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