- The summer row crop markets have felt selling pressure from the opening as bearish bets are placed against the coming US/China trade dinner later this week. The market doubts that the US and China will be able to come to an agreement which has sent soy futures lower this morning. Moreover, traders continue to discuss favourable S American weather and the coming competition of trade for the US. Corn has followed soybeans, while the wheat market hangs on the green in building US and world wheat demand. We look for a mixed close as traders try to position for Trump/Xi G20 event.
- Chicago brokers report that funds have sold; 7,500 contracts of soybeans and 5,900 contracts of corn, while buying 1,900 contracts of wheat. In soy products, funds have sold 3,200 soymeal and 3,500 contracts of soyoil. An increase in Brazilian cash related selling of soybeans is noted this morning. Farmers fear that a US/China trade deal could get done which further drops their cash premiums. The Brazilian market has been suffering from deflating premiums for much of the past three weeks, and farmers are worried with crops looking favourable heading into December.
- Goldman Sachs has put out a bullish general commodity forecast this morning with energy, metals and even ags topping their purchase list. Goldman argued that in 2019, commodities should enjoy a 19% return. Goldman looks for the late week US/China trade agreement and an OPEC cut of crude production as providing the fundamental inertia to start a rally. The Goldman buy recommendation is likely to have asset managers looking at commodities by year end.
- The Russian ag ministry forecast their initial 2019 grain crop at 110 million mt, the same as this year. Total planted area is estimated at 80.5 million ha, an increase of 1.3 million ha. The report made no mention of winter wheat acres, but a modest increase was likely included. It needs to be remembered that for the past three years, Russian winter grains have escaped winterkill damage. It will be interesting to see that occurs in 2019. Producer sources tell us the condition of the 2019 Russian wheat crop is well below 2016 or 2017.
- US export inspections for the week ending November 22 included 40.6 million bu of soybeans, 44 million bu of corn, and 9.3 million bu of wheat.
- The midday S American GFS weather forecast is wet for N and C Brazil over the next 10 days. Totals of 3-6.00” look to drop across the northern half of Brazil. Near normal rains are expected across Argentina as spring planting returns following heavy rains during the first half of Nov. No extreme heat is noted with temperatures to average near to below normal due to persistent cloud cover. There is a risk of too much rain falling across N Brazil that could cause an increase in disease pressures.
- Forecasting trade politics is impossible. One can take educated views, but that is about it. President Trump has smouldering battles that he must tend to on the international front in; Iran, the Saudis, the Chinese and now the Russians and their provocation of Ukraine. Will Trump get tough with Russia, unlike Obama when the Russians took Crimea. Ukraine is said to be pulling its wheat offers in the world market. It is hard to become bearish of sub $3.60 Dec corn or sub $4.60 Dec KC wheat. Our view is that although politics are uncertain, there is more risk to the upside than downside, as we have previously publicised.