MARKET UPDATE

You can scroll to read the usual update as well. As the written version is the exact same as the video.

Timestamps for video:
Overview: 0:00min
Corn: 7:00min
Beans: 9:35min
Wheat: 12:35min
Cattle: 14:05min

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Overview

Grains and cattle lower across the board once again. As all posted new lows for the move.

Corn has still yet to put together two green days in a row since all the way back on September 15th.

Jan soybeans have been lower the last 14 of 16 sessions.

Wheat has been lower for 9 straight weeks in a row, an all-time record.

If we end the week lower this week it would be 10 weeks in a row.

If corn ends the week lower, that would mark 6 straight weeks being down.

Which is probably pushing a record as well. I could be wrong, but I believe the last time we saw 6 weeks lower in a row for corn was back in 2014.

Cattle recently joined the grains.

Live cattle have been down for 6 days in a row, now about -15 bucks off their recent highs from just last week.

There is really still just a lack of news in this market, leaving bulls with very little to chew on. As the market has continued to trade the idea of bigger crops.

Harvest is starting to get wrapped up here in the US, and thus far South America is off to a good start planting down there as it's ahead of schedule. So the market has zero weather premium built into it.

If Brazil weather starts to have some issues, the market will take notice. And I still think the Super El Niño could at some point impact things down there as we get into the later part of the year. But so far, there has not been any problems.

We do have the USDA's November WASDE report that comes out a week from today. So that's clearly going to be the next big ticket item that can move this market drastically. We'll touch more on the report later this week. But based on the price action the market fears bigger crops.

I did want to mention that the live interview we had scheduled with the USDA for tomorrow did get cancelled. However, they said we would still be getting some written responses to some of the questions we were going to ask.

Elections

Mid term elections are today.

Right now the democrats are favored to win both the house and the senate.

As I am writing this they have a 74% chance for senate and a 93% chance for the house according to the betting markets.

Will this impact the grain markets?

I would say it's not going to have a major direct impact on the grain market right now.

Brazil, the USDA report, and macros are all going to have bigger impacts than the results of these elections.

These mid terms aren’t going to be impacting things such as China buying soybeans, as Trump is still going to be in office.

If anything, these elections might have a positive impact. Not because the market likes the outcome, but the funds and big money hate uncertainty. So you could argue that perhaps once they get the results and remove some of that uncertainty, it can help entice them to stop selling so heavily.

If you were curious if mid terms have any sort of historical correlation to prices, here is the price performances for corn, soybeans, and wheat for 30 days and 60 days after the mid terms.

No real correlation. Sometimes we are higher, sometimes lower.

Soybeans have although fared better than corn and wheat.

So again, I am not expecting these to directly make an immediate impact on the market. As there are far greater things at play that the market is watching.

StoneX Survey

StoneX released their November survey for corn and soybean yields.

Corn they had a 183 bpa yield. Up from their October yield of 182.1.

Soybeans they had a 55 bpa yield. Up from their October yield of 54.1.

These are their estimates for final yield.

Last month, the USDA had 181.2 for corn and 53.1 for soybeans.

If StoneX is right, those are clearly some bearish numbers. As that would be a large jump from last month.

However, something to note is that our final corn yield has came in lower then StoneX's November number in the last 11 of 15 years.

Here is a great chart from Karen Braun showcasing the past differences between USDA's final and StoneX's November estimate.

Buyers Finding Value?

We have started to see some positive headlines when it comes to the demand side of things.

We saw a massive flash sale of corn to Mexico yesterday.

It was one of the largest flash sales ever. The 7th biggest since the year 2000. The biggest since 2022.

So it is starting to feel like grains are getting some value down here. And maybe we've gotten cheap enough to attract the attention of buyers.

As we've mentioned before, I don’t think corn exports are a reason for concern yet. Soybean exports are 80% better than they vs the awful start last year. So naturally, our corn exports aren’t going to be what they were last year at this time yet.

We saw Spain in buying soybeans a week or two ago. They rarely ever buy soybeans

You also have China reportedly looking to purchase US wheat. As US wheat is now getting a lot more competitive on the global market place.

It just feels like we are getting to levels that are going to be adding demand, not removing demand.

Cheap prices eventually cure cheap prices via demand.

Here is a good tweet from @MisterCommodity over on X.

He makes a great point here.

One potential positive for grains is going to be the lack of farmer selling.

We saw a lot of farmer selling early on. You've also got the government payments. So less pressure for farmers to sell now. We are not at prices that going to get farmers interested in selling.

I don’t think we are going to be seeing much farmer selling at all for the rest of the year. There is just not as large of an incentive. This isn’t like the last few years where we saw little farmer selling early on. This year we saw a lot of grain sold before harvest.

We continue to see flash sales of beans nearly every day. Corn demand is still solid and these prices are not going to be losing business down here. We just saw some massive flash sales.

Exporters are going to have to continue buying. Crushers are going to be trying to find beans. If farmers aren’t selling, the market might have to pay up.

There is a reason we usually get "harvest lows". Because that's when the market has the most supply.

If we continue to see demand, that grain is going to need an incentive to get moving.

One sign of this is going to be the spreads. When nearby contracts gain on the deferred ones, it suggests buyers want supply sooner rather than later.

Despite soybean and meal prices both trading lower today. We saw the spreads firm up in both. Which is potentially a positive sign.

I think grains are will be higher a few months from now vs where we are today, whether today is a bottom or not. And I think most of the bloodshed has been done by now.

Aside from that, there isn’t much new fundamentally, as the market waits for the USDA and something to chew on.

So let's jump into the charts. As we are at some potential make or break levels here short term across the grains

Charts

Corn

Dec Corn Chart:

We are down at that major level we have been discussing for the last few weeks.

Dec corn has bottomed at this $4.40 to $4.45 level on 5 separate occasions over the last few years.

If bulls are going to find some life, this would be where we want to see it happen.

As this is the last support between us and the contract lows. So that's your risk if we break below this support.

We have only closed below this level a handful of days back in June.

We did send out a re-ownership alert for corn, soybeans, and wheat today.

As we are at levels where you can define your risk below this big support levels. And fundamentally it does feel like corn is undervalued down at these levels.

That doesn’t mean there isn’t more downside risk from here, but the potential upside outweighs the potential downside from here following a $1.10 haircut.

If you missed the alert: Click Here to View

Cheap Implied Volatility:

Another reason for the re-ownership alert was the IV of options.

Here is a visual on how IV has changed for corn and wheat throughout the year.

The IV has completely vanished from options. Meaning they have become a lot cheaper.

The IV for both is about half of what it was back near the highs. It's now the lowest it's been all year long.

So for those who sold grain higher than we are, and want a little bit of upside exposure, it makes far more sense to own options when they are cheap vs when they are expensive.

That does not mean everyone should just go out and buy options and does not mean the market has to go higher at all, but they have become more attractive for those who want to re-own.

In some cases, it might even make more sense to own options than it does to pay for storage. As for some options are now cheaper than storage.

RSI:

We already all know corn is oversold. The most oversold it's been in a few years.

That alone does not mean the bottom is in. As markets can stay oversold.

However, one thing I am watching closely is the RSI.

Today corn posted new lows. Yet the RSI did not.

If the RSI can print a higher low, it would be called bullish divergence. Which would be one thing to watch for when hunting for a bottom.

We do not have confirmed bullish divergence, but it is something I am watching for if you are able to follow up today with some green.

MACD:

Another thing I am watching is the MACD.

This is basically a momentum indicator.

It has finally started to curl higher.

It has not yet crossed bullish, but the last few times it has crossed bullish, a bottom did soon follow.

Soybeans

Jan Beans Chart:

Very important spot here for Jan beans.

I have been talking about these May highs since the last support broke. We're finally there.

Soybeans have turned prior highs into new lows all year long.

But there is a catch.

We have continued to fail to hold the most recent prior high. Instead we have bounced off the high before it.

In June, we failed to hold the March highs. Then bottomed at the November highs.

In August, we failed to hold the May highs. Then bottomed at the March highs.

Now, we failed to hold the July highs.

Could we now bottom at the May highs? We have yet to turn it into support.

It would be a convenient spot for another bottom.

That is not the only reason this is a key spot.

We've also given back exactly 50% of the entire rally from this year.

Which just so happens to test the May highs.

But keep in mind, if you fail to hold these May highs it could very easily open the door lower.

Failure to hold could result in about a 30 cent drop downs towards that $11.80 area and those August lows.

So this is clearly a very key level. And your risk is that we break below this support.

Dec Meal Chart:

Meal has continued to follow soybeans lower.

Meal broke below that golden zone from contract highs down to contract lows.

However, we now came down to the next support and perfectly tagged that 78.6% level before closing nicely off the lows.

So today's lows are a key level.

At the same time, we hit the 161.8% fib extension from the first sell off and rebound.

Meaning this sell off is 161.8% of the size of that first sell off we saw in early October.

Front Month Meal Chart:

On the front month chart, we do have this simple upward channel support that has marked the bottom for this market all year long.

So we'd like to continue to hold the uptrend.

Obviously, it's far too early to call a bottom, but if meal is able to find a bottom, it could help out soybeans.

Bean Oil:

Bean oil is fighting to hold those lows from June. Which also happen to be the highs from spring.

This level is also the 38.2% retracement of the entire rally this year. The first retracement.

Looks like this support is going to be a key spot. If we start to break below, there is going to be plenty of risk and air to the downside.

Wheat

Dec KC Chart:

Very simple outlook for wheat.

You are sitting at your last support between you and contract lows.

This is the last retracement from contract highs to contract lows.

This is also those June lows.

Clearly a big level we want to see defended.

Your risk is a break below these summer lows.

RSI & MACD:

Like in corn, this market is clearly oversold.

As we mentioned last week, on a front month basis KC wheat is the most oversold it's been in at least the decade.

The RSI is going to be something to watch here.

As like in corn, we have some "potential" bullish divergence forming. But we need to see the RSI print a higher low to get some confirmation.

Also watching the MACD here. As the last several times, a bullish cross has resulted in a bounce.

Dec Chicago Wheat Chart:

Keeping it simple here as well, as it's a simple outlook.

You are sitting at your last support before contract lows.

Testing the June lows and highs from last fall.

Failure to hold here potentially opens the door to the contract lows.

So it looks like a make or break level here.

2-Month Pivots:

Roughly every 45 trading days (or 2 months) there has been a pivot in the wheat market.

Coincidence? Maybe. Maybe not.

But we are coming up on that next pivot if it happens again. So we should find out soon.

Cattle

Dec Live:

We had that sell alert a few weeks ago, and I had been expressing a lot of caution in cattle as we were oversold and hitting resistance.

Live cattle perfectly hit the 61.8% level up to the contract highs before rejecting.

As we had been talking about, if this market was still in a broader downward trend, this would be a common area to struggle. Since we failed there, I still view this market as overall in a downward trending market for now.

We are now free falling and breaking support along the way.

As we failed to hold the golden zone down to the September lows. So it does not look too hot for cattle right now and it appears like the risk is lower for now.

I wouldn’t be trying to catch a falling knife here yet.

We do have that open gap that it looks like we want to try to fill.

Jan Feeders Chart:

I've now switched over to the Jan instead of Nov contract.

Clearly have held up better than live cattle.

We are quickly approaching a big area that bulls want to hold to prevent another leg lower. The golden zone down to the mid Sep lows.

That area has provided support and resistance in the past as well. So that is going to be a key level to watch.