 with 29,270 done in the December-March. Open interest was down 8,052.

Overseas markets are quiet today. January futures for Eastern Australian Wheat settled unchanged at $6.331 and December wheat futures in Paris afternoon trade is up a half-cent at $5.32 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.

Pivots111419.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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