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DAILY PM AG MARKET VIEW REPORT 

Jan 18, 2019  |  Follow us on Twitter @TradeADMIS  |  Download PDF
 

SUMMARY

Soybeans, soymeal, soyoil, corn and what traded higher. US stocks, Crude, Copper and hogs also traded higher. US Dollar was higher.

 

SOYBEANS

Soybeans traded higher. Some linked this to rumors that China may buy US products. A Bloomberg article suggested that China has offered to go on a 6 year buying spree of US exports. By increasing US imports to $1 trillion, China would seek to reduce its trade surplus, which last year stood at $323 billion to zero by 2024. This headline follows yesterday reports that US Treasury Secretary talked about lifting some or all tariffs imposed on China imports and even offered tariff rollback during trade discussions scheduled for Jan 30. March soybean started the week near 9.00. Prices slipped lower after US Treasury Secretary suggested US and China talks were not progressing well. Lack of US export news, CFTC commit of traders report and USDA Jan 11 crop report limited new buying. Talk China was asking for US soybean export prices and that this week China bought 10-15 soybean cargoes offered support. Drier than normal weather over 25 pct of Brazil is also offering support.

Soybean Futures Chart


CORN

Corn futures ended higher. For the week, March corn futures started near 3.78. Prices dropped on talk of lower US domestic cash basis. Some link this to talk crushers are covered and margins remain negative. This could slow corn usage. Funds were heavy sellers below key moving averages. Bloomberg article suggesting that China has offered to go on a 6 year buying spree of US exports. By increasing US imports to $1 trillion, China would seek to reduce its trade surplus, which last year stood at $323 billion to zero by 2024. Funds turned large buyers of corn on the news. There is talk that China might buy US corn if there is trade deal. USDA estimates China beginning corn stocks near 222 mmt, crop is near 256 and total domestic use is near 276 mmt. That suggest end stocks near 207 mmt. Doubt they need corn unless it is part of the deal.

Corn Futures Chart

 

WHEAT

Wheat futures ended mixed. Chicago wheat slipped lower while KC and MLS ended higher. March Chicago wheat started the week near 5.14. Concern about slow demand for US wheat exports offered resistance. This despite talk that US farmer may plant a record low amount of winter wheat in 2019. Rising EU wheat prices offered support. Some feel this due to talk of higher domestic Russian wheat prices and concern Russia may soon slow export’s. Chicago wheat futures continue to find resistance from talk that current season to date World wheat exports of the 7 major wheat exports is running 8 percent behind last year versus USDA forecast of a 2 percent drop. This equals about 12 mmt fewer World wheat exports than USDA is forecasted. There is talk that China might buy US wheat if there is trade deal. USDA estimates China wheat beginning stocks near 131 mmt, crop is near 132 and total domestic use is near 123 mmt. That suggest end stocks near 143 mmt. Doubt they need wheat unless it is part of the deal.

Wheat Futures Chart

 

 

DAILY AM FINANCIAL MARKET OUTLOOK REPORT

Jan 18 |  Download PDF

US-China Trade Deal Optimism

STOCK INDEX FUTURES

Before the close of trading yesterday the Wall Street Journal reported the U.S. was considering rolling back tariffs on Chinese made goods in an effort to advance trade talks prior to their March 1 deadline, which helped stock index futures to advance. 

A Treasury spokesman subsequently said no such proposal is in place, taking futures off of their session highs. 

U.S stock index futures are higher for the fourth straight day today on hopes that a trade war between the U.S. and China will be resolved.

China’s Vice Premier will visit the U.S. on January 30-31.

December industrial production increased .3%, as expected, and December capacity utilization was 78.7%, when 78.4% was anticipated.

The 9:00 central time January University of Michigan consumer sentiment survey is estimated to be 97.

It may take a while, but downward pressure on interest rates globally, but not from the Fed in the short term, will ultimately rescue this market.

CURRENCY FUTURES

The U.S. dollar is a little lower and the euro currency is slightly higher, although the euro remains near a two week low against the dollar as a result of recent weak euro zone economic data.

The Canadian dollar is higher on news that inflation in Canada unexpectedly accelerated in December. 

Canada's consumer price index increased 2% on a year-to-year basis in December, after a 1.7% advance in the previous month. Market expectations were for a 1.7% gain.

INTEREST RATE MARKET FUTURES  

Futures are steady at the front end of the curve and a little lower at the long end, as the yield curve becomes less inverted.

Financial futures markets are predicting a 71% probability of the fed funds rate remaining unchanged at the current level of 2.25%-2.50% this year.

There is a 22% chance of an increase in the fed funds rate by 25 basis points, and there is a 7% probability of a 25 basis point rate cut in 2019.

With the improving probability of a U.S.-China trade deal coming sooner rather than later, in my opinion, now is a good time to stand aside in the interest rate futures markets with the idea of getting long at lower prices. 

In spite of lower prices today, the long term trend for gold and silver still appears to be higher.

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

MONTHLY COMMODITY MARKET REVIEW

This special monthly report recaps the financial, energy, metal, currency, grain and livestock market trends exclusively by the ADMIS Research Team.

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INFOGRAPHIC SNAPSHOTS

US EMPLOYMENT DATA (released Jan 4)
Dec Employment Chart
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USDA SUPPLY/DEMAND REPORT (released Dec 11)
December 2018 USDA Supply Demand December 2018 USDA Supply Demand World
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US EMPLOYMENT DATA (released Dec 7)
Employment Data For Nov
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US Q3 GDP (released Nov 28)
Q3 US GDP
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