It Gets Dark Early
Dec 15, 2017
Market Watch with Alan Brugler
December 15, 2017
It Gets Dark Early
Winter begins on December 21, the shortest daylight and longest night period of the year in the Northern Hemisphere. Summer is just beginning, south of the Equator, but things have seemed a bit gloomy for the past several weeks even though we weren’t at that peak darkness! That might just be my embedded commodity market clock. There is no question commodities in general have had a rough couple weeks, if you look at the CRB Index. At the low on Tuesday, the CRB had dropped 4.7% from the December 1st close. This means that the majority of commodities in the basket were down and most of the ags were among the wounded. Cotton was an exception. Growing stockpiles of a number of commodities are a fact of life as we head into winter, buy spring always arrives. The market either goes too far, taking prices below economic value and then discovering that fact, or the low prices generate increased consumption and new uses. The latter shrinks the pile. Mother Nature can also help restore supply/demand balance, but there is a tendency to see tendencies that aren’t there yet!
Corn futures traded in a 6 1/2 cent range during the week, with Friday’s close 1.49% lower than the previous Friday. Throughout the week, the USDA reported 3 separate private export sales totaling 396,503 MT through their daily reporting system. Tuesday’s USDA Supply and Demand report showed little change to the US numbers, as corn used for ethanol was increased 50 mbu. That trimmed the US 17/18 ending stocks number by the same amount, as world ending stocks were raised 0.32 MMT to 204.08 MMT. The USDA left Brazil production at 95 MT, despite CONAB showing a 92.2 MMT projection for the 17/18 crop. The USDA indicated 12/7 weekly export sales slightly lower than the previous week, as total export commitments of 23.766 MMT are still 49% of the full year forecast. They would typically be 53% by now. Ethanol production slipped from the previous week’s all time record to 1.089 million barrels per day during the week of 12/8. The Friday Commitment of Traders report showed spec funds adding to their net short position by 36,673 contracts in the week ending December 12. They were net short 197,192 contracts of futures and options on that date.
Wheat futures saw fractional losses in the nearby CBT and KC contracts, with MPLS 1.43% higher…