10/30/18

Morning Commentary - 10/30/2018

Markets Unchanged in Lower Volume; New Chinese Tariffs Possible

6:30 AM CDT CBOT Prices: Nov soybeans are up 1.25 cents at $8.4025, Dec corn is unchanged at $3.6675 and Dec Chi wheat is down 1.0 cent at $5.0625.

Good Morning! Markets did very little overnight in mediocre volume. Monday’s crop progress report lacked major surprises, and macro markets and weather patterns are mixed.

There’s talk this morning that the US is prepared to place tariffs on all remaining imports from China, including tech, if a meeting between Trump and Xi in late November does not produce results. The validity of this is uncertain as of now, and it was unlikely that the two would get into trade details at November’s G20 meeting in Buenos Aires.

USDA Secretary Purdue also indicated on Monday that there’s no plan to extend tariff-based aid in 2019, but rather the market would re-allocate acreage. ARC simply assumes US-China tariffs will remain intact indefinitely.

The Central US forecast is wetter and cooler than previously in the 6-10 day period. The EU and GFS models agree that a second round of widespread precip impacts the Central and Eastern Midwest Nov 5-8, and the EU model this morning includes potentially heavy snowfall of 9-12+” across the Dakotas, IA, MN and WI. Corn harvest in the Eastern Midwest will slow in the next 10 days. And some 20-25% of beans are still in the field across the Dakotas, MN, WI, IN and OH. Rain begins in the E Midwest in the next 24-36 hours.

The EU/Black Sea forecast maintains complete dryness and well above normal temps in all but France over the next two weeks. There’s no sign that this pattern changes by Nov 15th. Winter crops there will enter dormancy in multi-year soil moisture.

EU wheat futures are flat. Aussie wheat futures opened the week slightly higher at $8.35/Bu. We mention the Australian climate forecast is rather hot and dry into late year as El Nino is established. Sorghum production in E Australia is at risk. Malaysian palm oil futures ended 18 ringgits lower overnight. Crude is down $.50/barrel and Dow futures are up 80 points.

Mixed trading is expected through the balance of the week. Cash corn prices in South America and Ukraine have fallen sharply in recent weeks, with Brazilian exporters aiming to boost corn sales ahead of early bean harvest in January. Ukrainian corn is looking for demand following much better than expected yields. Corn & beans remain broadly neutral, while Black Sea wheat prices move seasonally higher into early 2019.

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