Market Summary. Commitment of. Traders. Managed Money. Fund Positions

Transcription

1 November 9, 2018 Market Summary The November WASDE report was released on Thursday, and the report had something for both the bulls and bears to hang onto. Corn yield came in at bpa, which was down 1.8 bpa from October and at the lower end of the range of analyst estimates. While this decrease in yield dropped production by 152MM bushels, it was partially offset by decreases in feed and ethanol demand of 50 and 25MM bushels, respectively. The net result was a decrease in corn carryout by 77MM bushels to1.736b bushels. While this carryout is 400MM bushels less than last year, it s still a comfortable carryout and in-line with levels from 14/15 and 15/16 crop years. The biggest surprise on the corn side was in regard to the world stocks, which were increased by 5.8B bushels. This entire increase was a result of an adjustment to 10 years worth of China production - and follows news from earlier in the week that Chinese think tank GNGOIC had made some large changes to China s corn balance sheet. Simply put, this increase is equal to the combined annual production of Iowa, Illinois, and Indiana! I m not much for conspiracy theories, but the timing of this adjustment which gives China a bit more leverage in trade war discussions is surely enough to raise my eyebrows. US soybean yield was also reduced by 1 bpa. This reduction in production was more than offset by a 160MM bushel decrease in soybean exports, bringing the new carryout to an estimated 955MM bushels. I ve discussed the abysmal US soybean exports in prior weekly reports, and now the USDA is beginning to reflect that. The new export estimate of 1.9B bushels would be the lowest since the 14/15 crop year. While the 160MM bushel drop in US exports is a start, I think we ll ultimately see something closer to 1.7B bushels when all is said and done. World soybean ending stocks were increased by roughly 80MM bushels which was mostly a decrease in Chinese demand. Current world soybean ending stocks are 116 days, which is substantially above last year s record of 108 days of supply. The 7 day weather forecast should be constructive for continued harvest as mot of the Midwest appears dry with the exception of OH where heavy rains are likely. As we look ahead to next week its worth noting that Moore Seasonal has a sell signal on Dec corn starting 11/8/18 through 11/19/18. The trade has been a winner 13 of the last 15 years. Our bias internally is for corn to remain rangebound between $3.60-$3.75. As of: 11/6/18 Long/ Short Inside this issue Weekly Price Change... 2 Drought Monitor Day Precip... 4 Harvest Progress Day Day... 5 Exports... 6 Technicals.7 Commitment of Corn Traders Managed Money Fund Positions Soybeans Wheat +27K -45K -41k Change +13K +26K +4K

2 Weekly Price Change: 11/9/2018 Price Change % Change Corn Dec $3.36 3/4 -$.01 1/2-0.4% Soybeans Jan $8.86 3/4 +$ % Wheat Dec $5.02 -$.06 3/4-1.3% Feeder Cattle Jan $ $ % Live Cattle Dec $ $ % WTI Crude Oil $ $ % US Dollar Index % DJIA % 2

3 US Drought Monitor 3

4 7 Day GFS Precipitation Forecast US Corn Harvest Progress Harvest progress was up 13% this week to 76%. The last 15 to 20% of the crop always drags on a bit and this year will be no exception. There s enough mud and precipitation around that producers are still slogging thru harvest in many areas. 4

5 6 to 10 Day Forecast Precipitation Temperature Precipitation 8 to 14 Day Forecast Temperature 5

6 Exports Sales Export sales were disappointing once again, coming in at just 28MM bushels. This is about 10MM bushels shy of the average sales bookings to finish the year at the USDA estimate. Cumulative sales are 887MM bushels. Export Inspections Export inspections continue along at record pace. Inspections this week set a record for week 9 coming in at 51MM bushels. We need to continue to export roughly 49MM bushels to hit the USDA export estimate. 6 6

7 Technical Analysis Over the past three months the December corn contract has made a living between $3.60 and $3.80 other than a brief slide down to the low of $3.42 1/4 in the middle of September. In fact, if you look at a weekly December chart we have traded somewhere inside of the $3.60 to $3.80 range every week except for one. At the end of this week, December corn finds itself very near the midpoint of that 20 cent range. The market is not friendly enough to buy higher values, but also runs out of sellers at lower values. It has also been five weeks since we ve closed either above or below the prior week s high or low. This would seem to be the first objective that needs to be breached before the market will be able to sustain a move that might test either end of the sideways range. This week s low is at $3.66 with the high at $ these are the initial levels that I will be watching this next week. 7