Opening Calls – December 3, 2018 at 7:12 AM
Beans are up double digits after Saturday’s announcement that the U.S. and China have reached a trade truce, and either side will not levy additional tariffs on the other. More work needs to be done to reach a firm resolution to the trade dispute, but the tone should be much more positive moving forward. Beans were up as much as 29 cents at the open of the overnight session Sunday, and currently up 16 ½ cents. Corn and wheat tagging along with corn up 4 ¼ and wheat up 5 ¼.
Charts of the Day – December 11, 2018
Afternoon Market Commentary – December 11, 2018
by: Chris Betz
|Old Crop (futures month, change, settle price)||CH9||0’6||384’6||SF9||5’2||915’0||WH9||4’2||521’0|
|New Crop (futures month, change, settle price)||CZ9||1’6||404’0||SX9||4’6||961’6||WN9||1’2||536’0|
A quiet WASDE Tuesday left corn up around a penny, soybeans up over a nickel, while wheat closed in the red.
No big surprises in the report with the USDA numbers coming in close to pre-report estimates. The U.S. balance sheet is largely unchanged. Corn use for ethanol was reduced 50 million bushels from the November round of estimates, which lent to a 45 million bushel increase to U.S. ending stocks. The soybean balance sheet was completely unchanged. Traders will have been looking more towards the January round of estimates that will include Dec 1 stocks, and paint a more accurate picture of harvest.
Soybeans found some support on a Tweet from President Trump saying, “Very productive conversations going on with China! Watch for some important announcements!” What that announcement will be is completely unclear. Soybeans have propped themselves up off harvest time values off recent indications from the President of progress with China, but trade needs verification of actual progress at this point to go a leg higher.
In outside markets, the USD is firmer again on unrest in the British pound surrounding Brexit. Ethanol remains depressed, which is pressuring margins and production. Crude oil is higher on the day, but not far off recent lows. The DJIA is up 112 points at 24,517.
Technical Thoughts – December 6, 2018
By: Ken Lake
Politics, tariffs, trade-war, all factors making marketing decisions and recommendations more difficult than ever before. When that happens one should do two things: first, get a handle on basic fundamentals of the underlying commodity and second, market when opportunities present themselves, don’t try to predict the top of a market.
Regarding basic fundamentals, the first place to look is world stocks to use ratios. These form the benchmark for long term market direction. In corn, that ratio is a little over 14% the lowest number since 1995/1996. Soybeans and wheat offer a stark contrast. Both are burdensome numbers. Soybeans are the highest ever and wheat is the second highest only to last year’s record. On the surface, world stocks to use ratios are telling you that either corn is too cheap or soybeans and wheat are too expensive.
Turning to the charts, March corn gapped higher Sunday night and shows support at 377 to 379. The 200 day moving average of 393 is resistance and coincides with additional retracement resistance at 395. Considering the stocks situation above, I would expect to test the 395 area soon. Momentum indicators are over bought and a correction lower to at least the gap area at 377 cannot be ruled out.
The January soybean contract, like corn, gapped higher on Sunday night at around 896. That nearly back filled today with a low trade at 897. The 200 day moving average is 939 which coincides with a retracement count at 942 which offers a likely upside target. The problem with making sales recommendations for soybeans lies in the underlying political turmoil. Solid evidence of a deal with China would likely launch the market higher but offering a target would be pointless. All I can say is be prepared to reward the market with sales if we get that value to bump higher otherwise the soybean market faces very bearish fundamentals.
Support in the March wheat contract is 514 then 503. Long term downside risk goes to 482. Current fundamentals are bearish however total area seeded to wheat will likely fall below expectations and final yield will be negatively affected by late seeding dates. No sales recommendations currently.
Talk to your MAC Merchant to build a marketing plan and set targets for future sales.