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Turner’s Take Podcast: US-China Trade Agreement May Have To Wait Until 2020 Presidential Election

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Turner's Take Podcast

Play Turner’s Take Podcast Episode 210

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This week we go over the latest from President Trump and the trade talks and why a trade deal may be farther away than we thought. We think corn and soybeans could be at a good value but SRW wheat could be in a bearish reversal.  Hogs had a bullish outside reversal today in the face of negative trade news while cattle seems to be consolidating “up here”.  Make sure you take a listen to this week’s Turner’s Take Podcast!

Macro Markets

President Trump said it might be better to wait to make a trade deal with China after the 2020 Presidential Election.  That was the big news of the day and drove a lot of the market direction.  Yesterday it was aluminum and steel tariffs on Argentina and Brazil.  Today it is the prospect of no trade deal until after the 2020 elections.

Corn

Corn sold off like we thought right into FND and has rebounded since.  March corn will find major support at $3.65 and resistance around $3.95 to $4.00.  Crop Progress reported the US is 88% harvested.  ND is 36%, WI is 66%, and MI is 66%.  We could have 1 billion bushels in the field this winter.  If so the USDA will categorize this as “On Farm” storage in the stocks reports.  I am hearing a lot of issues with storing wet corn.  Argentina will be dry for the next two weeks and that should be supportive too.  The Dec WASDE could be slightly bearish.  The USDA does not tend to change supply numbers in the Dec report as they wait to do that in the Jan report.  The USDA historically will adjust demand.  Demand for corn and soybeans could come down in Dec by 25 to 50mm bushels.  I think there is value in corn.

Soybeans

Soybeans should be higher if the market really believes carryout is in the 400s.  The problem is demand is not great, China is buying soybeans from S.Am again, and the prospects of a US-China trade deal are diminishing.  What if the USDA lowers demand by 50mm in the WASDE next week?  Carryout will be the low 500s.  Some analysts think soybeans yields could go higher.  June soybeans are not as bad as many feared.  I know farmers in IL who planted soybeans in early June and had yields in the 60s and 70s.  If yield is 1 bpa higher in Jan then ending stocks could be 600mm. I think that is what the funds are trading and why they are short 60K+ contracts.  I like soybeans at these levels BUT for the market to go higher the funds need a reason to cover their growing short position.  That only happens if we have real S.Am weather issues, a US-China deal, or yields are lower in the Jan WASDE report.

Wheat

SRW wheat failed at the latest resistance line.  Russia is selling wheat aggressively.  I think we could break a lot lower as Chicago wheat is 60 higher than it was back in early September.

Dec 2020 Chicago Wheat

Livestock

After hearing President Trump say a trade deal can wait until after the election, I expected hogs to sell off. Instead they rallied 2 full points. A close above 70 in February will be another bullish signal.  The funds are almost flat in hogs so you can make the argument they have the fire power to get long again…or build a short position.  Cash is starting to catch up to futures.  The price action tomorrow should be telling.

February Lean Hogs

 

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!

Craig Turner – Commodity Futures Broker
Turner’s Take Ag Marketing: https://www.turnerstakeag.com
Turner’s Take Spec: https://www.turnerstake.com
Twitter: @Turners_Take

Contact Craig Turner

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About Craig Turner

Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com. Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.

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