Clean Energy Futures

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AGMASTER 9-19-19

DEC CORN

It took a slightly bearish Sept USDA Report last Thur to “stop the bleeding” – and Even more – put in a seasonal low! Production & yield estimates – while under last month

Were both over the estimates – however, conventional wisdom said the higher yields were Already factored in – as the mkt basically said  ENOUGH IS ENOUGH!!

FACTORS IMPACTING THE MKT

  • EXPORTS – Mon Inspections were 421,803 (LW – 612,065) & Thur sales were 498,000 (450-950)

9/12 -113,036   –  Mexico

9/10 – 278,000  – Mexico

9/9   –  651,670 –  Mexico

9/4   –  451,766  – Mexico

  • USDA SEPT REPORT – 9/12 – was definitely on the unfriendly side With yield, production & all carryout over expectations – however The mkt took it in a positive way – key-reversing on the upside – Basically implying all the higher yields & production were already dialed in

Prod –        13,799  (exp-13614)

Yield –        168.2     (exp – 166.7)

US STK       2190      (exp-1965)

GLOBAL     306.3     (301.8)

  • CROP RATINGS – good-to-excellent stayed at 55%

Ill – 41 (38)     Ind – 31 (33)    Iowa – 65 (63)   Ohio –  34 (33)

Despite the benign “finishing weather”, maturity is still lagging

Maturity – 18 (avg – 39)      Dented –  68 (avg-87)

Dough –      93  (avg – 98)     Harv –       4( avg – 7)

 

  • US/CHINA – some “goodwill buying” has taken place & this week China is in DC to set up early October face-to-face meetings – there’s a school of thought that Says Trump won’t get re-elected without some kind of “trade deal” – given how Instrumental THE FARM VOTE was in getting him in last time!
  • WEATHER ISSUES – have flipped the script as “frost angst” has been replaced With above-average temps – perfect for finishing the crop!
  • BULLISH KEY REVERSAL – following last Thur’s USDA less-than-friendly Report, The mkt soared- eventually challenging the Sept highs!

When “all the smoke clears” – after harvest, we still feel yields will be Disappointingly low – despite the recent spate of benign weather – & also, historically, Prices remain in the lower one-third of their 10 year range – which creates a  fertile Export environment!

NOV BEANS

On the heels of a basically neutral USDA Sept Crop Report, Nov beans exploded to The upside for a plus-20 cent gain – confirming that seasonal lows are in! This doesn’t mean The mkt will race to the upside – only that it will consolidate at current levels – awaiting Harvest results!  Two fundamentals were at play- one is the general attitude that the higher Yields are dialed in & two that some kind a trade deal will be forged – as Trump is beginning to realize he needs it to get re-elected!

FACTORS IMPACTING THE MKT

  • EXPORTS – Mon Inspections were 666,490 (977,914) & Thurs sales were A whopping 1,728 (700-1,100)

9/17 –   260,000  – China

9/16     256,000  –  China

9/13     204,000  –  China

9/10     138,000      Mexico

9/4        451,766     Mexico

  • CROP CONDITIONS – good-to-excellent dropped from 55 to 54

Ill – 42 (41)   Ind – 31 (32)    Iowa – 63 (61)   Ohio – 35 (34)

Setting pods – 95 (100)      Drop Leaves – 15 (38)

  • CROP REPORT – was basically neutral for beans – but the mkt took it Very well- rallying to its August highs

Prod  –   3633  (exp – 3596)

Yield  –   47.9   (exp  – 47.2)

US STK – 640   (exp  – 661)

Global  – 99.2   (exp – 101.6)

  • A WARM SEPTEMBER TO THE RESCUE – concerns about  an early Frost were quickly abandoned as a much warmer-than-normal September Came just in time to finish off the late-planted crop
  • DEAL OR NO DEAL!! China is in DC for the next two days – attempting to set the ground work for an October meeting – political pressure may well expedite some kind of deal – Trump needs the Farm Vote much more than last time

We see harvest lows converging with a trade deal -with prices coming off Historic lows – as all positive indicators that a seasonal bottom has been established!

 

DEC WHT

A flurry of export activity – including Egypt -180,000,  Algeria – 600,000, Ethiopia -400,000, Tunsia – 42,000 & Turkey – 250,000 – has buoyed the wht mkt – also helping was spill-over support from corn/beans after the post-USDA Report rally!  Finally positive rhetoric about the US/China trade deal has the mkt hopeful that more exports are on the horizon!

DEC CAT

Well, a picture is certainly worth a 1000 words – as this chart demonstrates! The downside gap was the result of a packing plant fire that sent the mkt into a $15 tailspin – to a level – some $25 off its Spring highs & cheap enough to generate solid demand – forcing a spike rally of $7 (98-105)!  More positive trade-talk rhetoric also supported  the rally! A 7-State  Cattle-on-Feed tomorrow at 2pm should corroborate this sudden change in trend – with placements reputed to be 5-6% under last year!

DEC HOGS

 

Chart Gaps also speak volumes about the Dec Hog chart – as positive trade rumors sent this contract surging to the upside – leaving almost a $5.00 gap in its wake!  China’s Hog herd as experienced a 40% attrition due to ASF – sending their pork prices to record levels very simply, we have a glut of pork & China is woefully short – so a trade connection between us two is a natural & looks to be happening!  The mkt tried to fill the gap today but was unable to do so – a $30 break off the highs ($90-60) since early April made the mkt plenty cheap enough to forge a low & it did – an unfilled gap is a very powerful technical indicator

 

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DEC WHT

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