12/17/18

Morning Commentary - 12/17/2018

CBOT Rallies To Start Last Full Week of 2018 On China Demand Hope and Weather Concern

** CBOT 6:30 AM Grain Prices: Jan beans are up 4.50 cents at $9.05, Mar corn is up 1.00 cent at $3.8575 with Mar Chi wheat up 5.75 cents at $5.3575.

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! The week has started higher with wheat leading the bull charge as weather threatens world wheat production. Initially, soybeans were the CBOT leader amid the hope for additional buying from China. This is the last full week of 2018 trading.

  Traders remain on alert for additional Chinese soybean (and other US ag product) demand. The USDA have announced that just under 1.5 MMTs of US soybeans were sold to China late last week. US exporters argue that China secured an additional 500,000-1.0 MMTs on Wednesday. Those sales could fall under FAS reporting requirements or are being held off shore on the books of foreign sellers. Most expect that by the final count, China will buy at least 5.0 MMTs of US soybeans, with some estimates as high as 8.0 MMTs.   

  Rumors persist that China will secure additional US ag products including; pork, milk products, corn, DDGs, ethanol and wheat. ARC argues that the Chinese shopping list is long, and it will be supportive on CBOT/CME breaks.

  Bitter cold arctic air will swamp the Black Sea in the next 10 days and pose the risk of wheat winterkill. Lows will reach to 10 to 25 degrees below zero which could threaten wheat which has modest snow cover. No additional snow is expected ahead of the arctic onslaught. This is the coldest air to impact portions of E and C Russia in years with Christmas being especially chilly.  

  Additional rain fell across Argentina on the weekend with totals of .5-2.00” impacting the northern 1/3 of the country. A cold front is sagging southward that will produce showers/storms impacting the Central and Eastern areas of Argentina in the next 36 hours with rainfall of 1-3.00”. Rain totals beyond today are estimated in a range of 2-5” which will cause flooding amid saturated fields across NC Argentina. Producers report that unharvested wheat quality is being degraded along with the washout of newly planted soybeans.  

  The Brazilian weather forecast features additional heat/dryness this week with hints of improvement in the 9-14 day period. Crops in MGDS and portions of Goias are being stressed. The sunshine/dry weather is helpful across Mato Grosso. The hope for better rains in late December will need to verify.

  The US Central Bank will meet for the final time this year and likely raise the US Fed Funds rate another .25% to 2.5%. The big question is whether the FED will keep raising rates in 2019? Also, important is whether US President Trump will allow a US Gov’t shut down which closes USDA reporting functions?

  Threatening weather for wheat (Argy/Russia) amid the rumors of additional Chinese demand for US ag products is likely to support new fund demand today.

** Bitter Cold for Russian Wheat with Coldest Day Being Christmas

**  Limited Snows for Central US Next 10 Days; No White Christmas:

** Exceptionally Warm for Next 14 Days – Warmest being Dec 21-22: 

 

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