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DAILY GRAINS COMMENTARY
Tuesday November 18, 2014
312-462-4533
DAILY SOY COMPLEX COMMENTARY
11/18/14
Strong demand-side data to offer a bit more of a bounce
OVERNIGHT CHANGES THROUGH 6:05 AM (CT):
SOY BEANS +1.4, BEAN OIL +0.1, SOYMEAL +4.9
OVERNIGHT DEVELOPMENTS: January soybeans were up 3 1/2 cents as of 7:00 cst. China futures were
down 0.5% overnight and Malaysia palm oil futures were up 0.9%. Global equity markets were mostly higher
during the overnight and early morning trading hours, with risk-taking sentiment supported by Japan delaying a
sales tax increase and supportive German sentiment readings. The Japanese Nikkei closed up better than 2%
overnight on prospects that PM Abe would consider further measures to stimulate growth that includes
delaying their next sales tax hike. Meanwhile, China's Shanghai Composite was a bit softer on sluggish home
price data and as excitement surrounding the Hong Kong/Shanghai trading link ebbed. European equity
markets were higher across the board, benefitting from dovish remarks from ECB's Mario Draghi in the
previous session, hopes for more stimulus and German ZEW sentiment figures that came in stronger than
expected. This helped to bolster risk-taking sentiment and pressured the US dollar. US equity markets also
traded higher during the initial morning hours but erased some of those gains in the wake of Japan's Abe press
conference. Another headwind facing US shares is elevated equity valuations, with indices sitting near record
high levels. Of interest in this morning's US economic calendar is October producer prices and a NAHB
Housing Market Index for November that is forecast to show minor improvement.
NEAR-TERM MARKET FUNDAMENTALS: Surprisingly strong NOPA crush data along with record shipments
last week seemed to bring back in some buyers to start out the week as December Soymeal and January
Soybeans traded near key support levels. NOPA crush came in well above trade expectations of near 150
million bushels to 157.96 million bushels. Some traders were expecting a weaker crush number due to the lack
of availability of early-harvested soybeans in some areas of the US, although the data suggests otherwise as
crush seems to be moving at a strong clip given the healthy crush margins. Interior basis levels for soybeans
and cash soymeal are also holding steady on stronger demand. Livestock feeders are double-booking their
needs just to be sure their supply is covered through the Thanksgiving holiday. In addition to the strong NOPA
number, weekly export inspections for soybeans came in at a whopping 3.113 million tonnes from trade
expectations for 2.0-2.3 million. As of November 13th, cumulative soybean export inspections for the 2014-15
marketing year have reached 35.5% of the USDA forecast versus a 5-year average of 31.2%. Inspections of
723,978 tonnes are needed each week to reach the USDA forecast. On top of the weekly shipments, exporters
reported a daily sale of 111,095 tonnes of US soybeans sold to China. Sources are also noting that a US
importer made a rare purchase of 25,000 tonnes of German rapeseed meal recently. The purchase seems to
be connected to problems importing canola meal from Canada.
The weekly harvest report showed 94% complete compared to 90% last week and 94% last year. Minnesota is
99% complete vs. 99% last year. Indiana is at 93% complete, up from 85% last week and down 3% from last
year. Illinois is at 95% complete, up from 91% last week and down 3% from last year. The 5-7 day forecast
shows below-normal temperatures and heavy moisture in the Eastern Corn Belt, which could delay the last bit
of harvest and slow rail/truck logistics. South American weather leans bearish. It's estimated that Brazilian
soybean planting is 62% complete, up 16% from last week and down from 72% last year.
TODAY'S MARKET IDEAS:
Support for December meal seems to be near 376.90 and soymeal spreads turned higher midday yesterday.
Follow-through strength in soymeal spreads might offer more of a bounce for the December flat price contract.
January soybeans closed sharply higher after first trading down to the lowest level since November 6th.
Support is near 1020 1/4 to 1014, and a move through that area could push the market down near 999 1/4.
Close-in resistance is at 1043 1/4. Spreads were weaker throughout the session while the market closed back
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above the 100-day moving average of 1032 1/2 which is now support. Consider selling one of the January
soybean 1020 puts near 24 and buy 2 of the Feb 980 puts at 16 each.
NEW RECOMMENDATIONS:
None.
PREVIOUS RECOMMENDATIONS:
1) Long July soybean 1020/880 bear put spread from 36 cents with an objective of 85. Risk to 21. 2) Short the
July/Nov soybean spread from +30 1/2 with an obj of -9 1/2. Risk a close back over 38.
SOYBEAN COMPLEX TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that
may appear elsewhere in this report.
SOYBEANS (JAN) 11/18/2014: Declining momentum studies in the neutral zone will tend to reinforce lower
price action. The market now above the 18-day moving average suggests the intermediate-term trend has
turned up. The daily closing price reversal up is a positive indicator that could support higher prices. It is a
mildly bullish indicator that the market closed over the pivot swing number. The next downside target is now at
1007 1/2. The next area of resistance is around 1048 1/4 and 1055 1/4, while 1st support hits today at 1024 1/4
and below there at 1007 1/2.
SOYBEAN OIL (DEC) 11/18/2014: Daily stochastics are trending lower but have declined into oversold
territory. The market's short-term trend is positive on the close above the 9-day moving average. With the close
over the 1st swing resistance number, the market is in a moderately positive position. The next downside target
is now at 31.78. The next area of resistance is around 32.76 and 33.01, while 1st support hits today at 32.14
and below there at 31.78.
SOYMEAL (DEC) 11/18/2014: Momentum studies trending lower at mid-range should accelerate a move lower
if support levels are taken out. The close below the 9-day moving average is a negative short-term indicator for
trend. The daily closing price reversal up on the daily chart is somewhat positive. The close over the pivot
swing is a somewhat positive setup. The next downside target is 368.1. The next area of resistance is around
395.1 and 400.0, while 1st support hits today at 379.1 and below there at 368.1.
DAILY CORN COMMENTARY
11/18/14
Demand continues weak; will continue to weaken with higher price
OVERNIGHT CHANGES THROUGH 6:05 AM (CT):
CORN -1.4
OVERNIGHT DEVELOPMENTS: December corn was up 1/2 of a cent near 7:00 cst. Outside market forces
look positive with higher metal markets and a weak US dollar.
NEAR-TERM MARKET FUNDAMENTALS: Sluggish export demand data continues to leave the corn market
at risk of a more significant slide lower, but positive technicals and strength in the soymeal market are
supportive forces. Weekly export inspections for corn came in at just 401,116 tonnes as compared with trade
expectations at 650,000-850,000 tonnes. As of November 13th, cumulative corn export inspections for the
2014-15 marketing year have reached 17.5% of the USDA forecast versus a 5-year average of 19.9%.
Inspections of 879,018 tonnes are needed each week to reach the USDA forecast. Soybeans shipments were
at a record for the period so some of the sluggish corn shipment pace may be attributed to the large US
soybean export program. An Israeli group tendered for 170,000 tonnes of corn on Monday along with 25,000
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tonnes of feed wheat. Traders also note that the interior basis in the western Corn Belt is a touch firmer, with
some ethanol plants now bidding 5 cents over the nearby contract. Below-normal temperatures and an inability
to entice the farmer to sell at current prices levels are supportive to the cash markets, although spreads
continue to trade at large carries and with a bearish bias.
Traders were expecting the weekly update to show corn harvest near 87% complete. The update showed 89%
complete compared to 80% last week and 90% last year. The 10-year average for this time of year is 85%.
Below-normal temperatures and stronger precipitation in the 5-7 day forecast for the Eastern Corn Belt might
add some slight delays to the last 13% of the harvest. Ohio is 81%, up from 67% last week, down from 86%
last year and up from the 10-year average of 79%. Iowa is 92% complete, up 10% from last week and above
the 10-year average of 86%. Indiana is at 84%, up from 71% last week, down from 91% last year and up from
the 10-year average of 87%. Illinois is at 94%, up from 87% last week, down 1% from last year and 5% higher
than the 10-year average.
TODAY'S MARKET IDEAS:
December Corn found support at the 10-day moving average of 374. A move through this level leaves 367 1/4
as secondary support. Resistance is at 389 and 405 3/4. With the higher price at a time which we may need to
find higher demand, traders might consider challenging the market with a more aggressive put play. Consider
selling the near the money put and buy multiple out-of-money puts.
NEW RECOMMENDATIONS:
Sell 1 January 390 put at 13 cents and buy 3 of the February 360 puts at 6 cents each. Hold for now and risk a
total of 8 cents on the spread.
PREVIOUS RECOMMENDATIONS:
1) Long 2 May Corn $4.30 calls from 12 1/2 cents each. * Use a 12 cent stop for now. Exited short May corn for
a 52 1/2 cent loss, exited previous short futures for a 27 1/2 cent gain and exited one of the calls for 12 1/4 for
a 1/4 cent loss. 2) Long December 2015 corn 380 put from 27 cents and long Dec15 corn from 399 3/4. Also
short December 2015 corn 430 call from 26 cents.
CORN TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that
may appear elsewhere in this report.
CORN (DEC) 11/18/2014: The daily stochastics gave a bearish indicator with a crossover down. Stochastics
turning bearish at overbought levels will tend to support lower prices if support levels are broken. The market's
close above the 9-day moving average suggests the short-term trend remains positive. The swing indicator
gave a moderately negative reading with the close below the 1st support number. The next downside target is
now at 368 1/2. The next area of resistance is around 382 1/2 and 388 1/4, while 1st support hits today at 372
1/2 and below there at 368 1/2.
DAILY WHEAT COMMENTARY
11/18/14
Wheat exports remain sluggish, look for more of a pullback.
OVERNIGHT CHANGES THROUGH 6:05 AM (CT):
WHEAT -4.4
OVERNIGHT DEVELOPMENTS: December wheat was down 3 1/2 cents near 7:15 cst. Outside market forces
look firm this morning with a weak US dollar and higher gold prices.
NEAR-TERM MARKET FUNDAMENTALS: The wheat market closed moderately lower yesterday with an
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inside-day trading session. A very strong US Dollar is helping to pressure the market to start out this week,
along with relatively weaker feed grain action with corn trading down on the day as well. The rally last week
plus the surge higher in the Dollar leaves US wheat at a disadvantage to other key exporting nations. Traders
also have the feeling that a good portion of the fund net short position has been covered. Weekly export
inspections came in at just 139,351 tonnes as compared with trade expectations near 250,000-350,000 tonnes.
As of November 13th, cumulative wheat export inspections for the 2014-15 marketing year have reached
45.4% of the USDA forecast versus a 5-year average of 46.0%. Inspections of 481,391 tonnes are needed
each week to reach the USDA forecast. Soybean shipments were at a record high and the mixture of strong
export demand from France, an uncompetitive price structure for US wheat and busy loadings for other
products in the US Gulf will keep export shipments for US wheat sluggish. Sources in Russia indicated that
their export prices rose slightly last week on a weaker currency and farmers in Ukraine have successfully
planted 6.4 million hectares of wheat for next year, which is up 200,000 from their forecast and up from 6.1
million last year. It's estimated that about 63% of the crops were in good or satisfactory condition.
Traders were expecting the weekly update to show winter wheat near 59% in good to excellent condition. The
weekly Winter Wheat Conditions report showed 60% was rated good/excellent compared to 60% last week and
63% last year. The 10-year average for this time of year is 56%. The highest percent rated good/excellent was
77% in 2004, while the lowest was 35% in 2012. The Oklahoma good/excellent conditions increased by 1% to
55%, and this is up from the 10-year average of 53%. Kansas dropped by 1% to 62% vs. the 10-year average
of 56%. Ohio dropped by 1% to 69%, and this is even with the 10-year average. Temperatures remain very
cold in the western Plains with natural gas prices surging 6.9% on Monday, which could hint at a more longlasting pattern of below-normal temperatures. Moisture remains mostly absent in the western Corn Belt,
although central Oklahoma could see 1 inch and western Kansas less than 0.25 inch of precipitation. The
weekly Winter Wheat Planting report showed 95% complete compared to 93% last week and 99% last year.
The highest percent complete was 99% in 2013, while the lowest was 90% in 2009.
TODAY'S MARKET IDEAS:
No technical damage was done to the wheat chart and with cold temperatures in the US, support will likely be
found on pullbacks to the 536 1/4 to 534 1/2 area basis December wheat. The weak demand trend for US
wheat along with US corn leans bearish fundamentally, and continued strength in the US Dollar might limit the
upside of the market. Selling resistance will develop on a move up to 575 1/4 to 580 1/2.
NEW RECOMMENDATIONS:
None.
PREVIOUS RECOMMENDATIONS:
None.
WHEAT TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that
may appear elsewhere in this report.
WHEAT (DEC) 11/18/2014: Studies are showing positive momentum but are now in overbought territory, so
some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving
average. The market setup is somewhat negative with the close under the 1st swing support. The near-term
upside objective is at 566 1/2. The next area of resistance is around 557 3/4 and 566 1/2, while 1st support hits
today at 545 3/4 and below there at 542 1/4.
KC WHEAT (DEC) 11/18/2014: Momentum studies are rising from mid-range, which could accelerate a move
higher if resistance levels are penetrated. The close above the 9-day moving average is a positive short-term
indicator for trend. The close below the 1st swing support could weigh on the market. The near-term upside
objective is at 613 1/2. The next area of resistance is around 603 1/2 and 613 1/2, while 1st support hits today
at 589 1/2 and below there at 585 3/4.
MINN WHEAT (DEC) 11/18/2014: Rising stochastics at overbought levels warrant some caution for bulls. The
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market's close above the 9-day moving average suggests the short-term trend remains positive. It is a slightly
negative indicator that the close was lower than the pivot swing number. The near-term upside objective is at
594 1/2. The next area of resistance is around 588 and 594 1/2, while 1st support hits today at 579 and below
there at 576 1/4.
RICE (JAN) 11/18/2014: Stochastics trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The close below the 9-day moving average is a negative short-term indicator for
trend. The market's close below the pivot swing number is a mildly negative setup. The next downside target is
11.788. The next area of resistance is around 11.980 and 12.067, while 1st support hits today at 11.840 and
below there at 11.788.
DAILY TECHNICAL STATISTICS
CLOSE
9 DAY
RSI
14 DAY
RSI
14 DAY
SLOW
STOCH D
14 DAY
SLOW
STOCH K
4 DAY
M AVG
9 DAY
M AVG
18 DAY
M AVG
45 DAY
M AVG
60 DAY
M AVG
GRAIN COMPLEX
CNAZ4
377 1/2
CNAH5
390 1/2
SSAF5
1036 1/4
SSAH5
1044
SMAZ4
387.1
BOAZ4
32.45
WHAZ4
551 3/4
WHAH5
553 3/4
RCAF5
11.910
KWAZ4
596 1/2
MWAZ4
583 1/2
OTAZ4
339 1/2
58.70
59.15
54.06
54.88
56.45
46.55
65.41
61.26
32.52
53.87
60.93
46.07
59.39
59.71
55.11
55.64
58.70
47.32
63.31
59.77
33.66
52.66
57.97
46.59
76.28
75.95
65.06
65.34
63.84
21.83
68.15
62.35
46.03
51.66
63.40
16.29
74.27
74.71
55.81
57.58
55.24
16.14
77.25
71.70
40.57
64.38
76.54
18.51
380.81
393.50
1040.00
1046.88
388.88
32.24
552.19
555.13
11.96
601.63
584.56
338.94
375.03
387.78
1037.08
1042.44
388.27
32.42
534.53
541.44
12.03
587.86
568.81
338.08
371.08
384.06
1028.46
1034.03
381.13
32.91
532.46
542.43
12.22
593.14
571.46
343.69
350.79
363.71
982.07
989.08
341.79
32.72
509.69
521.52
12.57
584.01
559.80
343.18
351.60
364.51
991.08
998.03
341.91
32.64
516.58
530.07
12.63
593.70
572.33
344.08
Calculations based on previous session. Data collected 11/17/2014
Data sources can & do produce bad ticks. Verify before use.
DAILY SWING STATISTICS
Contract
GRAIN COMPLEX
CNAZ4
Corn
CNAH5
Corn
SSAF5
Soybeans
SSAH5
Soybeans
SMAZ4
Soymeal
BOAZ4
Soybean Oil
WHAZ4
Wheat
WHAH5
Wheat
RCAF5
Rice
KWAZ4
KC Wheat
MWAZ4
MINN Wheat
OTAZ4
Oats
Support 2
Support 1
Pivot
Resist 1
Resist 2
368 1/2
381
1007 1/2
1015 1/4
368.0
31.77
542 1/4
542
11.787
585 1/2
576
336 1/4
372 1/2
385 1/2
1024 1/4
1032
379.1
32.14
545 1/2
546 1/2
11.840
589 1/2
579
337 1/2
378 1/2
391
1031 1/2
1039
384.0
32.39
554 1/2
556 1/2
11.927
599 1/2
585 1/4
340 1/4
382 1/2
395 1/2
1048 1/4
1056
395.1
32.76
558
561
11.980
603 1/2
588
341 1/2
388 1/2
401
1055 1/2
1062 3/4
400.0
33.01
566 3/4
571
12.067
613 1/2
594 1/2
344 1/4
Calculations based on previous session. Data collected 11/17/2014
Data sources can & do produce bad ticks. Verify before use.
***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent
verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without
notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract
and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors
should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of
this report without the express written consent of Stratis Financial is strictly prohibited. Violators are subject to a $15,000 fine per violation.
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