Morning Highlights


Happy New Year 2020!  May it be your best ever!

 

Highlights

  • The USDA Fats/Oils report is scheduled for release today, with the November crush estimated at 175.9 mb versus 178.1 mb last year and NOPA’s estimated for November at 164.9 mb.
  • We are finishing the week out of thin holiday trade. Next week all should be back in the game and positioning themselves for the USDA report on the 10th.
  • The energy markets are mixed with crude oil holding at the $61/barrel (after dropping a buck earlier in the week).
  • The US$ looks to be making a stab at the upside, trading up 289 at 96.67. The gold market is up 2-3 bucks at $1,525/ounce and the CD$ is down a hair at 0.76975 (backed down from its high earlier in the week). 

Corn

  • The corn market struggles with lack of fresh supportive news.
  • Funds are estimated to be short nearly 84k contracts.
  • The March appears to be stuck between $3.85 & $3.95, with no serious weather threat in SA and no confirmation that US corn will make the shopping list of Chinese purchases.
  • China’s corn market was up 2 ½ cents overnight.
  • Spread close on Tuesday: H/K 7 carry, H/N 13 ¼ carry, N/Z 1 ½ carry. 

Outlook:  Rangebound ahead of January 10 USDA crop production report 

Oilseeds

  • The soybean market has been trading higher for the past several sessions on hopes that China will buy another 35-40 mmt of US soybeans, once the Phase One trade agreement is signed on January 15th.
  • There are dry areas in SA, but forecasts call for more rain events to move across much of SA over the next week or so.
  • Deliveries: 597 beans, 1,485 meal and 605 soyoil.
  • Palm oil bounced backed, closing up 78 ringgit to 3,130 ringgit.
  • China markets were quiet with their soybean market down ¾ cent.
  • Funds are estimated to be short 25k beans, 23k meal and long 123k soyoil contracts.
  • The carry stops in July, with July at $9.79 ¾ & Nov at $9.78 ¾.
  • Spread close Tuesday: H/K 13 ¼ carry, H/N 24 ¼ carry, N/X 1 inverse, X/F 2 ½ carry. 

Outlook: Higher trade expected on Chinese buying optimism 

Wheat

  • The wheat market has shown strength over the past several sessions from crop concerns in Russia and Ukraine, along with ideas that China will be in the market to buy US wheat (once the Phase One trade agreement is signed on January 15th).
  • The funds have an estimated long position of 28k contracts in Chicago, have nearly cleaned up their short position in KC (last was short 5k contracts) and have bought back about half of their short in Mpls (last was short 15k contracts).
  • Spread close Tuesday: Mpls H/K 9 ¼ carry, Kansas City H/K 8 ¼ carry, Chicago H/K 3 carry.Mpls Mar is at a 75-cent premium to the KC Mar and Chicago Mar is at a 72 ¾-cent premium to the KC Mar. 

Outlook: Due some consolidation although setbacks should be well supported