The Hueber Report

Here it is only Monday, and I already feel like I am a day behind schedule.   I suppose this could be attributed to the fact that the Federal government is observing Veterans Day today (so no reports) while the rest of us did so yesterday.  That said, it is always appropriate to honor our Veterans regardless of what day it is.

The only market that is showing much life this morning is wheat but seeing it had endured three days in a row of losses last week, I suspect it may be little more than short-covering and spread unwinding.  There were reports over the weekend that Russia and China were in discussions concerning directing more Russian wheat to its neighbor to the east.  While it would be difficult to explain why that could be a positive for U.S. prices if one really used their imagination, you might be able to come up with a hypothesis that it would open other markets for us, but of course, all of that would be contingent on the Russia output, to begin with. 

Corn and beans are really pretty stagnant this morning, and I suspect they continue to grapple with the interesting data issued by the USDA last week.  Beans are under a slight amount of pressure this morning but in light of the inventory numbers, the fact that we closed higher on Friday and have really surrendered little this morning is impressive, and I am sure encouraging for the bull.  Note that since the tweet rally posted on the 1^stof November, January futures have remained in a tight closing range between 8.86 and 8.79 and by no means act like a market that is under control by the bear. 

There has been more news detailing the ill effects of the U.S./China trade war, but this time, it pertains to corn, not beans and specifically corn ethanol.  Last year when China announced they intended to ramp up the use of ethanol, the U.S. industry began to gear up for potential export business. By February of this year, China had become the number two market for U.S. ethanol but that all came to a screeching halt with the tariffs and trade war. Green Plains, Inc., which is the third largest producer of ethanol in the U.S. reported a net loss of $12.5 million in the third quarter and have sold three plants, and Pacific Ethanol, the number six producer, announced they have idled 10% of their production.  Even the granddaddy, ADM has noted issues related to this trade struggle. It would seem much is hanging in agriculture on the meeting between President Trump and President Xi at the end of this month. 

One final market of note this morning is the dollar.  While it does not appear to be affecting commodity trade just yet, we have seen this index again push into new highs for the year. I do not think this calls for a major advance but until it turns back lower, should continue to create headwinds in the commodity sector.