Morning Comments; Wednesday, December 4th, 2019

Even with less than stellar trade news, corn and soybeans posted moderate advances in yesterday’s session. This is a good sign that heavy selling may be exhausted, at least in the short term of the market. The on again/off again trade deal is apparently back on according to trade sources, but the market is failing to respond. Even if the trade dispute with China is settled, we may see more tariffs placed on other trade partners. Not only can this impact commodity demand, but imports of finished and raw products as well. There are worries this will impact the US economy which is already showing signs of topping. While this may be negative news for the market on a whole, it is giving the commodities light support. Commodities have been pressured for several weeks and for soybeans, the contract is heavily oversold. This could easily bring the speculative crowd back to the complex, even if just a place to park money for now. This is just what the commodity market needs to recover recent losses. This is a delicate balance though, as the US still needs to remain competitive in the global market to retain export interest. This is what caused wheat to set-back yesterday as Egypt passed on US wheat in favor of Russia due to price. The big gainer in exports may be corn as Brazil has reportedly exhausted its exportable stocks, removing one of our leading competitors in the global market. Soybeans may be the commodity to watch in this scenario, as tariffs mean US soybeans needs to be underpriced to the global market to attract export interest.

Highlights

* Global trade relations

* Trade concerns hitting financial markets

* China buying SAM soybeans

* Large amount of US corn remains unharvested

* Weak dollar may benefit exports

* Brazil ethanol production limits corn exports

* Brazil crop estimates rising

* Market factoring in harvest losses

Corn

* US corn exports lowest in 40 years

* Poll suggests 429.3 mbu corn for ethanol in Oct

* Oct corn for ethanol -6.7% from 2018

* Domestic demand drives futures/basis

* Brazil exhausts corn exports

Soybeans

* Production loss in US likely

* Oct crush a record 187.2 mbu

* Yearly crush likely underestimated

* China has used up tariff waivers

* China may have 70% of 1st half 2020 needs covered

Wheat

* Stats Canada report on Friday

* Global production losses figured into balance sheets

* Global supply remains ample

* Less than perfect US conditions

* Buyers pass on US wheat

Livestock

* Chinese hog values rebound

* China needs pork for Lunar New Year

* Record hog slaughter continues

* Technical buying surfaces

* Cattle market remains untested

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to ksetzer@agrivisor.com.




 

Market Commentary provided by:

Karl Setzer Grain Commentary