Daily Comments

While I see primarily green splashed across my quote screen for the grain and soy markets this morning, the gains are not exactly what you would call enthusiastic.  If this is indicative of what we have in store for the month of November, it may not be a tremendously exciting month.

As is so often the case at midweek, fresh news is relatively sparse.  Nothing of significance to pass along from the export sector, so we await tomorrow’s weekly report.  At 2:00 central today, the USDA will release the crush data for the month of September.  The trade is expecting a figure of 175 million bushels, which would be up from the 169 million recorded in August and last year’s 167.6 million.  If realized, this would be the largest September crush on record.  Bean oil stocks are expected to come in at 1.600 billion pounds, down from 1.772 in August and 1.991 last year.

Rains are expected to pummel parts of Southern Brazil and Paraguay from Thursday into Saturday, further hampering planting progress.  Conversely, a bit further south, rains continue to improve the soil conditions in Argentina.

Crude oil production in the United States set a new record of 13.05 million barrels per day in August. The previous high-water mark was established in November 2019 when we produced 13.0 mbd.  Is it any wonder that Exxon Mobil is in advance talks to purchase the shale producer Pioneer Natural Resource or that Chevron is purchasing Hess, which is one of the largest companies working in the Bakken shale fields of North Dakota.  While seeing larger players take control of smaller companies is not always desirable, these acquisitions may provide additional stability to a volatile industry.

Seeing that there is little to focus on this morning, I might as well give you a little trivia about the month of November.  The name is derived from the Latin “novem,” which translates to nine, as in the Roman calendar, it was the ninth month of the year. As most are aware, during the month, we celebrate All Saints Day on the 1st, Veterans Day on the 11th, and, of course, Thanksgiving on the fourth Thursday of the month, which this year is the 23rd.  I have also learned that the 6th this year is Zero-tasking Day, whatever that is, the 9th is National Scrapple Day, the 16th National Button Day, the 21st is World Hello Day, and then also on the 23rd and possibly most interesting for some market analysts and mathematicians, Fibonacci Day.  For this not familiar with him, in the 13th century, Leonardo (Bonacci) Fibonacci wrote about, so is attributed as being the first to uncover the sequence of numbers, 1,1,2,3,5,8,13, and so on, that show up repeatedly in nature, physics and design.  You may often hear of this referred to as the Golden Ratio, 1.0 and 1.618, which will be the measurement of a perfect square and rectangle.  As they say, and now you know.

Looking over at the macros this morning, we have energies and metals higher to kick off the month.  Notes, bonds, equities, and the dollar are all higher as well.

 

Wheat

While not exactly what you would label as exuberant, December wheat does appear to have attracted some fresh buying as we kick off this new month.  Thus far, we have remained contained within yesterday’s trading range, but with oscillators already flashing a buy signal, the bulls should have the wind behind them.  A couple of days of sideways trade should be enough to encourage additional buyers to join in.  Cycle counts ahead on the 3rd, the 16th, and the 27th.

We have an overnight recovery underway in KC wheat as well, and if we can hold the strength for the close, oscillators will have poked up through the oversold realm, which is a positive sign.  I would not expect to see prices get carried away immediately, and in fact, a few days of sideways chop would be desirable, but I would expect prices to begin climbing from there.  Of course, we have a lot of ground to make up and will need to at least begin seeing closes back above 6.62 to suggest we do indeed have a 5th wave low in place.    Cycle counts ahead line up for the 3rd, the 16th, and the 27th.

Corn

December corn is now in the sixth session, trapped in a range between roughly 4.85 and 4.77.  How much longer we will remain trapped within these parameters is unknown, but I suspect another day or so.  There is no assurance as to which side we will eventually break out; traditionally, this type of action is associated with a bottom, and technical indicators appear to back up that sentiment.  Cycle counts ahead on the 3rd, the 14th, which marks 180-calendar days from the May low, and the 24th/27th.

There is an identical pattern for March corn as for the past six sessions, we have settled into a range between roughly 5.00 and 4.90.  Technical indicators are suggesting we are at a low, but we could chop sideways for a couple more days.  If this is a 2nd or B wave low we are establishing, there will be potential for a swing up to the 5.30 zone, likely into the end of the year.  I suggest taking a long position in the low 4.90 zone and would hold tight as long as we do not see a close below 4.82 ½.  Cycle counts ahead on the 3rd, the 14th, and the 24th/27th.

Soybeans

Bulls in the bean market have not been able to find much traction yet, and the jury remains deadlocked on deciding the fate of this market.  If January futures close below 12.97 ½, the door opens for a slide to at least 12.84, but likely the low 12.70 level again, while a close above 13.34 should set us on our way to 13.62.  Cycle counts ahead line up for the 3rd, the 16th, and the 27th.  That final date will mark the completion of the 2nd cycle of 90-calendar days from the May bottom.

March beans remain stuck between 13.43 and 13.10, and there is no clear-cut signal to suggest which side of this range we will break out of.  A close below 13.10, and we should slide to at least 12.96 and possibly 12.82.  Conversely, a close above 13.43 and the door will swing open for a shot to 13.70.  Cycle counts ahead line up for the 3rd, the 16th, and the 27th.

Soy Oil

December bean oil has now worked back down to support at the 51-cent level, but with oscillators pointed lower, it would be premature to suggest the bears are satisfied quite yet.  There remains a possibility for a push into lower lows before we complete this final wave lower.  The next cycle counts line up for the 2nd, the 13th/14th, and the 24th.

Soy Meal

While I believe it is just a matter of days before we see the meal market turn lower, thus far, bulls have not begun to abandon ship.  Short-term oscillators are back to the oversold zone, so there is a possibility they could try and stage one more rally into the beginning of next week, but even if that is the case, it should falter against the 440 level.   Cycle counts line up between the 3rd/6th.

Cotton

Bulls blinked first in recent stare down in cotton, and December futures have tumbled into lower lows for the swing once again.  Barring a surprise recovery back above 81.50 for the close today, the door has now been opened for a slide to at least 79.60 to an extreme of 76.75.  Cycle counts line up for today, the 13th, and the 24th.

Lean Hogs

December hogs did squeal out a higher close yesterday but failed to make a higher high nor push through key resistance at the 72-cent level.  Oscillators are overbought and now showing a sell signal, so we should be poised for at least a corrective pullback.  If correct, there should be potential for a move back to at least the 68.66/67.89 zone and possibly 66.80.  the next cycle counts line up for the 10th and the 22nd.

Live Cattle

Bears tried to grab hold of the controls in December cattle but could not get a firm grip, and we ended up closing higher for the third session in a row.  Be that as it may, we did not entirely fill the gap left at 184.42, and with oscillators back into the overbought zone, time is beginning to run short.  I believe we should be able to fill that gap, but doubt we can close back above that mark.