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Turner’s Take Newsletter and Podcast | Post-WASDE Thoughts


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NEW PODCAST | We have a new podcast that just came out today. I go over my thoughts on the WASDE, where we think corn and soybeans could trade in 2018, and our thoughts on crude oil, cattle, and hogs.  Click here to listen to Turner’s Take Podcast

 

MEET CRAIG TURNER | I’ll be at the Van Trump Conference on Wednesday, December 6th in Kansas City, MO.  If you are going to be there too then please let me know and we can meet up! I am also going to be at Commodity Classic from Feb 27 to March 1st in Anaheim, CA.  I think we are going to do a live podcast from the Daniels Ag Marketing booth.  That is another place we can meet up and who knows, you might even be on the podcast!

 

CORN | The USDA really surprised everyone by increasing yields to 175.4 bpa.  Production increased 298mm bushels but feed and exports increased by 150, so the net gain to carryout was on 147mm bushels. This puts projected 2017-18 corn carryout at 2.487 billion bushels with a 17.23 stocks/usage.  Not great…

One encouraging sign was corn did not break below $3.40. We tested those levels but the market held. I think at this point all the bearish news has now been priced in.  We could have a spectacular South American growing season, and that could bring down prices another leg, but at this point there seems to be more potential bullish cards in the deck rather than bearish.  The funds are short over 200K contract (at or near record levels), farmers don’t want to sell down here unless they have too, harvest is nearing completion, export demand for US corn can only get better, ethanol is supportive, and we are one weather event in South America from a decent short covering rally.

In the near term I think we are range bound and I continue to like short straddles in the corn market. I have been writing about them in Turner’s Take Ag Marketing and we will continue to hold those positions.

Longer term I think corn acres go down. I just finished my 2018 Corn Outlook report and we’ll have a link for everyone to access it later this week. Some analysts are calling for 92mm acres but I think we will be at 88mm.  A lot of farmers I talk to are more interested in beans next season, bankers want to see more beans due to input costs and profitability per acre based on current prices, and soybeans have a stronger demand growth story than corn does right now.  2018 could be the year when corn reverses trend and heads higher.

 

MONTHLY CORN CHART

 

 

SOYBEANS | Soybeans were mainly unchanged as ending stocks came in at 425.  If South America has a large crop and we have 90+mm acres again, soybean stocks could be in the 500 to 600mm bushel range for 2018-19.  There are two big questions for soybeans in the coming months.

  • Do acres increase again in the US?
  • Does Chinese demand keep up with increases in global supply?

Soybeans are only grown for global export in a large scale in South American and the United States. Any serious production losses in Argentina, Brazil, or the US could send soybeans higher by a few dollars.  However, if South America and the US have another round of great crops, beans could be in the $8s!

 

MONTHLY SOYBEAN CHART

 

 

 

WHEAT | Wheat stocks came down again!!!  I think we might be finally seeing stabilization, and dare I say it, a long term bottom in wheat.  Minneapolis wheat stocks fell too and I think we could see some tightness in that market later this winter or in the early spring.  KC is gaining on Chicago lately too. So that means the protein trade is starting to look bullish.  I like KC over Chicago and I like bull spreading MW. I have been writing about that in Turner’s Take Market Alert and I continue to like those positions.

 

MONTHLY WHEAT CHART

 

 

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About the author


Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com.

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