12/26/18

Morning Commentary - 12/26/2018

CBOT Market Calls Steady to Firm

** Pre-Opening CBOT Calls Are: Soybeans 1-3 cents higher, corn steady to 1 cent higher with wheat called steady to 2 cents higher.  

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! Pre-opening CBOT grain calls are steady to slightly higher. World crude oil prices are recovering, and the South American weather forecast is drier in NC Brazil and wetter across Argentina than what was forecast Monday. The pattern is not dry enough to cause any big drop in Brazilian soy production, but it could limit the upside above 122 MMTs.

  Asian stock markets fell to sharp losses on Tuesday following the US’s decline with the Dow expected to open higher in a post-holiday recovery. The futures market is forecasting that the DOW will open 80-100 points higher. The problem is that such an opening will not produce the market capitulation that traders desire to call for stock market bottom.

  President Trump indicated that; “The US Gov’t will not open until we have a wall!” US President Trump and the new democratic House of Representatives are likely to have an extended fight over a US/Mexico border wall into the New Year. There is no indication that the US Gov’t will reopen for business with traders discussing the odds of a much-delayed US January Crop Report.  

  The EU lowered its wheat production estimate to 128.5 MMTs (down 700,000 MTs) and raised its corn production estimate from to 67.5 MMTs (up 4.6 MMTs) for 2018. No reason was given as why the EU usable corn production estimate rose so sharply this late in the crop year? The EU left its wheat export estimate unchanged at 20.0 MMTs and corn import estimate at 18.5 MMTs. The EU rapeseed production estimate was left unchanged at 19.8 MMTs.

  Nice rains fell across NC Brazil in the past 36 hours which helped restore soil moisture with the soybean crop in their reproductive state. However, the forecast is drier in the 6-10 and 11-15 day period for NC Brazil with more heavy rain for Argentina. The same South American weather pattern of the first 3 weeks of December appears to be returning? The regional dryness across Paraguay, MGDS and Parana will limit soy and corn crop size potential. At the same time, flooding rains in Argentina will return crop quality concern for 30% of the unharvested wheat and the washout of the newly planted soy crop.

  In other world grain markets, China’s Dalian soybean/soy product market closed lower amid the domestic oversupply, while Malaysian palmoil futures bounced on enlarged biofuel demand. Paris wheat futures remain closed. 

  Fresh news is scant post-Christmas, but the 100 day moving average in March soybeans is holding at $8.9175. We look for a two-sided holiday reduced volume session with soybeans gaining on the grains. New China soy demand is awaited.

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