12/7/18

Morning Commentary - 12/07/2018

CBOT Mixed Awaiting Actual Chinese Buying with the Value of the USD Sliding On the Week

** CBOT 6:30 AM Grain Prices: Jan soybeans are down 1.00 cent at $9.085, March corn is up 1.00 cent at $3.8375, and Mar Chi wheat is up 4.00 cents at $5.195.

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! It has been a mixed overnight trade in corn, soy and wheat with the grains gaining on the complex. The volume of trade has been rather average as the market awaits the FAS weekly export sales report and the monthly unemployment report from the US Labor Dept. The US Financial markets have shown extreme volatility this week based on uncertain results from US/China negotiations and fear that the FED could tighten too far, thereby pushing the US economy into recession.

  Russia and Saudi Arabia (ROPEC) have worked out a crude oil production cut of around 1.5 Mil barrels/day, but Iran does not want to be included, which has stalled the pact’s ratification. Everyone is holding their breath with the proposed cut likely to underpin spot crude oil prices at $50/barrel. ARC notes that November crude oil prices had their largest drop in over a decade, to keep values above $50.00, a cut of more than 1.2 Mil barrels is demanded.

  The US Dollar has weakened this week and looks to endure its worst performance in 2 years. The weaker US dollar has added a peg of support of raw material markets as the market now expects that the FED will only raise rates one time in 2019. ARC maintains a bearish view of the USD throughout 2019.

 South American weather forecasts have improved with a drier forecast for the northern half of Brazil and rain for Argentina/S Brazil during the 6-10 day period. This reversal of pattern comes at a good time with dryness dogging much of Argentina and SC Brazil over the past few weeks. There is no evidence of extreme heat with crops said to preforming favorably.

  Huawei’s CFO Meng Wanzhou is seeking bail today and could go free with a favorable court decision. There has been no political tie of Wanzhou with the US/China trade talks, but concerns persist. The markets will be watching the Canadian bail hearings closely.

   Political markets are difficult to trade, but our advice remains the same, “don’t buy rallies or sell breaks”. Traders are never patient, but they are unwilling to sell CBOT grain or soy aggressively until it’s clear that China is not stepping forward with large US ag goods. Rumors abound on Chinese demand for US ag with soybeans being on the top of the shopping list. Our strategy is to wait for a Chinese purchase confirmation to sell corn/soybeans.

** Limited Snows Across the Central US with Warming Temps:

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