Morning Wire


Highlights                

  • USDA December Supply & Demand report will be out Tuesday, 11:00 a.m.
  • China signaled a more optimistic tone on trade, announcing tariff waivers for additional beans and pork imports from the US on Friday.December 15 has been the next date for US tariff action, but markets are sensing this could change.The DOW was up Friday 336 pts, closing at 28,014. China wants existing US tariffs lifted before a Phase I deal is signed.
  • BNSF rail freight premiums remain $600-$700 under tariff.
  • Cold air is expected to dip down into the US this week. Rains dominate the eastern US corn belt.
  • U. S. Dollar index -.108 @ 97.59, Dow futures -20 @ 27,994, Crude Oil futures -.57 @ $58.63.

        

Corn

  • Friday’s CFTC report shows speculative funds net short 116,000 contracts [previous week -138k]. The Index fund net longs are +238,000, down from 255k previous.
  • CH20 was unchanged, as early trade failed to take out the 20 day moving average [$3.80] on Friday. It continued to lose ground for the week, but did settle off its lows.
  • The average trade guess for Tuesday’s S&D report on corn carryout is 1.910 bil bushels. No major production adjustments are expected to be made at this time.

 Outlook: corn still struggles to gain any upside momentum. Some minor short-covering was noted last week, but the potential major quality issues on the remaining harvest continues as a non-issue for board prices. Calls: steady to 1 lower.

 

Oilseeds

  • Friday’s CFTC report shows speculative funds net short 104,000 contracts [previous week -57k]. The Index fund net longs are +137,000 contracts.
  • It is estimated that China still needs to buy another 2-3 mil tons of beans for January, before the Brazilian harvest is available. For November, China imported 8.28 mil tons of beans, up 34% from October.Also, China’s hog herd increased 2% in November, the first monthly increase in over a year.
  • Bean oil has rallied sharply since last week. CME bean oil open interest was down 16,980 contracts on Friday.

 

Outlook: beans put in a higher close on Friday, the fourth session in a row last week, and managed to close back above the 10 day moving average [$8.83] for SF20. An updraft of optimism from China import tariff waivers again put a bid in the market. Calls: 2-3 better

 

 Wheat

  • Stats Canada on Friday trimmed December all wheat production to 32.34 mil tons, down from the September estimate of 32.149 mil.
  • Friday’s CFTC report shows speculative funds net short only 5,000 contracts in Chicago wheat [previous week -13k].KC net short 14,000 [previous week -16k], and MGEX -15,000.The Index fund net longs, Chi +100,000, KC +44,000.
  • Ukraine grain exports are up 31% versus last year, according to their Ag Ministry. Wheat exports totaled 13.7 mil tons vs 9.5 the previous year.Total grain exports are at 26 mil tons.
  • French wheat sowing is estimated to be 83% complete, still a bit behind their normal pace.

Outlook: a lower tone to end the week for KC and Minn, Chicago still has a little more support on tighter quality stocks issues.  There are dry pockets in the Southwest that traders will turn their focus on into the end of the year.  The trade expects USDA may trim their Australia and Argentina wheat production estimates in tomorrow’s report.

Calls: mixed