- “Tweets and Political Trade Posturing” has been trade in Chicago with corn, soybeans and wheat trading either side of unchanged. The volume of trade has been active in corn, but less so in wheat and soybeans. Algo trading funds that trade the news have been active with purchases in corn/soybeans on the early tweets from Trump. Chicago lacks a trend and most traders expects fireworks on Sunday night from whatever comes forward from G20 and Argentina. We maintain that trading politics is nearly impossible and lasting trends in Chicago will be difficult to sustain. Our expectation for the close is mixed, with selling in soybeans as US/S American farmers are picking up their cash sales. US farmers appear to be willing to shed some cash soybean supply while holding onto their grain stores.
- Chicago brokers report that funds have bought; 2,300 contracts of wheat, 5,500 contracts of corn and 5,500 contracts of soybeans. In soy products, funds have bought 2,100 soymeal while being flat in soyoil.
- President Trump in a press briefing (and tweet) suggested that he may be close to a deal with China. However, it also commented that he liked the flow of billions into the US Treasury, and he may not do a deal. Chicago rallied and then eased as the double talk made a bull or bear position difficult. Importantly, Trump has asked China Trade Hawk Peter Navarro to join the Trump/Xi dinner which will be seen by China as adversarial. Most Washington watchers thinks the inclusion of Navarro reduces the chances for a trade truce. Trump also stated that he will not be meeting with Putin due to raw nerves with Ukraine amid the capture of their naval vessels on Sunday. There are so many variables in the air that it will be up to the personal relationship of Trump and Xi and whether they can find common ground to call for a truce. No one knows what will happen with this important G20 meeting.
- US export sales for the week ending Nov 22 were; 13.9 million bu of wheat, 49.9 million bu of corn, and 23.1 million bu of soybeans. For their respective crop years to date, the US has sold 547 million bu of wheat (down 84 million or 13.3%) 1,007 million bu of corn (up 140 million or 16%), and 854 million bu of soybeans (down 407 million or 32%). The sales totals were deemed neutral/slightly bearish.
- There is a growing political risk that the Trump Administration may shut down the US Government if funding for a US/Mexico border wall is not raised to $5.0 billion in an Appropriations Bill. The shutdown would occur around Dec 8 and it could impact the USDA Dec WASDE report (and weekly export and sales reports).
- The midday S American weather forecast is similar to the overnight solution with above normal rain to fall across the northern half of Brazil with totals of 3-8.00”. Below normal rainfall is expected across Argentina as spring planting accelerates. No extreme heat is foreseen due to persistent cloud cover. Highs will range from the 70’s and 80’s across Argentina and the 80’s to lower 90’s across Brazil.
- Sunday night will prove to be dynamic for Chicago trade as the details of the Trump/Xi dinner to resolve trade differences are known. Our advice is to hope for the best but manage risk like it is a monthly USDA crop report. No one really has any idea whether the US/China trade war will have a truce or push to a more aggressive phase, consequently look for choppy Chicago trade to continue into the weekend.