Friday is first notice day on the December futures for delivery on December 3 which is the first day of Hanukkah…………………Given present basis levels traders might anticipate heavy corn deliveries and light wheat deliveries………..Regardless, out of position hedgers and speculators tend to be out of any and all December futures by the close on Thursday!
Hopes are high that trade pacts and agreements might be reached at the G 20 meetings in Buenos Aires at the end of the week…………………We might see more unfold within the European Union and the likelihood of further disintegration as Britain implements its exit(Brexit) from the alliance……………Also, problems in the Black Sea between sovereign states is causing problems in the wheat market as delivery reliability could be in question………………..Lots of black swans which are beyond the realm of imagination are out there, too! Yet, history shows us to not be complacent!
Storage rates for Chicago wheat are expected to be lowered to .00265 cents/bushel/day from the previous .0365 cents/bushels/day starting on December 19 as the WZ/WH running average on November 23 was at 19.8% which is well below 50% which requires the CME to lower rates……………………This suggests that storing wheat at the expense of storing corn and/or beans is not in the best interest of a deliverable elevator……………..Of course, things can change and the CME will revisit the storage rate again……………………….Higher storage rates might be enacted starting with the November 2019 bean contract and the December 2019 corn contract if the conditions set by the CME are met……………Many spread implications!
A lot of focus will be on the Federal Reserve this week as Mr. Powell speaks in New York on Wednesday and there is keen interest in any decision to tweak the anticipated 3 rate hikes for next year………….The implication to the grain markets is that some say that restrained money growth as opposed to the helicopter money phase of 2008 to 2016 might allow for “normal” prices for the next few years……………..What is normal??? Some say nearby corn near $3.50, nearby wheat at $4.80 and nearby beans at $8.50 might be those prices……………………….What is abnormal is wheat over $10. corn over $5 and beans in the teens……………………………….Sub $2.80 corn is cheap as is $4 wheat and $7 beans…………………………..Of course, input costs matter as do land valuations………………………
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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