12/28/18

Morning Commentary - 12/28/2018

CBOT Bounces on Rising Macro Financial Markets; Other Fresh News Lacking

** 6:30 AM CDT CBOT Prices; March soybeans are up 4.50 cents at $8.87, March corn is up 1.50 cents at $3.76, and March Chi wheat is up 2.50 cents at $5.13  

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! There are only 2 trading sessions left in 2018. CBOT grain markets are focused on the extreme volatility of the macro financial markets – and most importantly the US stock market. Thursday’s late day DOW rally (with futures being another 180 points higher this AM) is producing a low volume bounce in CBOT grain markets.

 And the US dollar is weaker which is offering a bullish tailwind to commodities. ARC expects additional financial market volatility before the New Year. The CBOT will close at its normal time on New Year’s Eve on Monday. 

  In a political token to the US, China will allow its 1st ever imports of US rice with CIQ, China’s phytosanitary agency suggesting that US rice no longer faces being rejected at port. There is no indication whether or how much US rice that China might secure through a Gov’t trading arm?

  There is no evidence that China is securing US grain or soybeans this AM. However, traders hope that China will still book another 2 MMTs of US soybeans if the US/China negotiations are able to score progress.

  India indicated overnight that it is preparing to lower its import tax on palmoil which is due to trade agreements that are being struck in SE Asia. India is the world’s largest vegoil importer and raised its import tariff last spring to boost domestic farm profitability. However, it’s the final tax level that India lowers its vegoil import tax to that traders will pay attention to. The world remains awash in vegoil supplies which is likely to cap rallies.  

  Argentina will endure above normal rainfall for the next 2 weeks as a series of storms pulls across the same general area. Another 3 systems are expected which will cause low level flooding and washout of newly planted soy along with producing quality concern for the 30% of the unharvested HRW wheat crop.

  The Brazilian weather forecast calls for normal rainfall across their northern and central soybean crop areas with below normal rains for RGDS. The rains will help restore soil moisture with temps averaging out to be slightly above normal. The soy harvest in Mato Grosso will be gaining speed next week with supplies starting to work into the northern export arc by mid-January.

  CBOT January soybeans will come into deliverable position on Monday. Open interest fell 20,000 contracts in January soybean futures on Thursday. 28,012 contracts still open this AM.

  ARC estimates the 2019 Brazilian soybean crop in a range of 120-121 MMTs and we would remind clients that farmers here planted an additional 3.1 Mil acres of soybeans (3.6%) that will make it difficult for a big decline in the crop.

Our market bet for is for more of the same – two sided without direction! Don’t chase rallies and don’t sell breaks. 

** 10 Day Percent of Normal Rainfall for Brazil:

** 15 Day North American Temperature Anomaly: 

** Snows Absent for Central US into January 10th: 

 

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