Morning Highlights


Highlights

  • The market continues to search for fresh news to drive the trade but most being discussed is just recycled.Trump did confirm what was already known that he is threatening tariffs if a Chinese deal is not signed on Dec 15.
  • Some precipitation expected in the upper Midwest through Friday but biggest accumulations appear to be in the South.
  • After Trumps comments, the Dow turned south and appears that we will see another triple digit downturn today.
  • China continues to put additional investment dollars into other countries to spread their exposure away from the US.They have invested about $100 billion into Brazil alone mostly on infrastructure projects.
  • 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

  • With the lack of volatility, basis levels are remaining stout especially in the east mainly due to the ethanol grind.Still seeing some interesting spreads.Decatur/Cedar Rapids still is showing about 30 cents premium to Decatur.This normally is pretty close to par.
  • Finally seeing a little action from the export front but still behind the pace needed to meet the USDA projections.It is likely Mexico, Japan and Columbia are the destinations.
  • Corn is still hovering just above the gap at $3.67 on the continuous chart.While it doesn’t appear to have a lot of downside from here, there isn’t much news to get the market excited either.Poor export demand and seasonals pointing down going into first notice day are keeping prices stagnant.Basis likely will continue to do much of the work.
  • Spreads have weakened a bit.CZ/CH at 10 ½ cents, CZ/CN at 22 ½ cents.

 

Outlook: Overnights for corn were weaker so looking for the market to open 1-2 lower.  Will need to watch the gap to see if the market want to fill it.

 

Oilseeds

  • Soybeans saw a little more support than expected but did falter approaching the close.Overnights were slightly stronger on limited news.
  • Oil continues to lead the complex recovering almost 100 points over the past week.Meal is in a rut but still trying hold above the key $300 level.Board crush is hanging in there roughly at the $1.00 with an oil share at 34% which is fairly strong.It has increased from 30% which was the low last May.
  • Technically, the continuous bean chart is showing some convergence with topside resistance at roughly $9.17.Downside is a bit more unclear but appears to be in the $9.06 area which would get us into the gap that begins at $9.10.
  • The Bean/Corn ratio is currently at 2.48.Much of last year’s range traded between 2.3 and 2.5 until we saw the weather concerns so it appears this range is where the market is comfortable at this point until more is known about the market.
  • Spreads are still holding SF/SH at 13 cents and SF/SN at 36 ¼ cents.

 

Outlook: Beans are called 1-2 better but is seeing some resistance as it tests the $9.15 area.  Still waiting for more export news to trigger some excitement.

 

Wheat

  • Wheat is a slightly weaker on the overnights but for now, comfortably holding the key support levels.Chicago appears to have solid support at $5.00 and KC at $4.15.Mpls is the lost child hovering at the near-term lows so likely trying to hold onto the psychological support at $5.00
  • Quality seems to be the main driver.Basis levels across all the classes remains strong for good quality.
  • Chgo/KC ratio off its peak of 1.30 currently at 1.20 but still at all-time high levels.
  • Spreads this morning: Chicago Z/H 3 cent carry; Kansas City Z/H 6 cent carry; Minneapolis Z/H 15 cent carry.Lower proteins are narrowing as they approach first notice day.

 

Outlook: Flat to 2 lower.  Spread action likely to be the main driver today.

 

 

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)