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

Transcription

1 December 7, 2018 Market Summary The trading week started off with a bit of fanfare on the heels of what was perceived as a constructive G20 meeting between President Trump and Chinese President Xi. Sunday s night s open saw sobyeans gap higher by nearly 30 cents/bushel while corn was also higher by 7 cents/bushel. Both parties agreed to stop imposing new tariffs (for example, tariffs on USD200b of Chinese goods will not be raised from 10 to 25% on January 1 as initially planned). If the endeavor to negotiate within the next 90 days fails, the 10% tariffs will be raised to 25%. The official statements from the US and China differ fairly substantially, in that President Trump stated that China will agree to purchase a not yet finalized the very substantial amount of agricultural, energy, industrial and other products from the US to reduce the trade imbalance. China s official statement said they are willing to import more goods from the US based on the needs of the Chinese people and to gradually address the trade imbalance issue. While the grain markets cheered the potential truce, the equity markets failed to hold onto the Sunday night optimism. The S&P 500 closed the week down 129 points, or 4.7%, while the Dow Jones Industrial Average closed down over 1,100 points, or -4.5%. This puts the Dow Jones back into negative territory for the year, after being up over 9% in September. The Rosario Grains Exchange said on Thursday that Argentine soybean exports to China could be a record 14MMT if the trade war between China and the US continues. A big IF, but continues to underscore South American availability of soybeans for China. The South American weather forecast into late December remains very favorable. Several rain events are offered to Argentina in the next two weeks, with cumulative totals around inches. In addition, no extreme heat is in the forecast for either Brazil or Argentina through the end of t he month. With Brazil off to a very favorable start to the growing season, private analysts are beginning to increase soybean production estimates. AgRural increased their estimate of the Brazilian soybean crop to 121.4MMT, which is up from their prior estimate of 120.3MMT. Interesting to note that this increase is due to a combination of increased planted acres of +2.1% vs last year, as well as an increase in yield. They are now forecasting Mato Grosso (which produces 1/3rd of the country s soybeans) yield at 51.3 bpa, which is up from last year s record of 50.2 bpa. It s no surprise that they are forecasting the crop to be 95% good to excellent. If no trade war truce is realized, China looks to have adequate supplies of South American soybeans again for the coming year. As of: 12/4/18 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 +18K -55K -27k Change -9K -10K +14K

2 Weekly Price Change: 12/7/2018 Price Change % Change Corn Mar $ /2 +$.07 3/4 +2.1% Soybeans Jan $ /4 +$ % Wheat Mar $ /4 +$.15 1/2 3.2% Feeder Cattle Jan $ $ % Live Cattle Feb $ $ % WTI Crude Oil $ $ % US Dollar Index $ % DJIA $ 24, % 2

3 US Drought Monitor 3

4 4 7 Day GFS Precipitation Forecast

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

6 Exports Sales Export sales were ~46MM bushels, down 3.5MM bushels from last week. The U.S. needs ~35.8MM bushels of sales per week through the end of the year to hit the USDA s 2.45B bushels estimate. Export Inspections Export inspections came in at ~41MM bushels, a week over week decrease of 5MM bushels. This brings cumulative inspections to 552MM bushels, which is roughly 243MM bushels ahead of last year at this time and 187MM bushels ahead of the 5 year average. 6 6

7 Technical Analysis The continuous corn chart continues to remain in a 25 cent range from $3.65-$3.85. Sunday night s gap up in price leaves an unfilled chart gap down to $3.78, as well as the gap from the switch from the Dec to Mar contract at $3.58. History provides evidence of high odds that these gaps get filled. When? Who knows, but the seasonal trend for the next couple weeks leans negative for both corn and soybeans. An extensive to the upside looks to fill a gap from last summer up to $