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Monday Market Thoughts


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For what is typically a quiet week in the grain markets, the Friday after Thanksgiving provided more activity then usual and even more so surprising given the past few weeks of trade activity. However with light volume in holiday trade and December option expiration taking place that Friday, the markets can often surprise. Unfortunately, the path of least resistance still seems to be the downside. Fridays flush ended well off the lows; Monday finished much closer to the session low.

Export inspection on corn came in at 638,711 metric tonnes (MT); below the weekly requirement of 986,469 in order to reach the USDAs target of 48,900,000 MT or 1.925 billion bushels. Corn currently stands at 15.4% of the USDA target versus the five-year average of 19.1%. Export sales from last Friday, however, did fair better. Reporting 1,080,900 MT versus the weekly requirement of 619,300 MT standing at 45.6% versus the five-year average of 50.0%. Both trailing their respective five-year average but the USDA, which still surprises me, is getting more optimistic to exports as they raised their projection on the past WASDE report.

--- Ag Hedge Newsletter Get daily fundamental and technical updates for free. Sent by email each morning! Sign Up! http://www.zaner.com/offers/ag_hedge_newsletter.asp?ap=bgrossma

Crop Progress out later today is estimated to show corn harvest at 96% versus 90% last week and may provide support to the market as grain bins get sealed up for the remainder of the year. However, even the end of harvest can only be supportive to a certain extent given the current market situation of 2.487 billion bushel estimated ending stock. However, crop progress, in addition to corn harvest progress, is expected to show declining conditions in the winter wheat; estimated down 1% at 51% good/excellent. Finding a mostly positive WASDE report in November, the wheat complex has a few reasons to be getting concerned.

While I am skittish to even think of weather problems being a reason to rally after this year, crops still need, at the minimum, decent weather in order to produce quantity and quality; the latter is the greater concern. A contact of mine in Australia is doubting the USDAs production estimate of 21.50 million metric tonnes (MMT). With Australia expected to be 9.7% of the global wheat exports; the pressure will be squarely on Russia and the FSU to keep the market fed with the US markets filling in the gaps as the USDA is optimistic wheat exports; raising their estimate to 1.000 billion bushels versus 975 million previously. Small victories at this time can mean a lot for the mood of the market.

--- Zaner Text Notice (US Only) Sign up for free market price updates at 1130am and settlement prices as well as USDA reports. Also giving easy texting access to a Zaner Group Ag broker! Sign Up! http://www.zaner.com/landing/ag_hedge_text.asp?ap=bgrossma

Managed money remains heavy to the short side. Currently estimated net short roughly 114,000 contracts in Chicago; a short covering rally has potential if concern begins to creep back into the markets. With near record low volatility, a small spark can start a fire and the setup for such an event is present. Now to make it happen.

As Russia continues to dominate the global export market, even a short covering rally will be limited as US wheat is already overpriced in comparison to the competition but Russia can only provide so much with limits on their infrastructure and the fact that US markets are known to be reliable sources of quality grain even if at a premium price.

The markets have a long row to hoe yet and a bounce of significant value may be hard to come by until the greater fundamental picture improves but technical moves should be watched for and taken advantage of. Producers sitting on unsold grain in private and commercial storage may be interested in learning more about our market out as well as strategies in place. Feel free to give me a call to chat markets, work on a marketing plan or simply just to chat. I can be reached directly at 312-277-0119 or at bgrossman@zaner.com and dont forget to sign up for our daily Ag Hedge Newsletter with the link above!

--- Brian

Brian Grossman

Market Strategist

Zaner Group, LLC Ag Hedging

(312) 277-0119

bgrossman@zaner.com

@AgHedgeGrossman
www.zaner.com

Forover 30years, Zaner has been helping futures, commodity and forex traders trade smarter, faster and easier. Zaner is an established, highly regarded award-winning execution and brokerage firm known for providing clients with exceptional service. Zaner covers a broad range of commodities with individual divisions which include agricultural, energies and metals. To learn more, sign up:

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TRADING COMMODITY FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS ANDMAY NOT BE SUITABLE FOR ALL INVESTORS. YOU SHOULD CAREFULLY CONSIDER WHETHER TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES, KNOWLEDGE AND FINANCIAL RESOURCES.



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About the author


Brian is a marketing strategist with Zaner Ag Hedge Group.  He grew up in Linton, North Dakota; born in 1988 and raised on the family farm.  He attended North Dakota State University and graduated in 2010 with a degree in Agricultural Economics with a focus on commodity marketing as well as a minor in Crop and Weed Science.  After graduating he returned to the family farm for the next five years before pursuing a career in commodity marketing.  Brian works with grain and livestock producers and end users of all sizes across the United States helping them develop risk management strategies. As a former producer who hedged through Zaner, Brian brings a unique perspective with vast experience on the client side of this industry. 

Feel free to visit with Brian about any marketing needs or thoughts at (312) 277-0119, bgrossman@zaner.com or follow him on twitter @AgHedgeGrossman

---

Brian Grossman

Market Strategist

Zaner Group, Ag Hedging

(312) 277-0119 -- Direct Line

bgrossman@http://zaner.com/

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