Morning Commentary - 11/07/2018


Post Election CBOT Bounce On Weak US Dollar; USDA November Report Thursday

** 6:30 AM CDT CBOT Prices: Jan beans are up 1.0 cent at $8.8525, Dec corn down .5 of a cent at $3.7275 while Dec Chi wheat is up 1.5 cents at $5.135.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! The political pundits were right with the US House going Democratic while the Republicans held onto the Senate in the US Mid Term Election. Both sides are claiming victory, but the result is that the Trump Administration faces a significant new speed bump in terms of having to now forge a legislative consensus for bills to pass.

  For agriculture, the most important issue is trade, and little changed in the election with the President having broad powers to cut and approve deals. Traders will be watching to see of Trump’s China trade optimism has waned following the elections?

Following Thursday’s USDA Crop report the ag market’s full attention will be focused on the late November dinner between Trump and Chinese President Xi and whether further US/China trade negotiations will evolve?

  AgResource notes widespread commercial talk that China’s Statistical Agency has revised China’s corn crop production estimates upwards in prior years. CNOIGC has followed their supply lead, but actual balance sheets offering Chinese supply/demand and stocks are not yet available.

  It makes sense that China would revise prior corn crop production estimates amid their sale of over 100 MMTs of stored reserve corn since June. Surprisingly, the huge Gov’t corn auctions have not caused much pressure in China’s domestic cash corn market. Yet, WASDE maybe carrying Chinese corn stock levels that are too low, but it’s far from certain when or whether WASDE will adjust their Chinese corn production estimates?  

  Argentina weather forecasts are warm/dry thru Friday before bouts of heavy rain drop on the weekend and much of next week. Key areas of Argentina could receive 3-6.00” which pose a quality/quantity risk to ripening HRW wheat crop.

  Much of the EU remains locked into a dire drought with limited rains offered over the next 2 weeks.

  Russia has now exported more than 18 MMTs of wheat and at least 21.5 MMTs of all grain. ARC estimates that Russia will export 4.4-4.8 MMTs of wheat in November taking the annual total to 22.5-23.0 MMTs. Russian wheat is leaving much too fast for political comfort with wheat flour prices at multiyear highs

 Today’s CBOT trade is all about Thursday’s USDA Crop report. Traders want to be long of corn/wheat and short of soybeans into the actual numbers. But amid a sharp drop of the USD, some fresh speculative interest for ags is likely.

** Too Much Rain for Ripening HRW Argentine Wheat:  

** Limited Rains for the Deepening EU/Black Sea Drought: 


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