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Wednesday February 6th, 2019

March 19 corn closed down ¾ at $3.80 and December 2019 closed down ½ at $4.03. March beans closed up 1 ½ at $9.21 ¾ and November 19 closed up 2 ½ at $9.63. March wheat closed down 1 ¼ at $5.26 and July 19 closed up 1 ½ at $5.32 ¼. Crude oil closed up $.34 at $54.34.

Corn market trade remains extremely choppy and indecisive ahead of Friday’s important USDA reports. In fact, even when compared to the rather subdued sessions of late, this was a particularly dull affair. Managed Money traders were viewed marginal net sellers today, which would leave them net long just under 50,000 combined futures and options.

The only real data of substance to come out today was the weekly EIA report, which actually was quite interesting for all involved, as it was heavily influenced by the historic cold that recently gripped the Midwest. Weekly production of 0.967 million bbl/day of ethanol was a -4.4% drop from the prior report and would be the lowest single week production total seen in well over one year (since October 2017). With the gov’t fully back in business (at least for now), the USDA will release export sales tomorrow. Unfortunately, it will be rather stale data, harkening back to the last week of December. Not worth spending much time discussing, much like the CFTC reports, until they are caught up. The USDA still has not reported a new corn sale since resuming 8 AM daily reporting.

The soybean market continues its choppy overall pattern with a higher flat price settlement for a fourth consecutive session although the bull spreads once again did not participate for a second day which is a red flag. The feature trade once again was soybean oil which took out its key reversal from Friday and resumed its rally into new highs. The USDA flashed 2.603 mmt of beans sold to China and another 274 tmt of beans to unknown when combined with yesterday’s 612 tmt it takes the total confirmed this week to 3.49 mmt out of an expected 5 mmt commitment from last week. This follows 5 mmt that was purchased in December following the G20/Trump-Xi meeting in Argentina.  The crop report on Friday is expected to re-enforce a bear stat scene in soybeans where both domestic and global supplies sit at record highs even when factoring in the smaller Brazilian crop than originally forecast.  Elsewhere in the news, Japan now reports a case of ASF, although a different strain, that has led to a cull of 15,000 pigs.

The wheat rally stalled today for multiple reasons, but probably the most logical, is with the huge data dump the USDA is going to give us Friday, who wants to take on a huge position ahead of those reports? Especially after how quiet trade has been over the past several months. But with futures holding steady in the upper end of its recent range, trade is positioned very nicely in case we do get friendly data that is influential enough to give the markets that breakthrough it has been yearning. Friday, we get the next wave of export sales data, but the only relevance of this report would be if we see something out of the norm as the data is from the week ending December 27.

Friday, we will get US final 2018 Crop Production, Quarterly Grain Stocks data and winter wheat seeding reports. First the bearish side of the report. Analysts are forecasting US 18/19 wheat ending stocks at 989 MB vs the Dec report of 974 MB and it may be even eclipse 1.0 BB as the export program over the first half of the year was abysmal. World ending stocks should see little change, but there too we will probably see a little bigger number than the 268.1 MMT we saw in the December report. Now for some friendly data. USDA quarterly US wheat stocks as of Dec 1, 2018 should come in around 1.957 bil bu vs 2.379 bil bu on Sept 1 and 1.873 bil bu on Dec 1 of 2017. The biggest piece of friendly data should be winter wheat acres. Expectations are for the report to show around 32 mil acres of winter wheat planted vs 32.535 mil last year. Of this total, HRW acres should come in around 22.5 mil, SRW acres around 6 mil and white wheat acres around 3.5 mil for 2019.

Anna Kaverman

anna@mercerlandmark.com

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