Politics and Federal Reserve policy statements have been having a major impact on grain and bean prices as harvest has wrapped up in the northern hemisphere. Traders are looking at weather conditions in South America and Australia and it appears that things look good in the near term which suggests that the world will be awash in soybeans for the next few months…………………….Beans need a Chinese trade agreement and/or problems to develop with the Argentine and/or Brazilian crops in order to sustain a rally or we’ll need the Fed to start another round of quantitative easing. End users appear to be in the driver’s seat in the soy complex……………………….Traders are going home on Friday a little nervous over what can happen over the weekend in Paris, the Black Sea, DC, China, Turkey, Germany……………………….this may be supportive to grain prices……………..
The wheat market still has the potential to pop and traders are always watching the Black Sea to see if the differences between Ukraine and Russia spark more conflict which may disrupt shipments……………………..The USDA will tweak Supply/Demand figures in the December 11 report which is released at 11:00 Chicago time…………………………….The big report comes out in early January as the USDA issues winter wheat seeding, final production, stocks-in-all-positions as of December 1, 2018 and Supply/Demand projections…the whole shabang! Traders have been talking about lighter acreage in both hard red and soft red as the areas may have been soaked with too much rain in September/October/November………………….If the Federal Reserve stands down with its recent tightening position and loosens a bit then traders may be looking at wheat at $5.00 as being on the low end of the scale……………..We are approaching that time of year when we may overreact to cold weather and talk ourselves into winter kill……………..Most damage occurs in early Spring!
Corn may have been an afterthought for speculative traders the last few weeks as there has been more focus with getting the crop stored for the winter and the Chinese talk has focused on the impact on beans…We may be in a very comfortable position with domestic stocks…..Spreads might remain on the defensive as warehousemen and elevators could be looking to move everything that is stored in temporary spaces…………….Traders will be looking at next week’s reports with interest as there is potential for a tighter world stocks to use ratio which could be supportive as we approach plantings in April/May……………Yep, we have to start talking about new crop and the impact of a very neutral $4.03 December 2109 on acreage……………..At this price and at a ratio of just under 2.4 to beans it may be how the early planting season pans out to determine if the producers seeds more corn………………………..
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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