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Morning Market Review for Nov. 21, 2019

Can a stabilized overnight Dow and supportive comments from China’s Ministry of Commerce reverse yesterday’s trade panic sell-off? (Comments are updated by 7:30 a.m. Central Time.)

Mature technical correction conditions and a trade headline panic, such as occurred yesterday, are all ingredients found at a bottom

Editor's Note: Bryce Knorr has retired. Filling in until a new analyst is up to speed for the team is Duane Lowry, Ag View Solutions. You can learn more about Duane at the end of this story.

Overnight Trends: At 6:03, cst:
Dec Corn= 3/4 higher
Jan Soybeans= 1/4 higher
Dec KC Wheat= 3/4 higher
Dec Chicago Wheat= 3/4 higher
Crude Oil= down 12
Mini-Dow= down 15
Gold= down $4.00
Dollar Index= down 9

Final stages of the US harvest will be slow and challenging during the next 2 weeks, as temps are too warm to allow wet fields to freeze and moisture systems keep fields muddy. Weather has not been having much day-to-day connectivity with price action.

Global News:
Export Sales data will be released at 7:30 this morning. Here are the trade estimates: Wheat= 200-500 tmt, Corn= 350-900 tmt, Soybeans= 600-1400 tmt, Soymeal= 100-450 tmt, Soyoil= 8-30 tmt.

In follow-up to yesterday’s panic about US/China trade talks being in trouble, China’s Ministry of Commerce said that “external rumors” about the trade talks are not accurate and that both sides remain in close communication.

*It is worth noting that the Dow’s low yesterday was established within approximately 30 minutes of the news headline/article by Reuters that seeded yesterday’s panic. Current mini-dow overnight values are 130 points off yesterday’s low. We have seen these “interestingly timed/placed” market reactions to trade fears before and almost each time they are followed by denials from at least one side and usually both sides within 12/24 hours.   


Today’s Support/Resistance and Expectations:

*Expectations for Today> Short-term technical conditions are not conducive to building/sustaining downside momentum here. Do not trust/embrace near-term weakness. Values are currently approximately 3 cents lower for the week. It is not a given that we finish the week lower. Overall conditions point to short-covering and improving price action unfolding during the next several days.  

Today’s Support/Resistance and Expectations:


*Expectations for Today> Short-term technical conditions suggest that weakness here should be seen as very suspect. Liquidation pressures were heavy yesterday and we may see a bit more of that activity today. However, the trade is not excessively long here and we should not be expecting long-lasting selling pressures. Honestly, I had expected values to be in a position to finish the week higher, but with overnight values now 14 cents lower for the week, that expectation seems rather difficult.

Today’s Support/Resistance and Expectations:


*Expectations for Today> Price action is constructive and somewhat buoyant. The area of recent lows is likely to be well-supported and may not be tested again. News is stale. Fundamental storylines are difficult to create. Overall conditions point to trending higher action unfolding in the weeks ahead, likely pushing above the October highs.

Overall Summary/Outlook:

Bulls have been challenged, worn-out, discouraged and now chased with yesterday’s headline driven mini price dump. This is a pattern that has become common enough that we almost need to expect each of these stages before a bottom can be touted, especially the last headline-related component. In a world where news headlines often seem more “placed and well-timed”, it is becoming more and more difficult to avoid conspiratorial thoughts. But as the saying goes, “Just because your paranoid, that doesn’t mean that they are not out to get you.” What used to be much more opaque and draped in secrecy for deniability, seems to be much more boldly willing to be exposed in the light of day. Media bias and deep state are two such things that come to my mind. For those with many years in this commodity business, it is not difficult to have some similar thoughts come to mind here as well. However, I digress…

Technical conditions are not at all conducive to building/sustaining downside energy here and should rather quickly produce some type of rejection of recent weakness. Fundamental storylines don’t seem consistent with price action. Harvest challenges, slow producer sales, yield themes, and strong/strengthening global demand all come to mind. Global export competitors have seen an enlarged export program during the front-end of their export season, setting the stage for the US to have a much-improved window of opportunity for export activity between now and March. The horizon and windshield looks quite optimistic to me, but the trade remains focused on the rearview mirror. It will take positive price action to shake that attitude. With the recent correction process seeming to be quite mature by many standards of measurement, the improved price action could be much closer than current sentiment is willing to ponder. With the headline-related panic yesterday, which is usually one of the last components found in a correction, the upside turnaround could be very close.

Overall conditions point to improving price trends during the next 90 days. Try not to be overly discouraged here. This is the time of year when discouragement is often a trap.

Duane has been involved in ag business and the futures industry since 1978. From an assistant manager at a large Iowa cooperative to a floor trader and broker in Chicago, Duane has worked with producers and grain elevators to manage futures, basis and spread risk. Duane has been writing daily market commentary since 1987 and currently works directly with producers to market their grain, manage risk and optimize their crop insurance decisions. Duane’ deep experience with basis, spreads and market analysis sets him apart as a crop insurance agent and risk management consultant, helping him to optimize producer marketing decisions.


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