The market’s focus may be turning to the southern hemisphere with wheat harvest weather in Argentina and Australia and soybean sowing conditions in Brazil and Argentina……………..For all extent and purposes the bean and corn harvest in the US is done as is winter wheat seeding……………………….We are approaching Holiday mode and the markets are closed on Thursday and close early on Friday…………………………..Then we’ll see first notice day against December contracts on Friday morning for delivery on December 3 which is the first day of Hanukkah…………………………..
Wheat spreads in Chicago, not Kansas City nor Minneapolis, have tightened the past two weeks as, some say, funds have started to move out of short December positions and moving to March……………………….Basis levels for old crop soft red wheat are historically firm as some are pointing to the poorer than normal quality of the 2018/2019 crop………………….Spreads are still wide because, some say, the threat of high vomitoxin level receipts keeps commercials from relying on the futures contracts as a valid and safe backstop against cash sales………………………………….Some commercials may go directly to the elevators in the Toledo switching district to garner mill-able bushels and bypass all of the headaches involved with sorting out receipts and mixing different vomitoxin levels………….We still sense that Toledo stocks will spend the winter icebound and real tightness, if it does occur, will be against the March and May futures……………………………
Corn stocks are still healthy and it appears that there in no rush to pay up for inventory as bags of corn and piles by elevators will need to be moved before Spring arrives in a few months………..We might have a tendency to have spreads widen as we go through each delivery month event………..CK/CH sub 8 cents appears tight, yet widening potential is not worth the risk bear spreading at this point………………Getting into 6 or less………………a different story!!! ………………………please remember that the CME is allowing storage rates to increase starting with the December 2019 contract………………..
Hopefully, good things happen at the G 20 summit in Buenos Aires at month’s end…………………………All ships rise with the tide…………………………Yet, egos and miscommunications could stymie trade agreements and implementation of decrees like Brexit……………………….The market appears to be cautiously watching to see how these things play out yet, the lack of an agreement has been perceived as bearish and allowing end users to patiently wait for nearby corn to slip back too 350 and nearby what to 480 before taking extended coverage ………………………..
The information contained on this site is the opinion of the writer and obtained from sources cited
within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.
Steve Bruce
Walsh Trading
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