Commitment of. Traders. Managed Money. Fund Positions

Transcription

1 October 19, 2018 Market Summary Corn started the week off strong, closing Monday up 4 cents at $3.77 1/4, which marked the highest close since August 20th. Nov soybeans also managed their highest daily close since August 20th, closing at $8.91 1/2. Despite starting the week off strong, both commodities gave back all those gains and then some, closing the week well off the highs. The weakness in corn and soybeans in the latter part of the week was attributed to more favorable harvest forecasts, which has allowed producers to finally return to harvest activities. The natural hedge pressure alone from significantly undersold farmers should continue to add pressure to prices in the coming weeks. Export sales this week can be summed up as simply awful. Corn sales were 15MM bushels, well below the 35MM bushels needed/week to achieve the USDA s 2.475B bushels estimate. Corn sales were the second smallest on record for this week only trailing 2012 which had 6.5MM bushels. Keep in mind that 2012 was the extreme drought year, which shows just how bad this week s sales really were. Bean export sales were MY lows, coming in at 10.7MM bushels. Through this week, soybean sales are down 234MM bushels vs last year, and down 157MM bushels vs the 5-year average. The USDA is currently estimating exports to be down 69MM bushels YoY, so barring a production issue in South American, They will be forced to trim export demand continuing to push the bean carryout toward 1B bushels. China sold another 167MM bushels out of their state reserves this week, which was 53% of the total offered at the auction. China has now sold nearly 3.5B bushels of corn out of their state reserves since April 1st, which represents 44% of total that has been offered. While the harvest weather will remain favorable through next Tuesday, the pattern will become more active again from October 24th November 10th. Two to three systems will cross the region next Wednesday into the weekend, bringing periods of rain with wind gusts to mph for 1-2 days. Dec corn begins a seasonal downturn next week that lasts through November. In fact, the 5, 15, and 30 year seasonals are in almost identical agreement of a short-term top in prices toward the end of next week. Managed money funds have now covered their entire short which was over 150k contracts just a few weeks ago. With more than half of harvest remaining and funds now neutral, upside should struggle from here. As of: 10/16/18 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 +20K -36K 0k Change +54K +5K -17K

2 Weekly Price Change: 10/19/2018 Price Change % Change Corn Dec $3.67 ($0.06) -1.67% Soybeans Nov $8.56 3/4 ($0.10) -1.21% Wheat Dec $5.14 3/4 ($0.03) -0.48% Feeder Cattle Nov $ ($0.05) -0.03% Live Cattle Dec $ ($0.08) -0.07% WTI Crude Oil $69.29 ($2.24) -3.13% US Dollar Index $ % DJIA $ % 2

3 US Drought Monitor 3

4 7 Day GFS Precipitation Forecast US Corn Harvest Progress Harvest progress was up 5% this week to 39%. SD and IA have now fallen below average pace, while MO, IN, and IL are above average. We should see harvest pace pick back up in next week s report as producers were able to return to the fields this week. 4

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

6 Exports Sales Export sales were lackluster this week as we only saw 15MM bushels hit the books. This brings the cumulative annual sales to 830MM bushels, which is the second highest YTD total on record Export Inspections Export inspections were lower week on week, falling to 39MM bushels which is roughly 7MM bushels below the average pace needed to hit the USDA export estimate. Cumulative exports reached 262MM this week which is the second highest YTD exports on record. 6 6

7 Technical Analysis Dec corn managed an intraday high on Monday of $3.78 1/2, but was met with relentless selling for the remainder of the week, ultimately closing 6 1/4 cents lower for the week. Price managed to close at very important support as it now sits on the 20 day moving average which acted as support the day of the Oct WASDE report, as well as the upper end of the channel which broke a long channel congestion since July. Failure of this support would find minor support at the 50 day moving average (yellow line), followed by stronger support at $3.60 (last week s WASDE report low). Resistance will be found at this week s high of $3.78 1/2. 7