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New Record Short in Corn?

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Good Morning! From Allendale, Inc. with the early morning commentary for November 17, 2017.

Grain markets await this afternoon's Commitments of Traders report for the latest on fund positions. Equity markets rallied yesterday with the House passage of tax reform. Further developments in Washington will be watched closely.

Weekly export sales for the week ending November 9th reported corn sales of 954,500 tonnes (all but 5,000 2017/18) were reported. This was below analyst expectations of 1,200,000 to 1,900,000 tonnes.

Soybean export sales of 1,176,900 tonnes (1,104,800 2017/18, 72,100 2018/19) were also reported. This would be considered neutral as it was within the 1,100,000 to 1,600,000 estimate. The majority of the sale was to China as was anticipated.

Wheat sales totaled 519,300 tonnes (489,300 2017/18, 30,000 2018/19), at the higher end of analyst estimates of 350,000 to 550,000 tonnes.

Informa estimates 2018 corn plantings at 91.415 million acres, up from their previous estimate of 90.460. Soybean acres are estimated at 89.627 million acres, down from 90.347.

Strategie Grains lowered its estimate for the EU soft wheat production from 142.8 million to 142.5 million tonnes. Though they have lowered their estimate, this would still represent at 5% increase from last year.

FranceAgriMer lowered its forecast of French soft wheat exports to non-EU countries from 10.2 million tonnes to 9.9 based on strong competition from Russia and other Black Sea countries. Accordingly, they raised their wheat stocks from 3.2 million tonnes to 3.3.

NOAA was out yesterday with their monthly forecast update for the winter months. They note, "La Nia is underway, w/65-75% chance it will continue at least thru the winter." For our markets, with US harvest virtually complete, the question is not how La Nina will impact the US, but how it will impact South America. We will watch that issue closely. If you're interested in how La Nina could impact agriculture volatility, check out the recording of ourrecent webinar on that topic.

Managed Money Funds were estimated sellers of 8,500 corn contracts, 4,000 soybeans, 500 wheat, 2,000 soymeal, and 4,000 soyoil in yesterday's trade. Traders anticipate that this afternoon's CFTC Commitments of Traders report will show a new record short position by the funds in corn.

NAFTA negotiations pickup again today in Mexico City. Negotiators enter into this round with moderate concern that perhaps no deal will be made.

The U.S. House of Representatives passed major rewrite of the tax code yesterday afternoon. The bill, which cuts rates on corporations and individuals alike, passed mostly along party lines. The Senate continues to work on their own bill which is expected to have key differences than the House bill.
Cattle on Feed will be released this afternoon at 2:00 PM CT. Analysts are expecting to see On Feed at 107.1% vs. last year, Placements of 107.7%, and Marketings of 105.4%.
Beef Export Sales of 9,300 MT reported for 2017 were down 45 percent from the previous week and 42 percent from the prior 4-week average. For 2018, net sales of 2,300 MT were reported.

Pork Sales of 13,200 MT reported for 2017 were up 69 percent from the previous week, but down 16 percent from the prior 4-week average. For 2018, net sales of 2,700 MT were reported.

Dressed beef values were mixed with choice up .11 and select down 2.78. The CME Feeder Index is 158.44. Pork cutout value is down .08.

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About the author

Paul Georgy serves as president/CEO of Allendale, Inc., a worldwide agricultural advisory and research firm that provides agricultural commodity price research and risk management alternatives for producers, major food companies, international corporations, foreign governments, and major news vendors.

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