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DTN Early Word Grains         12/12 05:59

   Grains Mixed with Focus on Weather, Trade Deadline

   March corn is up 1 1/4 cents per bushel, January soybeans are down 2 1/2 
cents, and March KC wheat is up 1 1/4 cents.

By Tregg Cronin
DTN Contributing Analyst

6:00 a.m. CME Globex:   March corn is up 1 1/4 cents per bushel, January 
soybeans are down 2 1/2 cents, and March KC wheat is up 1 1/4 cents.

CME Globex Recap:   Global equities are mostly higher overnight and holding 
together better than expected considering the Federal Reserve's messaging 
post-FOMC meeting was one of steady rates during 2020. As addicted as financial 
markets have gotten to cheap and falling interest rates as of late, 
expectations for a year of steady rates was received well. The Federal Reserve 
dot plot doesn't see any interest rate increases in 2020, sees a 25 basis point 
hike in 2021 and a second 25 basis point hike in 2022. Grains are mixed with 
corn higher, soybeans lower and mixed changes at the three wheat exchanges. 
Traders will be looking forward to export sales Thursday morning to see if 
commitments bounced back following the Thanksgiving holiday. Nothing fresh to 
report on the trade war front with the tariff deadline of December 15 only 
three days away. Most still believe an extension will be granted but expect 
some volatility until it is announced.

OUTSIDE MARKETS:   Previous closes on Wednesday showed the Dow Jones Industrial 
Average up 29.58 at 27,911.30 and the S&P 500 up 9.11 at 3,132.52 while the 
10-Year Treasury yield ended at 1.79%. Early Thursday, the December DJIA 
futures are up 14 points. Asian markets are mixed with Japan's Nikkei 225 up 
32.95 (0.14%) and China's Shanghai Composite down 8.72 points (-0.3%). European 
markets are higher with London's FTSE 100 up 39.65 points (0.55%), Germany's 
DAX up 13.14 points (0.1%) and France's CAC 40 up 20.93 points (0.36%). The 
December Euro is down 0.001 at 1.110 and the December U.S. dollar index is up 
0.079 at 97.135. The March 30-Year T-Bond is down 12/32nds, while February gold 
is up $3.70 at $1,478.70 and January crude oil is up $0.35 at $59.11. Soybeans 
on China's Dalian Exchange were up 0.15% while soybean meal was down 0.46%. 



   BULL                                    BEAR
1) Weekly ethanol production rose       1) Weekly ethanol stocks surged by
   12,000 barrels per day (bpd) last       1.176 million barrels last week, the
   week to 1.072 million bpd, the          largest single week stocks increase
   highest production level in 23          in almost six months.
2) On Wednesday, the USDA announced     2) European grain analyst Coceral
   725,000 metric tons (mt) of soybeans    increased their estimate of the EU
   sold to China and unknown               wheat crop to 145.0 mmt from 143.3
   destinations for the 2019/20            mmt in September and 126.9 mmt last
   marketing year.                         year.
3) Major wheat exporter ending stocks   3) Global wheat demand is currently
   are now projected at 61.3 million       projected at 76.29% of total
   metric tons (mmt), 2.2 billion          supplies, down from last month and
   bushels (bb), the lowest total since    now the lowest ratio since 1986/87.


   CORN  Firmer corn prices overnight, albeit lightly so and barely recovering 
any of Wednesday's sharp selloff. At the lows Wednesday, March corn was trading 
at the lowest levels since September 12 and just 5-3/4 cents off contract lows. 
Contributing to the selloff was the largest single week increase in ethanol 
stocks in almost six months, a sign the increased production of the last few 
weeks is already backing up. Spot ethanol prices fell to the lowest prices 
since September 10 with ethanol/corn spreads also the weakest since early 
September. After profitability had recovered much of the fall, current 
economics are close to pushing plants back into the red. As we've discussed 
much of the last few months, sustainably higher corn prices will require solid 
ethanol profitability and an improved export book. Ethanol profitability had 
returned while exports continue to flounder. Corn prices will struggle as long 
as both of these demand centers languish. With no changes from the December 
WASDE to speak of, corn prices are now back to trading South American weather 
and headlines surrounding the trade war. Models are mixed for precipitation in 
Argentina with the GFS turning much wetter in the December 18-24 time frame. 
Around 120% of normal precipitation is seen from the GFS during that time, 
while the Euro model retains a drier bias and sees only 80-82% of normal 
precipitation. Brazil will be favorably wet the next 7-10 days with 
temperatures remaining mild in both countries. Cash markets remain firm across 
the U.S., but calendar spreads have been weaker the last several sessions. Both 
the CN/CZ and CU/CZ calendar spreads remain at very small percentages of full 
financial carry and should be good indicators for ending stocks changes heading 
into the January WASDE. 

   SOYBEANS  Slightly lower soybean prices early Thursday as follow-through 
weakness is seen. The January contract recovered almost exactly 38.2% of the 
previous selloff with trade up to 9.02-9.03. Most technicians would agree a 
38.2% correction or retracement is a solid one but can be still consistent with 
an overall longer-term downtrend. The 100-day moving average is the closest 
major average, resting just overhead at 9.07. Until a major moving average like 
the 50 or 100 is reclaimed, downtrends are still in place and managed funds 
will be emboldened to add to shorts on bouts of strength. Nothing fresh on the 
trade front overnight with no official word on whether President Trump will 
delay the proposed $156 billion in tariffs on Chinese goods set to go into 
effect Sunday. Sources close to the president believe they will be delayed, 
although each deadline that passes without a deal or without additional tariffs 
should strengthen China's resolve to stay the course. South American new crop 
supplies will begin harvest in January with the U.S. struggling to maintain 
competitiveness March forward. Brazilian moisture prospects remain solid the 
next two weeks with 100-120% of normal precipitation expected by both the GFS 
and Euro models. Most Dalian soybean futures contracts hit fresh contract highs 
on Tuesday, although meal futures are not sharing in the strength. The May 
soymeal contract is near one-month highs while the May soybean oil contract on 
the Dalian exchange hit fresh contract highs on Tuesday. Malaysian Palm oil 
prices hit the highest levels since May 2017 on Tuesday as tightening global 
vegetable oil supplies remains a long-term supportive input to the soy complex.

   WHEAT  Mixed wheat markets overnight as Chicago posts losses while both hard 
wheat contracts are showing small gains. The day-to-day changes in wheat prices 
have a lot to do with the inter-market positioning by managed funds. For much 
of 2019, funds were net short both Minneapolis and Kansas City wheat while 
holding long exposure in Chicago. With Kansas City/Chicago spreads trading near 
record lows and Minneapolis/Chicago spreads near 10-15 year lows, one 
definitely needs to acknowledge the violent nature of inter-market spreads this 
marketing year. One of the more interesting tidbits from Tuesday's WASDE was 
the way global wheat supplies continue to outpace global demand. Using their 
latest projections, our demand base will use 76.29% of total wheat supplies. 
Upon further examination, this is the lowest ratio going back to 1986/87. The 
11.6 mmt (426 mb) jump in global wheat ending stocks is not the largest of the 
last five years, but the fact global ending stocks are now much closer to 300 
mmt than they are 200 mmt is troubling. Global ending stocks are over 90 mmt 
larger than they were in 2013/14, although a good portion of that reserve 
remains in Chinese hands. The U.S. share of global wheat trade is projected at 
14.76% which is up from 14.71% last year but is just 2.5% off the lowest on 
record in 2012. The European Union export program has ramped up significantly 
the last several weeks which will offer stiff competition to the U.S. 

              DTN Cash   Change From    National      Contract   Change from
Commodity     Index      Prev Day       Avg. Basis    Month      Prev Day
Corn:         $3.53      -$0.06         -$0.19        Mar        $0.000
Soybeans:     $8.37      -$0.07         -$0.57        Jan        $0.006
SRW Wheat:    $5.12      -$0.04         -$0.07        Mar        $0.003
HRW Wheat:    $4.03      -$0.01         -$0.27        Mar        -$0.005
HRS Wheat:    $5.06      $0.00          -$0.12        Mar        -$0.005


   Tregg Cronin can be reached at 

   Tregg can be followed throughout the day on Twitter @5thWave_tcronin 



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