DEC CORN

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Dec Corn exploded on Friday for no apparent reason for a 9 cent gain & has extended these gains on Mon 12/2 -with as much as a 4 cent rally! The usual fundamentals thought to be needed as catalysts for an upside move – South American weather & a Phase One trade agreement were not “in play” for this move! Lack of producer selling was a factor!

FACTORS IMPACTING THE MKT

1. EXPORTS – Fri Sales were 806,000 (600-900) & Mon Inspections were 428,000 (500-700)
2. HARVEST PROGRESS – corn is 89% in (lw – 84 avg – 98)  Ill – 93 (100)  Ind – 93 (98)   Iowa – 92 (99)   Ohio – 90 (95)  This is the final harvest report from the USDA this season
3. US/CHINA TRADE DEAL – today the rhetoric was negative as President Trump said that while he favors a deal, he thinks it may not happen before the 2020 election
4. NOV CROP REPORT – our last from the USDA until the Jan Final – has pegged production at 3.550 (ly – 4428) & yield at 46.9 (ly – 50.6)
5. SOUTH AMERICAN WEATHER – is a mixed bag with Brazil in good shape while Argentina is on the  dry side – bordering on a mild drought
6. TECHNICAL OPTIMISM – starting with last Friday’s surprise upsurge, Mar Corn is flirting with 3 higher closes in a row!
7. HISTORICALLY CHEAP – often forgotten by casual traders is the fact that Mar Corn is in the bottom 20% of 10 year range ($3 – $8)
8. NO PRODUCER SELLING – the farmer is not selling at these levels – so the mkt will have to rally if it wants grain
9. NO DELIVERIES AGAINST DEC CORN – normally a positive for prices!

Corn futures have rallied 14 cents for no apparent reason – and even today went up despite negative trade talk from Trump & and DJI trading over 400 lower! Sometimes a mkt just gets too cheap!!

 

JAN BEANS

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Jan Beans have closed lower 8 consecutive days in a row – losing 40 cents in the process! And this –  despite impressive weekly exports – Fri Sales (1.66 MMT) & Mon inspections (1.547 MMT)! The culprits are formidable – benign growing conditions in Brazil portending another large crop & the endless, non-productive trade talks that never seem to work out!  However, they say “low prices cure low prices” and we’re reaching down into historical support – with the mkt very oversold- so very possibly, the lows are close!!

 

DEC WHT

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After a near vertical 60 cent upside run since Mid-Nov (498-551), Dec Wht came back to Earth – retreating 20 cents in the past 2 days!  The mkt looks to have dialed in the sharp drop in Australian wht production, the various production issues in the Black Sea & other European locales & finally the considerable uncertainty of the US Crop just planted! Also adding to the pressure was the on-again-off-again nature of the trade talks – which have kept Corn & beans sideways – providing headwinds against the wheat’s rally!!

 

DEC CAT

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Like waiting for the other shoe to drop! Pundits have been calling for a top in this mkt for some time – the $24 rally since Mid-Sept seems to have fully reflected the current supply/demand fundamentals!  The mkt holds a hefty premium to cash! The 7-10 weather forecast is slightly bearish (no storms) – and placements are the highest in years! Finally, last Friday 11/29, the mkt scored a KEY REVERSAL DOWN (new highs followed by a lower close)! Today, the mkt is lower – so at the very least, we have a solid correction –whether that turns into a full-blown down mkt probably depends on what the stock mkt does!

 

DEC HOGS

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Much like its “sister mkt” Dec Cat, Dec Hogs is grappling with a significant turn-around – in this case – trying to “carve out” a low -much  like Dec Cat has been toying with a top!  After grinding down $12 (72-60), the mkt seems to have dialed in big weight & record slaughters! Yesterday was a good example, as the mkt, after opening lower off negative trade rhetoric, rebounded to close up over $2.00! Not going down on bearish news is very indicative of a sold-out mkt!  However, to register a definitive low, Hog futures need significant exports – which a “signed” trade deal will provide!!

 

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