Trade uncertainty, benevolent weather conditions for South America & general“holiday chop” have all contributed to a general malaise in the bean mkt – leading to 5 consecutive down days & an aggregate 75 cent drop (960-885) since 10/22/19. Harvest pressure has added to the downside but it’s all but over now with 94% (avg-97) of the crop in!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur sales were 1,516 (800-1,400) & Mon inspections were 1,942,761 (1,537,618) – both very impressive #’s but you wouldn’t know it by the mkt action!
- HARVEST PROGRESS – it’s all but over with 94% in (lw-91 avg -97)
Ill – 95 (100) Ind – 94 (97) Iowa – 97 (99) Ohio – 93 (97)
- US/CHINA TRADE DEAL – the mkt is becoming numb & unresponsive to all the back-and-forth trade rhetoric – & who can blame it – we need something “signed on the dotted line”!
- NOV CROP REPORT – our last from the USDA until the Jan Final – has pegged production at 3550 (ly -4428) & yield 46.9 (ly-50.6)
- SOUTH AMERICAN WEATHER – has been generally benign – promising bigger crops and exerting additional pressure on prices
It’s hard to push the “downside” when the mkt is already in the lower 20% of its 10 year range (8.00 – 17.00) – but it needs some kind of catalyst to shake it from its doldrums – namely a trade deal or South American weather issues!!
Dec Corn has been caught between a rock & a hard place – on one hand – benefiting from the upside surge in Dec Wht – but on the other – feeling downside pressure from the slumping Jan Bean contract! The result – not surprisingly – is that Dec Corn – for the past two weeks has been locked in a sideways pattern! Improving South American climes have leaned on Dec Corn but challenging weather in the European wheat areas have provided support – meanwhile, the on-again, Off-again trade deal has moved the contract both ways! However given the mkt is hovering just over 10 year lows, this doesn’t seem the place to press.
For the month of November, Dec Wht is clearly the upside leader – so far showing a 20 cent gain – while Dec Corn is down 25 cents & Jan Beans are off 50 cents! While a stalled trade deal & harvest have continued to pressure corn & beans, Wht has fed off weather issues – domestically, winter storms this W/E may jeopardize the newly planted Winter Wheat – and internationally, the Black Sea Region is too cold & other European growing areas are too wet. Also, lower production is expected in Argentina & Australia!
It looks for all the world that a top is near – after a $20 run to the upside – as the mkt price seems to fully reflect the current fundamentals! And – the mkt is at a huge premium to cash, has placements 11% over 2018 & is sharply overbought! But THE TREND IS YOUR FRIEND -& the mkt stubbornly hangs tough off good demand & strong cash – actually extending its gains this week – after a 3-week consolidation!
Dec Hogs are just the reverse of Dec Cat – seeking a low after grinding down all Fall. But they are a classic case of short-term down / long-term up as they try to turn the corner! Record weekly weights & slaughter have kept the mkt under wraps while it waits for a trade deal – which would give US Pork Exports a huge boost! This would be just what the doctor ordered – as we have abundant pork supplies while China’s supply has Been Decimated by the Asian Swine Fever!
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