Path To Trade Dispute Resolution Could Solidify Late Week Soybean Rally A


DR. AARON SMITH KNOXVILLE, TENN.


strong finish to the week, due to optimism regarding trade discussions, led prices to close


up for the week across the board. Markets will closely monitor trade news out of Buenos Aires, Ar- gentina where G-20 leaders are meeting November 30 and Decem- ber 1. The anticipated meeting be-


tween Presidents Trump and Xi (on Saturday) will dictate price direction early next week, particularly for soybeans. Positive news, indicating a path toward a trade dispute resolution between the world’s two largest economies, will likely result in a continuation of the late week rally, possi- bly breaking through strong resistance at $9.00 (January soybean contract). Negative re- ports could trigger a retest of the six month low of $8.26 (January soybean contract). Total U.S. export commitments (accumulated


exports and outstanding sales) for corn, soy- beans, and wheat continue to languish well below the required pace to meet USDA’s mar- keting year projection for the 2018/19 market- ing year. Cotton, the lone bright spot, has seen sales wain in recent weeks after very strong sales this summer and early fall. Currently, cotton export commitments are 70 percent of the USDA marketing year total well above the 5-year average pace of 58 percent. By compar- ison, corn, soybean, and wheat export commit- ments (5-year averages) are 41 percent (46 percent), 45 percent (71 percent), and 54 per- cent (73 percent). Exports are an important demand source for


all four commodities that help increase the prices U.S. producers receive for their com- modities. Over 85 percent of the cotton, 45 per- cent of the soybeans, 15 percent of the corn, and 45 percent of the wheat produced in the U.S. are exported to other countries. Access to international markets and fair trade with other countries will be essential to price improve- ments as we enter 2019. Corn The Crop Progress report estimated corn har-


vested at 94 percent compared to 90 percent last week, 94 percent last year, and a 5-year average of 96 percent. Ethanol production for the week ending November 23 was 1.048 mil- lion barrels per day, up 6,000 from the previ- ous week. Ethanol stocks were 22.93 million barrels, down 139,000 barrels. Corn net sales reported by exporters from November 16-22 were above expectations with net sales of 49.9 million bushels for the 2018/19 marketing year. Exports for the same time period were up 26 percent compared to last week at 41.5 mil- lion bushels. Corn export sales and commit- ments were 41 percent of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31) compared to a 5-year average of 46 percent. Across Ten- nessee, aver-age corn basis (cash price-nearby futures price) weakened at Northwest Ten- nessee and strengthened at Memphis, North- west Barge Points, and Upper-middle Tennessee. Overall, basis for the week ranged from 16 under to 10 over the December futures contract with an average of 1 under at the end of the week. December 2018 corn futures closed at $3.66. In Tennessee, January 2019 corn cash forward contracts averaged $3.74 with a range of $3.58 to $3.90. Mar/May and Mar/Dec future spreads were 8 and 22 cents. March 2019 corn futures closed at $3.77, up 7 cents since last Friday. For the week, March 2019 corn futures traded between $3.67 and $3.78. December 2019 corn futures closed at $3.99,


up 4 cents since last Friday. Downside price protection could be obtained by purchasing a $4.00 December 2019 Put Option costing 25 cents establishing a $3.75 futures floor.


Soybeans The Crop Progress report estimated soybeans har-


vested at 94 percent compared to 91 percent last week, 99 percent last year, and a 5-year average of 98 percent. In Tennessee, soybeans harvested were estimated at 83 percent compared to 74 percent last week, 90 percent last year, and a 5-year average of 92 percent. Net sales reported by exporters were within expectations with net sales of 23.1 million bushels for the 2018/19 marketing year. Exports for the same period were down 20 percent compared to last week at 37.6 million bushels. Soybean export sales and commitments were 45 percent of the USDA estimated total annual exports for the 2018/19 mar-


keting year (September 1 to August 31), compared to a 5-year average of 71 percent. Average soybean basis weakened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Upper-mid- dle Tennessee. Basis ranged from 66 under to 19 under the January futures contract at elevators and barge points. Average basis at the end of the week was 38 under the January futures contract. January 2019 soybean futures closed at $8.94, up 13 cents since last Friday. For the week, January 2019 soy- bean futures traded between $8.57 and $8.96. In Tennessee, January 2019 soybean cash contracts


CONTINUED ON PAGE 9


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