After a strong start to the week, beans ended the week 11 cents lower from the prior week’s close and under all major moving averages at 9.55 basis November. Despite China returning with three straight days of sizable purchases this week, it was news overnight of China putting a tariff on imports of DDG’s, which raises the possibility of weakening the meal market. China is the world’s top buyer of DDG’s and imports all of its supply from the United States. DDG’s are a by-product of corn ethanol production and can be used as a high protein animal feed. The 33.8 percent tariff on DDG’s comes on the heels of a U.S. investigation with the World Trade Organization over the subsidies that China pays to its corn, rice and wheat farmers.
Simply put, its merely nothing more than saber rattling between the two nations, but it sparked enough fear from the longs to liquidate positions ahead of further harvest progress in the Midwest. Speaking of harvest, it is advancing quickly this week in areas where it is dry. Those areas include the Delta, and eastern grain belt. Yields for beans are reported to be record large in some areas offering ideas that the USDA could raise yield over trend yet again in upcoming reports. This is countervailed by a deluge of rain of 5 to 8 inches in total of areas over the past week in Northern Iowa, Minnesota, and Wisconsin that have many thinking that we could have sizable production losses in some areas due to excessive flooding in low lying areas. WX Risk the Ag weather site sees drier weather for these affected areas in the 6-to-10 day and 11-to-15 day forecasts potentially giving thoughts to an influx of harvest activity in the days and weeks to come. This would alleviate supply concerns near term and coupled with increased technical pressure we could look for the market to establish new lows ahead of next month’s WASDE report.
Technical’s read like this for this week. For November, beans support is down at 9.40 and with a close under 9.25 is next. Resistance is up at 9.82 and then 10.09. For December corn support comes in first at 3.30 and then 3.26 Resistance comes in at 3.40 and then 3.46. For December, wheat support comes in at 3.98 and then 3.93. Resistance is up at 4.11 and then 4.17.