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Thursday December 27th, 2018

March 19 corn closed up 1 ¼ at $3.74 ½ and December 2019 closed up ½ at $3.96 ¼. March beans closed down ½ at $8.82 ½ and November 19 closed down ½ at $9.25 ¼. March wheat closed up ½ at $5.10 ½ and July 19 closed unchanged at $5.25 ¾. Crude oil closed down $1.64 at $44.90.

The corn and soybean markets did their best to bounce back from Wednesday’s outside day lower and stabilize our breaks which took both corn and soybeans for a test of their uptrend support.  Corn managed to hang on for a slightly higher close but beans were unable to sustain modest early strength. The break has uncovered some technical and value buying here but not with any real urgency with somewhat limited fundamental information and seasonal timings that can keep participants on the sidelines.  No news is not good news for corn and beans which are partly relying on export demand for support and we are not going to have any announcements to confirm if any new business with China (and others) is taking place. We also will not get weekly exports, CFTC data and potentially a Jan crop report if this keeps up.

The weekly export sales report was scheduled to be released Friday but traders have been unable to reach anyone at FAS offices and the voicemail says all staff have been furloughed. It doesn’t look like we’ll be getting that report as long as the shutdown persists and the markets will miss it this week because we would estimate sales of 1.1 to 1.250 mmt of corn, 350-400 tmt of wheat, 2.2 to 2.4 mmt of beans, meal 250-350 and oil around 20 tmt. Reuters confirmed this afternoon that the report has indeed been postponed indefinitely. Trade is still expecting to get the EIA ethanol report tomorrow. Linn estimates ethanol production a little higher (+1% to 1055) with stocks down 1% (or a little less wk/wk) on strong blender demand. Others are estimating a small cut in production.

Lots of talk about Brazilian production losses due to drought. Rains have returned this week although totals have not been heavy and leaving plenty of holes but it appears there is a shift in the overall pattern with more rains in the forecast over the next couple of weeks. Assuming that relief materializes, it should stabilize crop losses. 3-4 weeks ago, many analysts were projecting a 125 mmt+ soybean crop (130 high print) for Brazil where today most have taken the top end off with a 120 mmt type of estimate with (new 113 mmt low print seen today).

Acreage is going to be a bigger topic moving into the new year.  The bean/corn ratio is 2.34% which traditionally would signal that beans need to gain further on corn to secure enough acres. That is not the case this year where corn supply is adequate, but bean supplies are extremely burdensome. This ratio will need to tighten or narrow from this level to discourage bean acres.  China is only part of our problem contributing to excess bean supply. The bigger issue is planting 89-90 million bean acres the past two years where with strong/record yields we have way overproduced even the most optimistic demand scenarios.

The wheat market rose slightly higher on technical trading. Wheat export sales are estimated at 200,000-600,000 mt. March Chicago wheat has fallen $.28 since the highs back on December 13th.

Anna Kaverman

anna@mercerlandmark.com

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