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4yrs ago Managed Futures blog.pricegroup Views: 243

JAN BEANS

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Trade uncertainty, benevolent weather conditions for South America & general“holiday chop” have all contributed to a general malaise in the bean mkt – leading to 5 consecutive down days & an aggregate 75 cent drop (960-885) since 10/22/19.  Harvest pressure has added to the downside  but it’s all but over now with 94% (avg-97) of the crop in!

 

FACTORS IMPACTING THE MKT

  • EXPORTS – Thur sales were 1,516 (800-1,400) & Mon inspections were 1,942,761 (1,537,618) – both very impressive #’s but you wouldn’t know it by the mkt action!
  • HARVEST PROGRESS – it’s all but over with 94% in (lw-91 avg -97)

Ill – 95 (100)    Ind – 94 (97)  Iowa – 97 (99)   Ohio – 93 (97)

  • US/CHINA TRADE DEAL – the mkt is becoming numb & unresponsive to all the back-and-forth trade rhetoric – & who can blame it – we need something “signed on the dotted line”!
  • NOV CROP REPORT – our last from the USDA until the Jan Final – has pegged production at 3550 (ly -4428) & yield 46.9 (ly-50.6)
  • SOUTH AMERICAN WEATHER – has been generally benign – promising bigger crops and exerting additional pressure on prices

It’s hard to push the “downside” when the mkt is already in the lower 20% of its 10 year range (8.00 – 17.00) – but it needs some kind of catalyst to shake it from its doldrums – namely a trade deal or South American weather issues!!

 

DEC CORN

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Dec Corn has been caught between a rock & a hard place – on one hand – benefiting from the upside surge in Dec Wht – but on the other – feeling downside pressure from the slumping Jan Bean contract! The result – not surprisingly – is that Dec Corn – for the past two weeks has been locked in a sideways pattern!  Improving South American climes have leaned on Dec Corn but challenging weather in the European wheat areas have provided support – meanwhile, the on-again, Off-again trade deal has moved the contract both ways! However given the mkt is hovering just over 10 year lows, this doesn’t seem the place to press.

 

DEC WHT

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For the month of November, Dec Wht is clearly the upside leader – so far showing a 20 cent gain – while Dec Corn is down 25 cents & Jan Beans are off 50 cents! While a stalled trade deal & harvest  have continued to pressure corn & beans, Wht has fed off weather issues – domestically, winter storms this W/E may jeopardize the newly planted Winter Wheat – and internationally, the Black Sea Region is too cold & other European growing areas are too wet. Also, lower production is expected in Argentina & Australia!

 

DEC CAT

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It looks for all the world that a top is near – after a $20 run to the upside – as the mkt price seems to fully reflect the current fundamentals! And – the mkt is at a huge premium to cash, has placements 11% over 2018 & is sharply  overbought!  But THE TREND IS YOUR FRIEND -& the mkt stubbornly hangs tough off good demand & strong cash – actually extending its gains this week – after a 3-week consolidation!

 

DEC HOGS

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Dec Hogs are just the reverse of Dec Cat – seeking a low after grinding down all Fall.  But they are a classic case of short-term down / long-term up as they try to turn the corner!  Record weekly weights & slaughter have kept the mkt under wraps while it waits for a trade deal – which would give US Pork Exports a huge boost! This would be just what the doctor ordered – as we  have abundant pork supplies while China’s supply has Been Decimated by the Asian Swine Fever!

 

 

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