Morning Highlight


Highlights

  • The Chinese commerce ministry says tariffs must be cut if China and the United States are going to come to an agreement on trade.
  • Outside markets as of 7:00 AM Central: January crude is $0.35 higher; gold is up $0.20, DOW futures are 110 points higher, S&P futures are up 12 points and the US Dollar index is down .149. 

Corn

  • Corn is trading nominally mixed overnight, unable to establish a clear directional move as news remains routine.
  • Producer movement is sluggish, though some selling is seen as harvest wraps up and farmers head to their tax accountant.
  • Managed money spec funds are estimated net short 115,000 contracts and seem content with their current position. As 2019 comes to a close, the market remains susceptible to liquidation and year-end positioning.
  • Domestic usage remains stout for ethanol and feed. Broiler egg-sets are 99% of last year and chick placements are also down 1% from a year ago as we begin to see possible signs of a contraction.
  • The president of Aprosoja, Brazil’s national grain grower group, says Brazil’s meat packers will need have a plan in order to avoid a corn shortage in early 2020 during the old crop to new crop window.
  • Secondary US rail freight markets remain weak as the slow US corn export program and poor quality of the upper Midwest corn supply restricts the demand for rail cars.
  • Export sales estimate: 500 to 900tmt.
  • There were 129 corn deliveries: Spreads are fractionally firm: H/K 5 ¾ cent carry; K/N 4 ½ cent carry and N/Z is a 2 ½ cent carry. 

Outlook:  Trading lower without clear direction 

Oilseeds

  • Seeing news stories this morning that China is saying tariffs must be cut to reach a phase one trade agreement. Additional and new US tariffs on $156B of Chinese goods are set to take effect on December 15.
  • SF, for the past two session, is seeing a small rebound to regain the early week loss and is now above Friday’s close. The September low on SF at $8.65 is support.
  • Brazil weather remains favorable with rain and more rain forecast over the next 10 days.
  • Nearby FOB US export offers are competitive against Argentina offers and are below Brazil offers. The US loses its competitiveness April forward.
  • Export sales estimate: 700tmt to 1.3mmt. Meal 100 – 300tmt.
  • Deliveries: 148 soymeal contracts, 860 contracts soyoil.
  • Malaysian palm oil traded 42 Ringgit higher in overnight trading. China’s Dalian beans were also stronger overnight.
  • Spreads: F/H 14 ½ cent carry; H/K 15 cent carry; F/N 42 ½ cent carry. 

Outlook: Trading steady to a penny better 

Wheat

  • The wheat markets are seeing a relatively quiet, two-sided overnight. They remain choppy day to day and unable to establish a clear direction. MWH consolidates near the low end of its recent 60 day trading range. KWH is rangebound and WH has been in an upward trend with last week’s high establishing the highest level traded since July.
  • Stats Canada is set to release its Production of Field crops report tomorrow with trade estimates for wheat production ranging from 31.4mmt to 34.5mmt. The September estimate was 32.5mmt and they experienced wet conditions throughout harvest.
  • Argentina is experiencing some dryness, though they did receive some rains yesterday. Some analysts are suggesting that their wheat production could be reduced as a result.
  • Australia production is still at risk from this year’s drought as it sounds like some yields are quite disappointing. ABARES current estimate of 15.85mmt is an eleven year low.
  • Export sales estimate: 300 – 700tmt.
  • Spreads: Chicago H/K 4 ¼ cent carry; Kansas City H/K 7 ½ cent carry; Minneapolis H/K 8 ¾ cent carry.
  • Deliveries: 1 contracts KC, 0 Chi, 76 MGEx. 

Outlook: Trading better across all three markets