Morning Commentary - 11/09/2018

CBOT Soft Overnight As World Adjusts to 10 Year Chinese Crop/Stocks Revisions

 ** 6:30 AM CDT CBOT Prices: Jan beans are down 4.0 cents at $8.75, Dec corn is down 2.50 cents at $3.71 while Dec Chi wheat is down 5.25 cents at $5.025

 ** AgResource AM Grain & Oilseed Comment: Good Morning! CBOT prices have declined overnight as foreign traders adjust to the USDA November Crop Report and the 10-year adjustments to Chinese corn, soybean and wheat balance sheets.   The sharp rise in China corn stocks has pushed back the expectation on when China will return to the world feedgrain market for imports. Non-US Chinese corn/wheat stocks are tight, but that fact will limit any sustained CBOT downdraft and frustrate the bears. Yet there are rumors in the EU grain market that China has purchased 60,000 MTs of Ukraine corn, confirmation is lacking.

  US farmers are unlikely to sell newly stored corn/soybeans with some Plains producers frustrated by the snow/cold that is preventing them from harvesting the last vestiges of their standing crop. CBOT selling pressure will have to come from funds that want to add to existing net short positions.

  Seasonally, the next 2 weeks is one of the most bullish times of the year as CBOT prices rise into Thanksgiving. ARC sees no reason why similar price trends can’t be followed this year.

  US China Ambassador Branstad visited with President Trump, USTR Lighthizer, Treasury Sec Mnuchin and USDA Sec Perdue yesterday to develop a trade framework that can lead to a deepening negotiation between the US/China ahead of the November 30th G20 meeting. Perdue’s office issued a statement late Thursday expressing optimism that President Trump’s approach to trade will lead to a settlement of the current US/China trade dispute. The market will be closely following political develops as Trump/Xi talk trade over dinner.      

  Crude oil futures have fallen below $60/barrel for the 1st time since February with the next level of support noted at $58.00. The US dollar is slightly higher following the US FOMC November meeting that concluded it will stay on path of normalizing US interest rates.

   The EU weather model has gone very wet for Argentina with some key crop areas expected to receive 7-10” of rain in the next 10 days. Most other areas will endure 3-6” with real concern developing for winter wheat crop quality. The winter wheat crop is ripening with harvest estimated at 9% completed. Rain is not what producers desire with spring seeding/wheat harvesting underway.

  It’s a red morning at the CBOT, but this is no place to sell a break amid the lack of producer selling and tightening US and world exporter grain stocks.

** Flooding Rains for Key Argentine Crop Areas Including Wheat:

** EU Weather Pattern Remains Stuck in Warm/Dry. Arctic Cold/Dry for Russia: 


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