Walsh Daily Bullet Points 11/12

GRAINS

• Dec corn down ¼ and Dec Chicago wheat down 1½ as of 6 a.m. CT
• Mar KC wheat down 5½ on rain in the forecast for the southern Plains
• Wheat was the standout Wednesday, Dec Chicago up 8 cents and Mar KC up 5¼
• Algeria and China were both in for international wheat
• Tuesday’s post-report high of 4.55½ is the resistance level to watch in Dec corn, bulls have not been able to push through it
• Corn open interest jumped 14,976 contracts Wednesday, so money keeps coming in even on a flat day
• Taiwan went to Brazil for corn, which is the kind of business the US wants back
• Brazil is sitting on a record corn crop and Russia is storing unexported grain in giant plastic bags with Black Sea trade stalled
• Weekly export sales come out Friday instead of Thursday because of the Veterans Day holiday
• A polar air mass is dropping into the eastern half of the country, overnight lows in the 20s across the central US by Friday
• Freezing temperatures reach the Deep South by Saturday morning, widespread frost and freeze across the South and Southeast this weekend
• Chicago wheat open interest up 172, KC down 497
• Dalian corn down 0.18%

OILSEEDS

• Beans down 1½ overnight, meal down 0.10, oil down 0.15
• Soyoil did the work Wednesday, up 1.17 while beans only managed 2½ cents
• China is facing a soybean oil glut as it buys beans from both Brazil and the US
• Malaysian palm extended its bounce to around MYR 4,450 on a weaker ringgit and firmer Dalian oils
• October Malaysian stocks came in at a record 3.62 million tonnes but below the 3.75 million the trade expected, and that smaller than expected build is what triggered the rally
• Palm is now off its lowest level since early March
• Bean open interest fell 3,963 and oil fell 4,723, so Wednesday was position squaring more than conviction
• Meal open interest rose 5,498
• Dalian palm up 1.70%, soyoil up 0.50%, beans up 0.17%, meal up 0.06%
• Malaysian palm up 0.68% overnight
• Jan crush settled 194¾, up more than 13 cents on the day
• Meal 51.25% of product value, oil 48.75%
• Oil rallied hard while beans barely moved, so the revenue side gained on the cost side and the margin widened
• A wider margin means processors make more per bushel, which supports their demand for beans

LIVESTOCK

• December live cattle slipped 0.225 to 218.975 on corrective selling after the three day bounce
• January feeders added 1.125 to 327.80 on short covering and bargain buying
• Hogs picked up 0.225 to 56.025 on light short covering after last week’s contract lows
• The CME lean hog index is projected at 59.78, down 21 cents, but it is showing early signs of bottoming
• Screwworm is the story to watch, more than 40 cases confirmed so far in November, the worst month since it first showed up in Texas this year
• 128 total animal cases and 65 active right now, the newest a horse in Otero County, New Mexico
• It spread to Arizona for the first time in October
• Mexico raised beef exports to the US 17% while live cattle shipments keep falling
• USDA’s trade nominee told the Senate ag committee the US needs to push China to relist delisted US beef plants
• Japan confirmed its first bird flu of the season in Kyoto and is culling about 200,000 chickens

SOFTS

• Cocoa jumped 190 to 5,061 on short covering after the recent beating
• Sugar gained 38 points to 18.47 as firmer crude sparked short covering
• The crude link is the thing with sugar, stronger oil makes ethanol more attractive and pulls cane away from sugar
• Cotton was under pressure through midday
• The COT from the week of 11/3 shows funds carrying a big net long in sugar at 227,793 against commercials short 271,913, which is a crowded position
• Funds were net short cocoa 19,424 that week, which helps explain Wednesday’s bounce

FINANCIALS

• Dollar index settled 102.90, up 0.67, a new contract high, and hit a 19 month high overnight
• Goolsbee called the inflation report borderline disturbing with the Fed weighing more hikes
• 10 year Treasury at 4.999%, WTI down 0.7% at 85.95, stock futures lower after Wednesday’s rally
• Gold fell 24.80 to 3,995.90, silver added 58 cents to 51.805
• The Nvidia story is the one with teeth for ag, the spy allegations are putting the Trump and Xi meeting in Shenzhen at risk and that is the first real test of the trade truce

CURRENCIES

• Dollar strength is the whole story and it is working against every export market
• Yen at 159.85, down 1.148, euro at 1.1094 with a break under 1.1100 putting 1.1000 in play
• A weaker ringgit is part of why palm rallied, it makes Malaysian oil cheaper for foreign buyers

SETTLEMENTS

• Dec corn 4.48¾ (−¼) · Dec Chicago wheat 6.00¾ (+8) · Mar KC wheat 6.39½ (+5¼)
• Jan beans 12.30½ (+2½) · Jan meal 327.30 (+1.30) · Jan soyoil 64.11 (+1.17)
• Feb live cattle 222.58 (unch) · Jan feeders 327.90 (+1.22) · Dec hogs 55.90 (+0.10)
• Mar cocoa 5,061 (+190) · Mar sugar 18.47 (+0.38)
• Crush (Jan): 194¾ --- meal 51.25%, oil 48.75%

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