December 21, 2018 Market Summary Commodity and equity markets took it on the chin this week. In fact, as of this writing, the DJIA is down over 5.5%, S&P 500 is down 6%, and crude oil down more than 10%. We saw more confirmation of Chinese soybean purchases this week as Thursday s export sales showed China buying 75MM bushels last week. This, in addition to several flash sales announced this week would certainly add validity to the fact that China is indeed following through on their promise to purchase US Soybeans. Initial estimates are that they will end up purchasing 5MMT in this initial round. Keep in mind, while this is a start, it does little to alleviate the massive shortfall we ve experienced in US soybean exports to-date. In addition to Soybean purchases, there are also rumors that China may buy up to 3MMT of corn. While cash contacts in the PNW have not seen anything transpire yet, this would certainly be newsworthy as the US corn balance sheet is substantially tighter than last year. Going back to talk of Chinese soy purchases, its important to note that China s average monthly import demand for soy is 7.5MMT. With Brazil gearing up for harvest in the next 4-6 weeks, South American soy will again be plentiful and leave China with options. One could look at the recent purchases of US soybeans as simply limping along Chinese demand until South American supplies refill the pipeline. Also of note, expectations are that Brazil will again harvest a record crop. Time is not on the side of the US Soybean producer. South American weather has turned favorable in the past few days. The excessive moisture pattern in Argentina will shift north into Brazil over the next week. This will have a major benefit to water-logged areas of Argentina as it will allow time for soils to dry out, while also providing much needed rainfall to areas of Central/Northern Brazil. Wheat prices took a hit on Friday as the Russian Ag Minister estimated exports at 42MMT vs 38-39MMT previously, including 14MMT for Jan-June. The bulls had been hoping for news that exports would be curbed, but in fact the news was the opposite. The premium built into the wheat market appears to be getting taken back out as I write this. Due to the Holiday next week, trading volumes should be anemic. Equity markets are likely to be a bit jittery as we await the potential for a government shutdown. Speaking of which, an extended shutdown could threaten the release of the January WASDE report which is deemed a crucial report as they publish final 2018 yield numbers. On behalf of all at POET Grain, we would like to wish you a very MERRY CHRISTMAS! As of: 12/11/18 Long/ Short Inside this issue Weekly Price Change... 2 7 Day Precip... 3 6-10 Day... 4 8-14 Day... 4 Exports... 5 Technicals.6 Commitment of Corn Traders Managed Money Fund Positions Soybeans Wheat +18K -55K -27k Change -9K -10K +14K
Weekly Price Change: 12/14/2018 Price Change % Change Corn Mar $ 3.78 1/2 -$.07-1.82% Soybeans Jan $ 8.85 1/4 -$.32-3.44% Wheat Mar $ 5.13 3/4 -$.18-3.29% Feeder Cattle Jan $ 147.38 +$3.00 +2.07% Live Cattle Feb $ 120.85 $-.68 -.56% WTI Crude Oil $ 45.95 -$6.53-12.44% US Dollar Index $ 96.98 +$0.40 +0.41% DJIA 22,681-1,300-5.0% 2
3 7 Day GFS Precipitation Forecast
6 to 10 Day Forecast Precipitation Temperature Precipitation 8 to 14 Day Forecast Temperature 4
Exports Sales Export sales were 77.7MM bushels, an increase of 42MM bushels from last week. The U.S. needs an average of 34.7MM 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 34.8MM bushels, a week over week increase of 0.3MM bushels. This brings cumulative inspections to 629.6MM bushels, which is roughly 261.7MM bushels ahead of last year at this time and 197MM bushels ahead of the 5 year average. 5 6
Technical Analysis Corn prices gave way to some technical selling this week. Thursday s trade saw CH9 fill the open chart gap to $3.78 that was left from the gap up in price after the G20 Summit. In filling that gap, price fell below the 20, 50, and 100 day moving averages. The next major area of support on any weakness next week would be the large volume pocket at $3.68, and if that doesn t hold price may look to fill the open chart gap down to $3.58. The latter support level also coincides with the uptrend support line drawn from Septembers spike low. 7