THE PARTIAL U.S. GOVERNMENT SHUTDOWN INCREASED MARKET


UNCERTAINTY On January 25 the U.S. government announced a stopgap temporary bill that will leave the government open for three weeks, through February 15. Grain futures tend to feed on USDA data, which they have not been getting.


Grain futures tend to feed on USDA data, which they have not been getting. This includes daily and weekly export sales, weekly CFTC Commitment of Traders reports and the delayed USDA WASDE U.S. and world supply and demand reports. Grain futures have settled into a mostly low volume trading range until the USDA comes back to work.


 hope that the U.S. and China may soon agree on a new trade deal. The main stumbling block appears to  IT transfer. They are miles apart on this issue. This suggests they may extend talks past the deadline, but  may agree to buy U.S. corn and wheat.


Without USDA updates the market assumes that the U.S. 2018/19 corn carryout may drop from 1,781 million bushels to closer to 1,679. This is due to a slight drop in the 2018 crop and an increase in feed and exports. There is a growing debate that exports may not reach the USDA estimate of 2,450. Globally, there is talk that higher supplies in Europe, Argentina and the  their crop from earlier estimates. Also, there is concern that a slowdown in the global economy could reduce global corn consumption in 2019. Some analysts estimate that 2019 consumption might increase at  percent. I estimate that managed funds are net long 100,000 corn futures. This is up from the lows made  longs were near 430,000 contracts in September, 2010 and record fund shorts were near 230,000 contracts in November, 2017.


8 | ADMISI - The Ghost In The Machine | January/February 2019


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