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Could a trade compromise be in the works between China and the USA?

Kevin Van Trump

January 7, 2019

2 Min Read

Bulls are hoping to hear some positive news out of Beijing this week as U.S. and Chinese leaders gather to discuss details of a trade compromise. We've heard tons of rumors and whisperers that the Chinese are interested in U.S. corn, ethanol, and DDGs but nothing officially has been delivered to the market. Hopefully we will learn more once U.S. officials wrap up their two-day meeting in Beijing.

It's still early, but pockets of dry conditions in Brazil and pockets of overly wet conditions in Argentina are creating some bullish headlines and a bit of uncertainty about total production. The USDA currently has their Brazilian production estimate forecast at 94.5 MMTs vs. 82.0 MMTs last year. Their Argentine production estimate is currently at 42.5 MMTs vs. just 32.0 MMTs last year. That allows the bears to argue that regardless of a few weather hiccups, the trade is still penciling in an additional +20 MMTs of South American corn hitting the marketplace when compared to last year. Perhaps moving forward, the bulls can shoot a few holes in that argument if we start to see the South American production numbers tapered back a bit more, which would provide a more bullish tailwind. I don't know if we can put a lot of weight in that argument as of yet, but we can certainly take that tilt.

Here at home, there's still some concerns and debates circulating around demand. Not only is there increasing export competition coming online, but ethanol margins and slowdowns continue to hit the headlines.

Technically, bulls are wanting to see the MAR19 corn contract close above $3.90. Keep in mind, the last time the MAR19 contract closed above $3.90 was all the way back in mid-October. It was on October 15th that the contract closed at $3.90^2. In fact, the last time we closed above $3.86 was back on October 17th. Friday of this past week we closed at $3.83 per bushel. In other words, we are starting to bounce up against stiffer, long-term technical resistance on the charts.

Click Here to find out what to expect in the next 30-days.

Check out the Van Trump report on line here: http://www.vantrumpreport.com/free-trial/

The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.


About the Author(s)

Kevin Van Trump

Founder, Farmdirection.com

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead. 

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