Below is a sample of Thursday morning’s This Week in Grain newsletter. Click here to sign up for our free daily grain report email.
I expect markets to stay right here for most of the day after the early selloff, probably retracing a bit to the upside in wheat ahead of tomorrow’s massive data dump. Tomorrow, it starts early with CONAB estimates coming out right around this time, then the USDA takes over at 11 am central with the delayed grain stocks, 2018 yield updates and wheat planted acreage reports rolled in with updated global demand and supply updates. The question I ask myself will any surprise move prices out of this range or will we get a nonevent and see prices bleed into March delivery like we have seen in every delivery month since July of 2018.
Below is the message posted on the FAS website regarding USDA export sales. Today we get the report for the week of Christmas. The USDA looks to get caught up on exports two weeks from tomorrow. Until then we remain looking backward at data from more than a month ago. Given it was a holiday week that is being reported this week, all numbers were drastically smaller than a week ago.
USDA Report Schedule
No news updates on trade talks other than word that Brazil is interested in renegotiating some deals with both China and the US. Brazil knows they could be the odd man out here as most of the products China would buy to narrow a trade deficit with the US are competitive in Brazil. It was written yesterday by a few folks that US trade teams have been in Brazil this week to push the new President there to buy more US product like wheat and ethanol, while lifting a ban on US pork imports. Brazil is a potential market for both wheat and ethanol, but in the case of ethanol there are tariffs to overcome.
South American weather looks pretty good in the short term. The trade will be keeping an eye out for weather forecasts into March as that is when it matters for Brazilian corn. I don’t see much to worry about in Argentina, it looks like they will bounce back from last year’s disaster with near record production. Argentina produces a little under ½ of what Brazil does, so forecasts there matter more. Regardless, both countries will be light on corn stocks going forward given poor production last year (Argentina) and low acreage this year (Brazil).
Today I encourage producers who hold products or traders who hold long contracts (especially in March) to seek out a level where they would be comfortable moving aside. I would throw an order out there at that level and let it work. If you are short or selling production ahead of the report, do the same looking for buy back areas only look at the May contracts. Some of the best trades/sales I have made come from putting orders 2-3% away and letting the emotion of these reports take me out. I would use a weekly or even a monthly chart to find that level. Here is how I would position such orders.
- Sell March at 390
- Buy May at 375
- Sell March at 930
- Buy May at 890
- Sell March at 75.50
- Buy May at 72.01
- Sell March at 533
- Buy May at 505
- Sell March at 519
- Buy May at 5.00
- Sell March at 585
- Buy May at 565
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.