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

Transcription

1 November 2, 2018 Market Summary Volatility seems to be picking up as the market trades from one headline to the next to a larger degree than we have seen recently. One shift that we ve seen in recent weeks is an increase in global export competition from South America and Ukraine. Corn sales have fallen well below levels needed to reach the USDA estimate each of the past 3 weeks. Weekly sales have averaged just 14.8 mln bushels while we need 36.5 mln per week to reach the USDA estimate. However, total sales to date are 28% above last year at this time which is well ahead of the pace needed. Weekly inspections have also been low the past three weeks but are still nearly 69% above last year s level. Bottom line, the strong export story still exists, but has taken a back burner in recent weeks. Ethanol margins are poor, which seems to be impacting domestic consumption to a small degree but this also needs to be watched closely as we go thru the marketing year. President Trump tweated that he had a good conversation with President Xi of China and soybeans exploded higher gaining nearly 50 cents in 2 days. Beans did fail to sustain those gains however and backed off about 15 cents on Friday from the Thursday night high. On the surface, you could argue that even if a deal gets worked out it would not be that significant of a change, but good luck trying to trade that position. The market will almost certainly shoot first and ask questions later when it comes to buying a resolution...should it occur. We ll likely see more headline risk between now and the G20 meetings at the end of November. On Friday, corn found some strength following the release of the USDA s 10 year baseline report which showed US corn stocks declining to 1.6 billion bushels in the 2019/20 crop year. They estimated stocks would remain between 1.6B and 1.75B from 2019/20 thru 2023/24 with US yields increasing from bpa next fall to bpa in 2023/24. This report usually fades quickly as it s used for budgetary purposes only and is formed in a completely different manner than normal USDA Supply and Demand reports. The next monthly USDA Supply and Demand report will be released next Thursday, November 8th. Expectations are that the USDA will trim corn and soybean production slightly in this report which could give a slight upward bias to the market ahead of the report. As of: 10/30/18 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 +14K -71K -45k Change -11K -27K -19K

2 Weekly Price Change: 11/2/2018 Price Change % Change Corn Dec $3.71 1/4 +$0.03 1/2 +1.0% Soybeans Jan $8.87 3/4 +$ % Wheat Dec $5.08 3/4 +$.03 1/2 +0.7% 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 10% this week to 49%. SD, IA, and NE are below average pace, while he rest of the Midwest remains above average. Favorable weather this week should continue to push harvest progress forward in next week s report. 4

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

6 Exports Sales Export sales were extremely disappointing this week, coming in at just 15.5MM bushels. After a robust start to the year on export sales the US is beginning to trail off, although this is still the 2nd strongest YTD export sales book. Export Inspections Export inspections came in at 28.6MM bushels this week. Although this is well below the average necessary to hit the USDA export estimate, we are in a seasonal low point and exports come in just below a weekly record Cumulative exports reached 328MM bushels after this week, the second highest YTD exports only behind 16/17 exports. 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 four 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 $3.62 1/2 with the high at $ these are the initial levels that I will be watching this next week. 7