The market assumes that the U.S. 2018/19 soybean carryout may increase from 955 million bushels to closer to 1,050. This is due to a drop in U.S. exports. The U.S. trade war with China has reduced China buying U.S. soybeans. Globally, there is talk that dry weather in Brazil could reduce their 2019 soybean crop to near 118 mmt from the USDA estimate of 122. Despite wet weather in parts of Argentina, Argentina is expected to produce a 2019 soybean crop near 55 mmt versus 38 last year. Concern that a slowdown in the global economy and African swine fever in China could reduce global soybean and soymeal 2019 consumption. Some estimate that 2019 soybean consumption might increase at 1.5-2.0 percent versus  meal consumption in 2019 might also increase at  percent. I estimate that managed funds are net short a small number of soybean futures. This is down from the highs made early in 2018 due to a lower Argentina crop. The record fund long position was near 253,000 contracts in May, 2012 and the record fund short position was near 119,000 contracts in June, 2017.


THE U.S. TRADE WAR WITH CHINA HAS


REDUCED CHINA BUYING U.S. SOYBEANS.


The market assumes that the U.S. 2018/19 wheat carryout may increase from 974 million bushels to closer to 1,000. This is due to a drop in U.S. exports. Increased competition from Russia was more than expected. The International Grain Council recently increased its estimate of the 2018/19 world wheat crop 8 mmt to 737. This was due to higher crops in Russia and India. They estimate the 2019/20 world wheat crop to be near 751 mmt. I estimate that managed funds are net short a small number of Chicago wheat futures. This is likely up from the lows made early in 2017 and tested again in 2018 due to record world supplies. The record fund long position was near 80,000 contracts in August, 2012 and the record fund short position was near 160,000 contracts in April, 2017.


Steve Freed E: steve.freed@admis.com T: 001 312 242 7089


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


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