One of the important factors facing all markets, in my opinion, is monetary policy domestically and internationally! We’ve experienced a decade of “helicopter money” when it felt that all breaks in all markets, sans interest rates, were opportunities to own………….Hedge funds thrived as Middle America dived! ………………Now it appears, according to the most recent Federal Reserve Committee minutes, that our nations monetary policy will make up for the excess years by continuing on the path of quantitative tightening……………………….Add this to the struggles over Brexit, power struggles in France and Germany , potential for a new trade agreement with China and other Pacific Rim Powers and Middle Eastern happenings which have a specific impact on crude oil values and we have an uneasiness which we haven’t experienced……………………………… So many more macroeconomic influences!
We are approaching first notice day against the December futures and basis levels suggest that corn spreads should have a tendency to widen while wheat spreads could continue to have a tightening bias………………..
Fundamentally, the markets are focusing more on southern hemisphere weather and it’s a smorgasbord as wheat has experienced unfavorable conditions while beans and feed grains have enjoyed decent conditions…………………………………The wheat crop in the northern hemisphere is approaching dormancy in good but not great condition as we’ve had problems near the Black Sea and more than abundant moisture in the USA Plains which stymied seeding and the acreage which could have been added did not get added……………………..Hopefully, the USDA will issue an accurate assessment when it comes out with everything and the kitchen sink in early January 2019……………..
In the microeconomic sense corn/bean/wheat ratios are still in a benign to “seed more wheat” area………..Flat price?; see paragraph 1 as grains could be heavily influenced by other black swans unshackled by the changing political/central bank happenings ……………………….End users might be more than happy to build ownership sub $3.60 nearby corn with an attitude of “keep it coming ’til my head caves in” if it falls to sub $3.40……………………………….A similar attitude might be see with nearby wheat approaching $4.80…………………………………..Producers are not excited to hedge 2019 production sub $4.00 CT(December 2019) or WN sub $6.00…………………………..11 trading sessions left to roll December futures if you do not want to be involved with deliveries……………………..
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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