Soybeans ended slightly higher on Friday with corn slightly lower and wheat mixed. Cattle and hog futures both ended in the red.
Selling Pauses in Soybeans But is it Done?
After three days of selling in the soybeans, the market took at break on Friday and posted slight gains with the help of a recovery in the soybean meal.
Chip Nellinger with Blue Reef Agri-Marketing says the soybean market has corrected its overbought status with the profit taking by the funds so the selling pressure may be over. “It feels like we’re trying to stabilize things. We kind of stopped at some key points in my mind, the 9-day moving average. We kind of touched right on that and bounce a little bit. We regain some of the early losses from Friday. And so I think if we can bounce a little bit going into Thanksgiving
holiday, maybe the worst is behind us for the time being,” he says.
However, Nellinger thinks the market will still need fresh bullish news to work back higher and retest the highs.
More China Business or Certainty Needed?
The market faded this week’s confirmation of China sales with a “buy the rumor, sell the fact” reaction. USDA has confirmed around 1.816 MMT of China soybean purchases. However, Nelliger says the trade is estimating a higher number adding in unknown destination purchases. “It looks to me like most people are thinking 2MMT to 3MMT have been purchased. Depends on, you know, exactly what some of the unknown destinations that have been released are going to. I think most people assume that’s China. But certainly that’s well under what was talked about.”
The market is still working under the assumption the trade framework includes 12 MMT but the market needs clarity on whether that is by the end of the 2025 or the calendar year. “So we’re quickly speeding into the end of the year. I don’t know if that’s even possible at this point,” he adds.
Soybeans Hold Chart Support
Nellinger says the market needs to hold the recent lows to be able to stage a recovery from a technical standpoint. “So for the time being, I think as long as, say, make it an even number, $11.10 holds on the January contract, we could probably have a bounce maybe back towards $11.35, $11.40. But if $11.10 would give way, especially in a closing basis, opens a door up for $11 and then a push back down much lower than that. So I think we are kind of at a key point, especially at the lows Friday.”
Corn Posts Lower Weekly Close
Corn futures continued to see light selling pressure on Friday and posted a lower weekly close. The corn market has been following soybeans lower but has also been hampered by the record large crop and 186 bu. per acre yield in the U.S. confirmed by USDA. “I think it’s still a hangover of the USDA report coming in 186. I really think since the market rallied into that report, that it was really leaning in the direction that the USDA would cut further than what it did. And by further, I mean not fractionally, I mean five, six bushels. And so the setback that we’ve seen, I think maybe is just the disappointment,” he says. Nellinger points out that with the yields farmers were reporting it didn’t make sense that corn yield was seven bushels above a year ago.
Corn to See Pressure Into First Notice Day?
Friday was December option expiration and next Friday is first notice day mixed in with the end of the month and a low volume holiday. So will corn continue to see pressure? He says,"Yeah, it could be a different kind of a week because first
notice day on Friday. Friday is a short day and so everybody’s going to be needing to roll out of that by the close Wednesday.”
He says there is still large open interest in December corn. “I know on Friday, I know we get the open interest a day lag, but on Friday’s open, there were 300,000 plus contracts still open interest in the December corn. So that’s a large amount of volume to get rolled out into the March, you know, in a holiday shortened week. So it could be an interesting week, probably not a lot of news otherwise.”
Corn Holding Technically
Corn has corrected back to the middle of the trading range established before the report. Nellinger says the market did not violate support. “You know, we did kind of close right on the 50-day moving average, maybe actually just a tick below it. So I think if we can bounce from here going into Thanksgiving and then the week after Thanksgiving, I think maybe we’re just still in here in a range. If we would continue to sell off going into Thanksgiving, get under the 50 -day moving average, it could open the door up for another 10, 12 cents a downside, but even then you’re just still in that same range that we’ve been in for several months.”
Wheat Ends Lower for the Week
Wheat futures were mixed Friday but ended lower for the week. Nellinger says the wheat market has rallied off of five year lows but has run into chart resistance and a lack of buying interest due to the large global supplies. He says December contracts go into delivery on wheat as well next week but it should be more manageable because the open interest is lower.
“I think it’s a big global supply still. I think the funds will find out eventually several weeks down the road when we get caught up on the commitment of traders data that the funds likely came out of a fair amount of their short position, kind of drove us up into some of those key areas of resistance. And going back to the most recent CFTC report, the thing that’s maybe, you know, quietly the most bearish thing in that report was the world wheat carry out way above what the highest estimate was. And so we’re just in a situation, unfortunately, where there’s too much wheat in the world. That really kind of curbs any rally potential out here other than some sort of geopolitical event, a news story or money flow, you know, that the funds would drive out of their shorts. Just fundamentally, there’s a lot of wheat in the world right now.”
