Grain Spreads:China Buys US Products

Despite all the hot air and trade war rhetoric, guess who was in buying beans this morning? From the USDA:Private exporters reported to the U.S. Department of Agriculture export sales of 296,500 metric tons of soybeans for delivery to unknown destinations during the 2019/2020 marketing year. Unknown is spelled C H I N A. This follows yesterdays sale of 10,200 Metric tons of pork to China for future shipment. In my view the salvos fired by each side regarding tariffs and trade is just noise in the market and tells me that we should stay disciplined and study the charts rather than react to the noise. Remember it was the Chinese who announced last week that they would forego the US for export regarding AG commodities. November Beans finished 9 cents higher while Oct hogs finished limit down today. Resistance in Nov beans at 893, then 902. These areas need to be taken out for the market to eventually challenge 921, the 200 day moving average. Support is down at 866 and then 857. A close under and its 840. Corn found Friday short covering following a dismal week and for Dec 19 Corn, the market at least closed over a key area of support at 376. I'm not getting excited about corn until we can close back over 390 basis Dec. If we can, the market can possibly challenge 4.05/4.07. Under 3.76 and its 367/66 on the charts and if that doesn't hold its 359 next week in my opinion. Chicago wheat finished at 477.4 with December now top step on the roll. Support here is 467. A close under and its 4.61. A close under 461 and its 442. Resistance is 487.6, and with a close over its 5.04. Over 5.04 it major resistance at 512. Over 512 and we could possibly rally to 526.

Equities rallied to finish the week Friday, but Central Banks including the US Fed are very dovish. Some of these economic outlooks globally are tenuous at best regarding their outlooks as their currencies continue to get devalued. This could have an effect as funds and money mangers could look to some grain and livestock sectors deemed cheap and diversify into owning tangible commodities as an inflation hedge. Its noted that private crop tours will begin next week in the Midwest. I would continue to watch if any of the aforementioned price levels are breached or violated early next week. Along with the crop tour results we will get a crop condition report from the USDA on Monday at 3pm.

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