Play Turner’s Take Podcast Episode 159

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Macro Markets

The stock market and crude oil have been selling off since the end of September. Traders and investors are concerned about a global growth slowdown. Crude has been more bearish than stocks because supplies are also going up. The US Dollar has been strong during all of this. These are significant headwinds for the ag markets. We see the stock market stabilizing but crude could still go lower. More on that below. Keep an eye on the US Dollar. We are getting back to recent highs and a close over 97 resumes the uptrend.

Dec US Dollar Index Daily Chart

WASDE: Grains & Oilseeds

The WASDE was bullish for corn based on the US carryout but bearish when you take into account the world carryout. China revised their corn stocks and as a result global corn stocks doubled to about 300mm mt. I doubt the market makes much of it as Chinese corn is not going to make it to the export market, the total quality of Chinese corn is in question, and not everyone believes the number anyway.

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Soybeans were bearish at 950mm bushels carryout. The good news is the market is getting optimistic about the US and China getting a deal done. Cash premiums are coming down in Brazil while prices are stronger in the US. We are not 100% sold a trade deal gets done between the US and China anytime soon but at least both sides are willing to talk.

For now we are neutral on corn. I like playing the range and see corn trading 15 to 20 cent higher and lower from current prices. We see more upside in wheat than downside at these prices and we are hearing reports that quality wheat at 12.5% or better is now hard to source in Russia. With US wheat around $5.00 spot futures we see more demand coming to the US. Soybeans are the wildcard. If Nov 19 gets over $9.50 I think producers need to hedge a little. For spec plays I like the July/Nov bull spread IF (and that is a big IF) a deal gets done between the US and China.

March Corn

March Wheat

Jan Soybeans

N19 vs. X19 Soybeans

Livestock

China continues to have issues with ASF. We like the Feb vs April bull spreads to play the coming global losses in supply in 2019. We have been bearish on deferred cattle contracts for a while now, particularly April Fats and March Feeders. The funds are very long cattle, the deferred are still a good premium to cash, and the Cattle on Feed reports show plenty of cattle in the supply line.

Feb 19 vs. April 19 Hogs

April Live Cattle

March Feeder Cattle

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About Turner’s Take Podcast and Newsletter

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes!

While the podcast does not have specific actionable trading recommendations, we do publish them in Turner’s Take Market Alert for spec traders and