MAR BEANS

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The mkt rallied steadily all week – on the back – of positive trade rhetoric but it took just one geo-political incident to erase all the hard-gotten gains – in just one day!  The Iran incident, while not directly related to bean exports, still introduced enough uncertainty into the mkt – to cause a sizeable down last Friday – though half those losses have been recouped!

FACTORS IMPACTING THE MKT

• EXPORTS – Mon Inspections – 963,830 (500-1,000) & Fri Sales – 332,000 (350-1.0)
• US/CHINA PHASE ONE TRADE DEAL – we’re closer to fruition – with a Chinese delegation due in DC on Jan 13 & a signing scheduled for Jan 15
• JAN CROP REPORT – we’re looking for a slight reduction across the board – production – 3516 (Nov – 3550)  Yield – 46.5 (Nov – 46.9)
• SOUTH AMERICAN WEATHER – Brazil Bean Crop is forecast to be a record –as timely rains have fallen in the Southern Hemisphere
• PRODUCER SELLING – farmers aren’t opening their bins – so a mkt rally is needed to extract any grain from storage
• SHORT OPEN INTERST – a still sizeable portion of the open interest is short & will have to buy itself out – upon further upside!
• THE US DOLLAR – reached 6 month lows last week – with the Brazilian Real rallying – a good combination for US Exports!
• US DRONE ATTACK ON IRAN – on Friday rattled the markets – even though there was no direct impact on bean exports – but the political uncertainty of the event was enough to induce profit-taking on a Friday
• CHEAP ENOUGH – believe it or not, bean prices are the same level as they were in 2009 much freer trade – world wide – coupled with a competitive price should be a recipe for higher prices in 2020!

 

MAR CORN

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There is enough geo-political, supply/demand fundamentals – swirling around this week – both positive & negative – to keep  this mkt range-bound until Mid-Jan!! On the plus side, the WASDE Report on this Friday 1/10/20 is forecast to come in with lower #’s for production, yield & carry-out!  Also, the signing of the US/China trade deal on 1/15/20 – should usher in a new era of China buying! On the negative side, the Iranian crisis is still hovering over the mkts – possibly disrupting export flow – and South American weather continues to be bearish with ample rains & no excess heat!!

 

MAR WHT

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Mar Wht’s 20 cent correction (568-548) was in part due to an overbought condition – as the mkt reacted after a solid up – much enhanced by the falling US Dollar! But the Iran Crisis introduced serious supply/demand concerns – not just a knee-jerk reaction – as Iraq is a large US Wht customer – also forecasts for snow over the Black Sea region should benefit Russian & Ukrainian crops!  But finally longer-term, the Phase One signing of the US/China Trade Deal could well include Chinese wheat purchases!

 

FEB CAT

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Pundits have been predicting a top for a long time, but every time the mkt looks like it’s ready to roll over & die, it doesn’t!  The last three days are a perfect illustration – last Friday, the mkt fell to 3-week lows – but the very next trading day, PRESTO – the mkt surged over $2.00 to the top of the range – only to trade back lower today! So the mkt can’t seem to make up its mind -mired in a congestion area for several months now.  The fundamentals lean toward a top – higher placements for the last 3  COF reports – a 540 million pound production increase from the 1st to 2nd Qtr – the largest since 2008!!

 

FEB HOGS

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The Feb Hog contract seemingly has the supply/demand fundamentals to move higher but it’s not happening and traders are growing increasingly skeptical!! Of Course, the imminent signing of Phase One has the “export hopes”  sky-high   but in the interim, the mkt is trading short-term fundamentals – which week after week, feature near-record pork production!  So until, the Us/China Accord translates into actual increased exports, the mkt will defer to the short-term bearish supply!!

 

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