Takeaway

The presenter argues that agricultural markets are in a risk-off posture, with significant profit-taking in grains ahead of the upcoming US-China summit. The outcome is a key catalyst; a lack of friendly news regarding Chinese agricultural purchases could trigger further technical selling next week.

What the presenter said

• Grains faced significant selling pressure on Friday due to a lack of fresh bullish news and anticipation of headlines from the US-China summit. [00:27]
• Fund money is likely taking profits as the third quarter comes to a close. [01:17]
• Traders are looking for China to follow through on agricultural purchases (soybeans, corn, sorghum, wheat, dairy) as a sign of good faith from the summit. The speaker notes China has purchased about half of its 25 MMT soybean commitment. [01:59]
• A lack of positive news from the summit could lead to technical selling in grain markets next week. [03:10]
• December corn futures slipped below support near $5.29-$5.30, which now acts as resistance. [05:40]
• The next support for December corn is near $5.25, with a daily chart gap at $5.09 and a 50% correction target of the August rally at $5.00. [06:00]
• The wheat market appears tired of Black Sea headlines and is being pressured by a rising US dollar and expectations of more acres planted in the Southern Plains. [06:57, 08:33]
• The hog market had an "ugly week" with contract lows almost daily, driven by ample production and no supportive news. [10:20]
• The milk market is also struggling with production, though the presenter notes that Class III milk futures are extremely oversold and may represent a value point for buyers. [11:10]

Trade ideas

None stated. The presenter's view is that markets are waiting for a catalyst from the US-China summit. A lack of positive news could see further technical selling, particularly in the grain complex.

Levels and data cited

• December Corn Futures: Support at $5.29-$5.30 has failed and is now resistance. The next support level is $5.25, with downside targets at a chart gap of $5.09 and a 50% retracement level of $5.00.
• November Soybean Futures: Watching support at $13.00, with the next level down at $12.50.
• Class III Milk Futures: Deferred contracts are dipping under $16.00.
• USDA Weekly Crop Progress: Last week's data showed the corn harvest is on target with the 5-year average.
• USDA Weekly Export Sales: This week's report was described as "modest".

Risks and what would invalidate this

• A lack of friendly news from the US-China summit could lead to further technical selling in grains.
• The rising US dollar is not favorable for US agricultural exports.
• Ongoing battles and infrastructure damage in the Black Sea region continue to pose a risk to grain exports.
• Technical selling in the hog market may spill over into next week.