Special Market Update

The bearish themes in the grain market are still in place with very little prospect for any major shift over the next two months. We are beginning to enter holiday trade mode which should result in reduced trade volume and participation. The trade war is likely to drag on for months based on the back and forth negative rhetoric on a daily basis. We will get a December WASDE, but USDA does not change yield on that report which means the market will have to wait for the final production number in January.

Corn continues to drift lower and looks precarious on the chart right now. A close below $3.70 in December futures may set up a trade towards contract lows just above the $3.50 area. The biggest problem for corn remains a lack of export demand with export sales and loadings running well behind projections. Managed money traders are holding a modest short at this time. We don’t see much of a reason for them to cover unless the final yield drops on the January report. A quick resolution to the trade war might trigger some short covering but we don’t see that happening anytime soon. Corn harvest today is likely 80% complete and the last 20% may be a struggle with the weather pattern turning wetter on the latest maps. Corn basis remains firm with the producer disengaged for now.

Soybeans are also starting to rollover from a chart perspective, but basis remains strong for this time of year. Funds are basically even with very little to push the market sharply higher or lower for now. ASF in China continues to destroy soy demand and competing South American currencies have been weaker which could limit more future US export demand. South American weather is excellent and should remain that way through the current forecast models.

With futures drifting lower into the holidays, it’s hard to recommend aggressive sales here today at these levels. However, we would definitely look at getting open orders in above the market on the chance that we get some type of surprise over the next 60 days. We would also focus on getting some bushels enrolled in our Freedom pricing tools with the sign-up deadline of December 20^th approaching fast.