Commitment of. Traders. Managed Money. Fund Positions

Transcription

1 October 12, 2018 Market Summary The October WASDE report was released on Thursday, and while the numbers were certainly not bullish, the market reaction was one that could be labeled as not as bearish as we expected. Corn made a weekly right in the minutes before the report was released, and managed to finish the week +13 cents off the lows. As expected, old crop corn carryout was boosted by 138MM bushels a direct result of the higher than expected stocks from the Sept 1 stocks report. This increase was almost entirely offset by a series of changes to supply and demand in the 18/19 balance sheet: Production decreased by 49MM bushels due to yield being lowered from to bpa, while demand was also increased by a net 50MM bushels largely due to an increase in exports. The net result was a final stocks number at 1.813B bushels and while not exactly bullish, it s a significantly tighter situation than we ve experience in the past two years. The USDA has certainly come out strong on demand assumptions for 18/19 the current 2.475B bushels of estimated corn exports would be a record for a marketing year. US soybean stocks continue to grow, with the USDA increasing carryout again by 40MM bushels. Soybean yield was increased by.3bpa to a record 53.1bpa, however this was offset by lower planted and harvest acreage. The real increase in ending stocks came from higher carry-in as a result of 17/18 production being adjusted upward. Worth noting, there have only been 2 other years where USDA increased corn yields in August and September and cut in October, and both of those years (2006/2007, 2007/2008) saw final yields lower, by an average of 4 bpa. Correlating these decreases to a % basis would have final 18/19 yield at 176. Something to keep in mind as we await final yields in January. The market also found a bit of support this week due to the excessive moisture across the Midwest. The northern plains saw measurable snow, specifically in the Dakotas that has many worried about soybean yield losses as well as quality issues. While the forecast appears to dry out for the norther half of the Plains in the extended forecast, the moisture seen this week has no doubt slowed harvest progress to a screeching halt. Producer interest in forward selling has gained traction this week as July 2019 approaches a $4 bill and Dec 2019 showing $4.05. The past three years have shown this to be a great level for those willing to pull the trigger. As of: 10/9/18 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 -34K -41K -4k Change +24K +3K -17K

2 Weekly Price Change: 10/12/2018 Price Change % Change Corn Dec $3.73 1/4 +$ % Soybeans Nov $8.67 1/4 -$ % Wheat Dec $5.17 1/4 -$ % Feeder Cattle Nov $ $ % Live Cattle Dec $ $ % WTI Crude Oil $ $ % US Dollar Index % DJIA , % 2

3 US Drought Monitor After this next week, we might have to replace this with a Flood Monitor map. Our thoughts and prayers are with the producers that have the most at risk. Here s hoping that the sun comes out a little sooner than later. 3

4 7 Day GFS Precipitation Forecast US Corn Harvest Progress Harvest progress was up 8% this week to 34%. All states still remain above the 5-year average with the exception of PA. We should see harvest pace slip backwards to near normal over the next couple of weeks. 4

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

6 Exports Sales Export sales were a bit disappointing this week as we saw nearly 40MM bushels booked, which is 6MM bushels less than the average bushels of exports need to hit the USDA export expectation. This brings the cumulative sales to 815 MM Export Inspections We saw another strong week of export inspections, coming in again at 53MM bushels. This is 7MM bushels higher than the average pace needed to hit the USDA 2.4B export estimate. Total inspections are 222MM bushels on the year, 80MM bushels higher than last year this time. 6 6

7 Technical Analysis Dec corn managed to breakout above the upper channel resistance this week, with next major resistance being $3.80, followed by $3.89. As far as support, this week s low of $3.60 should act as very strong short-term support. As indicated in prior reports, a $3.60-$3.80 rangebound trade would not surprise us for the remainder of harvest. 7