The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
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While it is nice to see plus signs across the screen this morning, in reality, the grain markets will have just limped along this week for an uninspiring performance while beans will have suffered one of their worst weeks since late summer. If we were to close right now, March corn would be down 3 ½ cents, January beans down 19 ½ cents and March wheat, and this one may surprise you, up 1-cent. In the greater scheme of things, all these markets continue to exhibit is broad sideways, bottoming type action but it would appear that the bears are not feeling the generosity of the Christmas season just yet.
It turns out that there is at least one major investment house that thinks commodities, in general, hold a brighter future as we move out into 2018. Goldman Sachs believes that the global economic outlook portends greater demand in the commodity sector for this coming year and is recommending overweight investment in commodities expecting at least a 10% return. Analyst for the company, Jeffrey Currie stated, “The demand backdrop today is now even stronger than a year ago, with robust and synchronous global growth clearly evident.” They also noted that traditionally, when central banks are tightening the reins, commodities will outperform other asset classes. I recognize that this outlook is heavily weighted to oil and industrial metals where we have already seen backwardation in the price structure, but as I have noted previously, we continue to raise the demand bar for all agricultural commodities, and it will not require much of a disruption anywhere globally to shift these markets to a demand mindset as well.
The USDA did release a nice lineup of export sales this morning. 257,000 MT of beans to China, 134,503 MT of corn to Costa Rica, 126,000 MT of beans to unknown and 130,000 MT of soft red wheat to unknown destinations. The NOPA crush report for November will be released later today.
Next week will be the final full week of trade for the balance of the year, which considering the lack of interest already, may not matter much. Markets will close early on Friday. That afternoon we will have the quarterly hogs and pigs report to be released as well, which would appear to be the only “scheduled” news to look forward to.
With that said, we wish you all a good and safe weekend.