Commentary
It is my belief that the trade expects minimal changes in carryout in Friday’s USDA December WASDE supply /demand report. Changes may occur in world corn and soybean ending stocks and that’s due to expected production losses in Brazil, with output seen down 2 to 3 million metric tons this month for Brazilian corn and beans. While there is little doubt by crop scouts that drought like conditions in the center/North of Brazil have done damage, a potential pattern shift could be underway for the second half of December to a more normal monsoon rain flow. That said the 6 to 10 day remains bone dry for the most part for the areas severely affected by drought in Brazil. So, in my opinion verification for the 2nd half of December in Brazil is paramount. Beans were under pressure for most of the session but came back to unchanged at the close. A lot of today’s strength may have come from meal. Dec meal rallied 11.40 while January meal rallied 9.40. First positive close in 6 sessions. Front month meal contracts still trading in backwardation with the spreads widening today. Not hearing to much out of Argentina as far as bean availability to crush as they were close to being out of beans to crush in October. The meal market priced that story with a 112-handle rally from October to Mid-November, then once priced in, meal collapsed as did beans as forecasts turned wetter and some rains finally showed. Will the inversions in spot meal grow with funds front running the spreads one more time? They might, but I think that there is a better chance of one more rally if rains miss in North Central Brazil during the second half of December. No trade recs today, Jan 24 meal chart below.
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Trade Ideas
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Risk/Reward
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