Morning Highlights


Highlights

  • Fresh new stories are few and far between so the market continues to watch the concerns of the Chinese Trade dispute, the Hong Kong riots, and the impeachment hearings.Key now is what will happen once we get to December 15th.Will an agreement be signed or will the President enact new tariffs.
  • Continued slow harvest progress with corn at 76%.
  • Dow looks for another record day with futures pointing to a triple digit gain today.With the lack of interest in commodities, the specs are keeping their focus on equities for now.
  • The signup period for the 1-year fall 2020 and the 2-year fall 2021 CHS Pro Advantage programs close December 11, 2019, for more information click: www.chshedging.com/chs-pro-advantage
  • Last trade day for December grain options is Friday, November 22. First notice day for December futures is November 29th so with Thanksgiving the day prior, longs will need to be out of their positions on the 27th or risk delivery.

 

Corn

  • Corn basis continues to be propped up by the strong bids from the ethanol grind.Margins have improved dramatically so now the market waits to see if the sector will take delivery due to the lack of country movement.
  • The next couple of days will be key for the Dec futures technically.While yesterday was a weak day, it did hold the gap that formed on the continuous chart.There is a gap that formed when Dec became the lead month on Sept 16th and the topside is at $3.65 ¾.Overnight action held above this level but to hold we not only need to hold for the session and also confirm tomorrow.With seasonals negative for corn futures going into first notice day, it will take a lot of work to hold this.
  • Spreads are flat.CZ/CH at 9 ½ cents, CZ/CN at 20 ½ cents.

 

Outlook: Corn is looking to be steady to 1 better as the market search for the support.  Continued unwinding of spreads and getting positioned for option expiry and first notice day will keep the trade choppy.

 

Oilseeds

  • Soybeans are trying to recover after yesterday’s poor day.Lack of news and exports still are weighing down the market.
  • Technically, the continuous bean chart is showing a gap when Nov beans expired so with the lack of strong fundamental news, it appears to be a good time for the market to cover this.The downside of that gap is at $9.01 ¾ so that may be the target this week.
  • The Bean/Corn ratio is currently at 2.47 which is on the topside of the range we have been seeing since mid-August.Corn can hold if beans wants to cover the gap if the market decides to do that.
  • Spreads are still holding SF/SH at 13 cents and SF/SN at 36 ¾ cents.

 

Outlook: While recovering on the overnight markets, the technical pressure will keep bean action choppy.  It will be tough to hold these gains unless we see some export news.

 

Wheat

  • Wheat had a good day despite the pressure the rest of the market saw.The market held in the overnight action so it appears that WZ has support at the $5.02 ¾ level and KWZ at the $4.16 ¾ level.Mpls needs some help however as it has traded itself into the gap formed when Dec became the from month.As long as Chicago holds, Mpls should see some support since it is currently trading below Chicago at this time.This relationship rarely holds for long.
  • Quality instead of protein appears to be the main driver for now.
  • Corn/Chgo Wheat is trading at a mid-range .73 ratio so it appears to be looking for a direction.
  • Spreads this morning: Chicago Z/H 3 ½ cent carry; Kansas City Z/H 7 cent carry; Minneapolis Z/H 14 ¾ cent carry.Lower proteins are narrowing as they approach first notice day.

 

Outlook: Flat to 1 higher.  Should be fairly choppy as the market prepares for option expiration and first notice day.

 

CHS Hedging and Russell Consulting half-day conference is open for registration.

https://etmna.eventsair.com/chs-annual-meeting/2019-russell-non-client

Cost $50 for Non Russell Consulting clients

Wednesday December 4th:
Registration: 12:30 p.m. – 1:00 p.m. Conference 1:00 p.m. – 5:00 p.m.
Social reception: 5:30 p.m. – 6:30 p.m. Dinner: 6:30 p.m

Location: Hilton Minneapolis 1001 Marquette Ave. S.Minneapolis, MN 55403

Speakers and topics:
Dr. Ed Seifried, U.S. ag economy outlook.  Jim Weismeyer, Washington D.C. farm policy Chris Short, Crop nutrient pricing strategies Kent Beadle and Preston Zacharias, Market outlook (grain and livestock)