Markets are watching to see if there is any progress, even incrementally, with important trade talks between the US and China. Funds are buying with the hopes there will be progress. Brazil weather is having perfect conditions for their crops. The markets will be somewhat volatile until more definition is seen with China. Some changes are expected, but no major changes not likely.
The trade becoming increasingly convinced of a Chinese agreement being in the cards in the not-so-distant future. Perhaps more importantly over the coming weeks is the possibility of a sharp yield drop from the USDA's current projection of 186.7. strong demand, both on the domestic and export fronts. With harvest winding down in many areas, satisfying that end-user demand with off-farm purchases will not be getting much easier in the coming days and weeks. Potentially adding to the demand structure going forward is China struggling to get their corn crop harvested, due to some very excessive rainfall totals the past thirty days. Technically, the charts look strong with yesterday's December close of $4.28 being the highest since September 16 and just 3 1/4 cents shy of the highest tick since July 3. Government shutdown continues to keep news flow slow.
It does appear as if the presidents of China and the United States will be taking some time out of their schedules next week to discuss both sides in regard to trade. Basis levels are improving as producer bins remain on lockdown, as hopes of better prices ahead are rampant. The funds are certainly feeling the optimism, as their estimated net long is 155 million bushels. The estimate, given that there's been no official CFTC numbers released over the past three weeks.
Top risk remains as nothing is certain and especially when it comes to US/China relations. Near-term the market looks to be range bound in a large trading range as headline risk remains elevated. The price levels to watch for remain at $10.01 down to $9.94 for support and $10.48 up to $10.53 on the upside. The short-term technical indicators show an overbought condition being corrected. As stated in the corn, if the meeting between China and the US the next few days does not produce another set of meetings between Presidents Trump and Xi Jinping, this market could break to test support very quickly
John R. AndersonVice President of Grain
Farmers Union Cooperative
563-380-2311
