Early Market Talk October 11, 2019

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Solid gains overnight after the poor performance yesterday. Strength due in part from US – China trade talks progressing. Day one talks reported “Better than Expected”.

At 0630 CZ19 up $0.04 ¼ at $3.84 ½ with SX19 $0.10 higher at $9.33 ½. Both showing better than typical volume. KC and Chi wheat firm as well.

Dow futures up 285 pts again on favorable trade talk news. Crude $0.72 higher at $54.27. US $ showing a modest decline.

US Soybean carryout today forecast at 460 mln bu and contrasts to a year ago at 885 mln bu. Imagine for a minute resolution of trade issues with China, and a 100 mln bu increase in exports. Further ponder a 1 ½ bu decline in the national average soy yield to 45.4 bpa. That would take carryout this year to 247 mln bu!

US corn carryout now forecast at 1,929 mln bu and sets the glide slope sideways to lower into end of the year? Soybeans potentially lending support as concern mounts with above assumptions?

SXSN at 44 ¼ this morning. High water mark 51 ¾ set Aug 26th may hold for the year. So much for testing those new storage rates and increased full carry calcs. Radically different soy balance sheet outlook today vs just a few short months ago changes the picture for spreads and Basis heading into the new year. Those able to hold old crop beans into the new year should be rewarded with significantly stronger basis than the previous year!

Trump will meet with Chinese Vice Premier Liu He at the White House today.

Corn open interest up 10K yesterday on volume of 525K contracts.

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