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Tuesday October 16th, 2018

December closed down 3 at $3.75 ¼ and March 19 closed down 3 at $3.87 ¼. November beans closed down 6 ¾ at $8.84 ¾ and January 19 closed down 6 ½ at $8.99 ¼. December wheat closed down 1 ½ at $5.23 ½ and July 19 closed down 1 at $5.59 ¼. Crude oil closed up $.15 at $71.76.

One way or the other, it was going to be a “Turnaround Tuesday” either the markets would reverse early weakness, or end a recent win streak by closing lower. Futures decided to tread the latter path, spending all day in the red. Technically, corn left Monday’s friendly close overnight, which is a slightly negative signal if not addressed in coming sessions. Managed Money traders were viewed small net sellers today, as they hang with a greatly-deflated net short in corn.

It was an extremely light news day, and with no fodder to feed the bull, the market was left to its own devices. There was a little tender business around, with both Israel and Korea in for small chunks of corn. Many Midwest farmers are waiting on Mother Nature to dry things down after a very wet week.  It is currently cool, but at least it is projected to stay mostly dry over the next ten days. Some light rains for parts of Missouri and the Eastern Belt entered the picture late this week, but it should be light. Oct 25-28 is expected to be the next major rain event?  Europe and parts of Argentina could use some rain, though the dry western half of Argentina is expected to receive just that this weekend. Brazil planting weather remains excellent, with first crop corn progress running ahead of normal.

After Monday’s relatively exciting pacing and price action, today’s market felt like an eternity as we set back from the recovery highs and volumes and farm selling were constrained.  Yesterday was the sugar high with just enough of a taste of fundamentals and chart action to raise the intensity a notch, today was the hangover. The rally in meal put flat price right back into our previous range and now we are trying to defend the gains although that swine revere continues to rear its ugly head in China with new cases reported nearly daily. Yesterday’s outbreak on the larger 20k head operation stood out and is bothersome because the larger operations also have the more stringent biometric protections that did not work in this case.

There are two more bean cargoes being loaded at the Gulf for November delivery to China but these are old sales already on the books to be executed for government buyers while new sales are still being discouraged. It was great to put some premium back on the board, but we shouldn’t forget that we have a record US crop being harvested, Brazil has record plantings that are ahead of normal, China trade remains unresolved and we are still lugging around a current projected carryout just shy of 900 mb which will require some significant acreage reductions this coming spring.  900 mb. Soybean prices on the board should maintain some risk premium as Southern Hemisphere beans are still going into the ground (rapidly) and China has placed all their eggs in one basket for the moment. Planting conditions are favorable, but the market will be very responsive to any threats.

The wheat contract battled both sides of unchanged throughout the day before succumbing late and finishing slightly lower. With very little influential news around the market place throughout the day, and corn, beans and soymeal all trading on the defensive, it would have been very easy for the wheat complex to fall apart today. At the very least give back Monday’s strong gains from the end of the day. But trade held in there pretty good, especially Chicago, and it makes you wonder if some positive, influential news develops over the next couple of days, what type of market reaction are we going to see. Trade has moved into an area where it has found some very tough resistance in the past. The fact that trade has done this much with such little news is truly remarkable. But I have to respect the move and look ahead.

There were a couple Reuters headlines today. Within the context of the articles are subtle hints that are not very positive to trade right now. In one article a chairman from the USDA talks about Russian exports slowing for multiple reasons, which we all feel will come at some point. But, he talks about how the US export program will eventually kick into gear over the second half of the year. That is not something very friendly short-term. The second article was about how Russia and Brazil are trying to be trading partners again. In fact, Russia is trying to open doors to several trading partners (including China), and those doors which were once slammed shut are now ajar, and more competition means less export business for the US.

Anna Kaverman

anna@mercerlandmark.com

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