The US and China will resume high level trade talks next week. We are bullish grains and oilseeds short term but we are bearish long term. We bullish cattle heading into Q4 2019 and Q1 2020
The Cattle on Feed report was bullish on Friday. Feeders are now in a bullish uptrend while Fats are reversing and trying to fill the gap from the Tyson fire. Soybeans lead the CBOT higher due to improving trade talks between the US and China
The report was bullish for HRW wheat (KC). Russian wheat production was cut, US HRW exports were increased, and feed use was increased. Year-over-year HRW stocks are projected to be 15% lower. KC wheat finished 20 higher today and lead all markets.
The next couple of weeks makes or break corn. Soybeans could add acres but at current prices with no China deal it is hard to make that case. I think worst case scenarios are CN goes to $3.20, CZ $3.40, SN $7.50, SX, $7.80 WN, $4.00 and KWN $3.60. Maybe $7 soybeans discourages South American planting? Corn has a real chance to rally this spring/summer but it is all about US acres and yield. It will not be a demand story. Farmers need to sell the deferred contracts on rallies and use the new price ranges to sell straddles. The rest of this year is going to be all about Maximizing Opportunity in a Low Priced Environment. I’ll be holding a webinar on that topic soon and updating you about it next week
Informa came out with estimated acres and pegged soybeans at 86.2mm and corn at 91.5mm. Based on the conversations I’ve had with farmers since the new year I tend to agree with these numbers. 91.5mm acres and 178 trend line yield keeps corn under 2.0 billion carryout, which I think is neutral. It can be bullish with more export demand and spring planting/summer weather issues. 86.2mm for soybeans with a 50 trend line yield puts new crop ending stocks around 600. Not great. That is already factoring in the 5mm mt of new Chinese demand. However, if a US/China deal gets done and China buys another 5mm mt of old crop, then ending stocks for beans are between 450 and 500mm with a trend line yield. That at least has some potential for soybeans to rally in the spring and summer with weather issues. We could even see $10 for new crop under the right conditions.
We are now in the first full week of trading in 2019 and the markets are trading higher for the most part. The US dollar is down and metals are struggling a bit, but the stock market, crude, grains, and livestock are generally higher. We go over all the major futures market sectors and give our opinions for each in the latest episode!
I talk to a lot of traders and I’ve noticed many use the words “bear market” and “recession” interchangeably. Most economic recessions cause bear markets in equities, but a bear market doesn’t have to lead to a recession. In 1987 the market crashed more then 20% but was not followed by a recession. That could happen again in 2019 but first lets look at what exactly are bear markets and recessions.
Turner’s Take Newsletter & Podcast | Trade War Causes Massive Ag Selling NEW PODCAST | We just released a new Turner’s Take webinar. I talk about how the escalating Trade War (of words) caused Soybeans to trade 66 cents lower today, which also lead corn down 17 cents and HRW wheat down 27 cents. Click… Read more.
NEW PODCAST | We just released a new Turner’s Take podcast. We go over our thoughts on the June 2018 WASDE and why we think corn has the best changes of a big rally IF we have a significant weather rally. Please click here to listen to the latest Turner’s Take podcast. JUNE WASDE | The USDA did… Read more.
PODCAST | The USDA released their April WASDE yesterday and we dive right in during the podcast. We think the biggest takeaway was what the USDA had to say about 2018/19 new crop corn exports. The Ag Forum had 2019/19 corn exports at 1.9 billion bushels. I think we could see 2.1 to 2.2 billion in… Read more.