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AgMaster 10-11-19

DEC CORN

A confluence of contrasting fundamentals has descended upon the corn mkt – creating a highly volatile mkt environment.  First, the USDA incredulously raised the corn yield to 168.4 (Sept – 168.2) – even with only 15% of the harvest in! Second, a partial US/China deal seems likely – & third a major storm is headed our way – the result dn 14 up 14 -to unchanged!

FACTORS IMPACTING THE MKT

  • EXPORTS – Thur sales were 284,000 (500-800) & Mon Inspections were 466,000 (500-700)

Mon –     240,000 to Unknown

198,000 to China

Thur –     398,000 to China

  • US/CHINA TRADE DEAL – the headlines this week have been “all over the map” – starting with blacklisting Chinese companies – then a partial deal – then – China leaving DC a day early because of the “wide divide’ between both countries – to finally Trump & the China VP meeting in DC today for high-level talks! After what’s gone down in the past, it’s hard to trust any trade deal – partial or

Otherwise- but we remain hopeful!

  • OCT USDA REPORT – the USDA has resumed their penchant for issuing bearish reports – raising their yield – 168.4 (166.8)), production 13,779 (13,611), US Stocks 1929 (1684) & World Stocks 302.6 (296.1)
  • MAJOR WINTER STORM – is hitting the far NW Corn Belt – promising to end the growing season for those crops – however, it remains to be seen if this is a big enough area to really impact overall production
  • HARVEST PROGRESS – corn is 14% in (lw-7 avg – 34) dented 93 (99) mature 58 (85) Good-to-excellent – 56 (57)

Ill 13 (46)   Ind 15 (29)   Iowa 3 (12)  Ohio 11 (17) – harvest results

  • CHARTS – higher lows & higher highs since Mid-Sept – filled a long-standing downside gap from early Aug 387-392) – good technical action which indicates the harvest lows are already in!

We’ve taken the “DOWN” out of the mkt! That leaves sideways or up! And that will be determined by the ongoing yield results and the trade talks!  Our choice would be UP – given the historical cheapness of corn prices today (lower 20% of a 10-year range)!!

NOV BEANS

Well they say a picture is worth a 1000 words -and this chart “speaks volumes”! Easily the bullish stalwart of the grain complex, Nov Beans are not too far from their June highs – whereas Dec Corn & Dec Wht are miles away from theirs!  While the USDA Oct Crop report was a bearish surprise for corn, it was in fact friendly – across the board – for beans – yield – 46.9 (47.1)   Production – 3550 (3571)  US Stocks – 460 (510) – World Stocks – 95.2 (96.9)!  So that coupled with the imminent Winter Storm & a likely “partial trade deal” has Nov Beans up 16 cents for the wk!  Ongoing yields will determine the extent of the rally.

DEC WHT

A rising tide floats all boats & so it is with the Wht Mkt! Whereas it does respond to various supply/demand fundamentals – like the Russian Wht  Crop,  Egyptian tenders & the condition of the Winter Wheat Crop, the movement of its Sister Mkts – corn & beans- has the biggest influence on its mkt action -so this week rallying C & B has spilled over into the Wht – pushing it thru its August highs today!!

DEC CAT

The mkt has made a near-vertical move since early Sept (98-112) when it put in a spike low! Although overbought of late, strong cash & solid demand has underpinned this mkt! Another assist would be the Hog Mkt – buoyed recently by positive trade talk in DC!  Also, it turns out, the packing house fire – while initially considered bearish, has contributed to the turn-around – effectively reducing the overall meat supply!

DEC HOG

The Dec Hog Contract is closely aligned with the progress of the US/China Trade talks – and today, all indications are a “partial trade deal” will get done! This should mean a big increase in our pork exports to China! On top of that, hog futures have been buoyed by China’s sharp advance in pig prices, strong packer demand & just this week a record US Pork Purchase by China for 2020! All this contributed to a solid weekly gain by Dec Hogs Of $2.65 (67.25-69.85)!

 

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