11/12/18

Morning Commentary - 11/12/2018

Mixed On a Lack of Fresh News; Will Supportive CBOT Seasonal Trends Kick In?

** AgResource Pre-Opening Sunday Calls: Soybeans 1 cent higher to 2 cents lower, corn steady to 1 cent lower and wheat 1 cent higher to 1 cent lower.

 ** Weekend Weather & CBOT Market Discussion: Opening week calls are mixed. Friday’s divergent CBOT trends are likely to continue amid a lack of market moving news. The November USDA Crop report has passed, and the price focus will be on world macro-economic considerations and the coming Trump/Xi meeting  late month in Argentina. Its interesting to note that the White House distanced itself from Peter Navarro Friday’s comment (Trump trade adviser) who bashed Wall Street to stop their shuttle diplomacy on US trade with China. The White House’s split with Navarro is an interesting twist and could reflect Trump’s desire to solve the US/China trade dispute before the political debate kicks in for the 2020 elections.

  Managed funds were net short; 41,000 contracts of CME wheat (down 4,000), short 45,000 soybeans (down 26,000), and short 59,000 contracts of soyoil (up 4,000). Funds were long 27,000 contracts of corn (up 14,000) and long 19,000 contracts of soymeal (down 4,000 contracts).

    ** Nov 1-25 % of Normal Rainfall for South America **

  The chart reflects percent of normal rainfall trends across S America from November 1-25th.  The rains for Brazil are ideal, but worry is increasing across Argentina where a wet trend looks to continue. The regular/heavy rains come as the wheat crop is ripening and spring seeding of soybeans is supposed to be underway. Weekend rainfall ranged from .5-4.00” across Argentina on 70-80% coverage.

 The European/Black Sea drought will deepen over the next 2 weeks with cold temps to end winter grain establishment in the Black Sea. Winter grain crops here are going into dormancy with their most limited soil moisture condition since 2010 – opening the risk of winter kill into next spring.  

  Winter like weather dominated the Central US this weekend with lows reaching into the teens as far south as OK with single digits recorded across MN/IA. Lite snow was recorded across many areas, but accumulations were less than 2”.

 The Central US forecast stays chilly for another 5-6 days before warming on the weekend and holding a seasonal temps. A new tropical storm is forming in the Lesser Antilles that needs to be watched.

** South American Weather Forecast: Favorable growing conditions will persist across Brazil for the next 10 days with variable temps. The Argentine forecast features additional heavy rains of 2.5-5.00” with localized heavier totals. The rain poses a real quality risk for HRW wheat that is ripe or ripening.

 

 

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