Grain Spreads:Choppy/Two Sided

It looked as if grains could sustain the rallies from last week and earlier this week. However positive trade talk that filled the airwaves and social media on top of new AG purchases by China for future shipment seemed like a distant memory by today's close. Beans were the biggest loser losing 10 cents in November today while corn and wheat fell slightly. The news today from the President Trump said that he is not looking for partial, but a complete trade deal with China. Trump went further and said that he would not accept a deal on just Ag purchases. If China cannot ink a deal in total, President Trump indicated that he would not accept anything less. Trumps comment cast aside the potential for a staged or partial US/China trade deal in the near term.

Ag markets fell on the news in my view and underscores that we are probably no closer to a deal than we were when both sides werent talking just a month ago. For corn and wheat the action was muted for the most part as the daily losses were insignificant. For beans the drop was a little more pronounced. The drama here wont end for sometime and I think its imperative that we study the charts and base our trading decisions off of what they tell us. We have our crop condition report at 3pm Monday. Beans came in last week at 54 percent good to excellent while corn was steady at 55. WX risk the Ag Weather site sees a significant warming pattern East of the Rockies, south of I-80. It could be a record breaker for heat for this time of year and its accompanied by little to no rainfall. If it enters into the Midwest, dry/drought like conditions could continue into October 7th. Rain the last few weeks has been centered in the Northern Plains and Great Lakes. Im not saying the grain market can rally on this but there could be potential for one if it stays dry and our condition reports in Down State Illinois and Indiana worsen. In my opinion, that will be the battle in the grain market. A potential bullish supply side weather markets vs a longer term potential bearish demand scenario. In my view we will be supply side driven until we get to 50 percent harvested for both corn and beans which is several weeks away.

Technical levels for next week come in as follows. For December Corn, support is down at 368.6/369. Underneath that and next major support is at 355.4/353.2. Below there its 346. Resistance is at 377. A close over and its 390. Over 390 and its 396 and then 4.05. For Soybeans, major support is down at 868.2/866. Under here the next level is 842/840. Under 840 its katy bar the door to 812 in my opinion. Resistance is 891.2. A close over and its 902. A close over 9.02 and its major resistance at 914. Over here and its 936 to 941. Chicago wheat support is at 471. Under here and its 464.6/461. A lcose under and its 456.4. Resistance is up at 5.04 and then 508.2. A close over 508.2 and its 521.

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