11/14/18

Morning Commentary - 11/14/2018

Ag, Macro Markets Stabilize

6:30 AM CDT CBOT Prices: Jan beans are up 5.5 cents at $8.8375, Dec corn is up .75 cents at $3.6725 while Dec Chi wheat is up 1.5 cents at $5.0925.

Good Morning! Ag markets – and commodity markets as a whole – have stabilized after Tuesday’s emotional session. Spot WTI crude is up $.50/barrel, and amid incredible oversold technical conditions a more neutral trend is expected in energy markets into late year.

The EIA’s weekly energy report has been pushed back to Thursday AM amid this week’s Veterans Day holiday, but another build in US crude inventories is expected.

It’s possible that by early December US crude stocks will match the level of last year, at which point spot crude traded in a range of $55-60/barrel. Whether US production falls in tandem with price will be interesting given the rise in US crude exports over the last year.

Iraq is taking additional steps to add Russia as an acceptable wheat import origin. This has been discussed for a bit, but now there are reports Iraqi officials will travel to Russia in December to begin actual talks. Should Russian wheat be allowed this will only serve to shuffle the world trade matrix, but this does underscore Russia’s plan to boost its share of ag trade over the next several years. Iraq has been a sizable market for the US, Canada and Australia.

There’s otherwise little fresh input available. Dow futures are up 30 points. The US dollar has resumed its advance and is again trading above 97. Malaysian palm futures have extended their recent correction on yet another boost in monthly stocks and as any El Nino-based production lost will be an issue for spring/summer. World vegetable oil prices have also followed crude to some degree. Biofuel margins will be tightening once cash biodiesel/gasoline prices fully account for the recent collapse in futures.

US harvest progress is moving along more slowly than expected. The forecast, however, is rather dry into Nov 25th. Progress should be wrapped up by the latter part of the month. A more normal/favorable pattern of rain lies ahead for Argentina, with the EU and GFS models in good agreement. There is talk this AM that weekend/early week rain will slow bean planting and wheat quality loss is nearly certain in north/northeast regions. Argentina wheat prices 

Steady trade is expected through the balance of the week.

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