Commitment of. Traders. Managed Money. Fund Positions

Transcription

1 October 5, 2018 Market Summary The USDA will issue its October Supply and Demand report this next Thursday and will incorporate updated ending stocks data from last weeks report. Additionally, they will have updated production estimates along with a variety of demand adjustments. We know that the Carry In number will increase for corn by 138 mln bushels which will require a downward demand adjustment for old crop feed. Will they also adjust new crop feed as a result? Not necessarily if the old crop adjustment is there way of adjusting for a larger 2017 crop. If no other changes were made to the balance sheet than the 2019 Carryout would increase to bln bushels. However, we ll certainly see some new crop adjustments as well. Best guess is that we end up between 1.85 and 2 bln bushels. Such a range would not send much of a signal to the market from current price levels. I suspect we ll back off ahead of the report, but after the report most of the bearishness in the market will be fully known which could make it easier for buyers to step into the market. The soybean carry in will also be adjusted upwards by 43 mln bushels which would take 2019 carryout up to 888 mln bushels with no other changes. Most estimates have production edging higher, so we could see something over 900 mln which could be the downside market driver that influences corn. The next two weeks do not favor harvest. The weather has shifted to a very wet pattern across the heart of the Grain Belt. Traders are nervous about losing yield and impacting quality along with the delay. Lower yield and harvest delays would be seen as supportive of course. However, lower quality can sometimes be a negative influence as producers are unable to hold the crop in storage as long. After the crop report, weather will not have much in the way of competing stories. South American planting season is off to a fine start, nothing overly concerning at this point. Currently, I believe the odds of touching $3.80 first are about equal to the odds of touching $3.50 first. In other words, about 10 cents in upside potential vs 20 cents in downside risk in the short term. As of: 9/25/18 Long/ Short Inside this issue Weekly Price Change... 2 Drought Monitor Day Precip... 4 Harvest Progress Day Day... 5 Exports... 6 Technicals.7 Commitment of Corn Traders Managed Money Fund Positions Soybeans Wheat -57K -44K -12k Change +56K +15K -11K

2 Weekly Price Change: 10/5/2018 Price Change % Change Corn Dec $3.68 1/4 +$ % Soybeans Nov $8.69 +$.23 1/2 +2.8% Wheat Dec $5.21 +$ % Feeder Cattle Nov $ $ % Live Cattle Dec $ $ % WTI Crude Oil $ $ % US Dollar Index % DJIA % 2

3 US Drought Monitor After this next week, we might have to replace this with a Flood Monitor map. Our thoughts and prayers are with the producers that have the most at risk. Here s hoping that the sun comes out a little sooner than later. 3

4 % Complete 7 Day GFS Precipitation Forecast US Corn Harvest Progress 18 States Corn Harvested 100% 95% 90% 85% 80% 75% 70% Harvest progress as of Sept 30th reported at 26%. This is 9% ahead of average and 10% ahead of last year. 65% 60% 55% 50% 45% 40% 35% 30% We should see harvest pace slip backwards to near normal over the next couple of weeks. 25% 20% 15% 10% 5% Sep 9 Oct Year Avg 0% 4

5 6 to 10 Day Forecast Precipitation Temperature Precipitation 8 to 14 Day Forecast Temperature 5

6 Exports Sales Export sales were robust this week, coming in at 56MM bushels. This brings the cumulative sales to 775MM bushels. This is 63% larger than YTD sales versus last year. Export Inspections We saw another strong week of export inspections, coming in at nearly 53MM bushels. This was a week 4 high for shipments, and 7MM bushels higher than the average pace needed to hit the USDA 2.4B export estimate. 6 6

7 Technical Analysis I set up the chart below two weeks ago when Dec corn was trading at $3.57 1/4. At the time, I was only highlighting the potential that the market could trade up into the $3.65 to $3.71 area which would satisfy a long term retracement as well as the September high. Two weeks later, and that s exactly what has transpired. Now that we re here...what s next? Some believe we could still retest the September low at $3.42 1/4 as harvest ramps up (weather allowing) and we get S&D adjustments this next week. Others believe the market will eventually push thru overhead resistance in the $3.70 area and test the $3.80 to $3.85 area. I don t have a serious disagreement with either of these scenarios and personally think that we could see a longer term trend develop between $3.60 and $3.80 pretty easily. 7