1

Early Call 8:45am EST: Corn up $.01, soybeans down $.01, wheat up $.01. Grain

contracts were trading higher early Wednesday despite a sharp rally by the U.S. dollar

index, the latter pushing back above 100.000 and testing its long-term high. This has

both energies and gold trading lower, though crude oil is giving back only part of

Tuesday's strong rally. DJIA futures were higher as traders await the release of a long

list of economic data Wednesday morning.

Grains: Wheat futures finished lower on Tuesday amid concern that additional South

American production will come onto the world market. Corn and soybean prices were

also lower. Wheat futures fell sharply on the day after Argentina's incoming president

said he would remove some export taxes. The taxes have diminished some of the

country's potential exports, and their elimination could spur Argentine farmers to look

increasingly to the international market for sales. That would increase global supplies

and pressure prices overall. At the same time, a strong dollar overall has damped wheat

prices by making U.S. exports less affordable for overseas buyers. The grains were

pressured by ongoing demand concerns and large global stocks. Wheat futures for

December delivery on the Chicago Board of Trade fell $.10 3/4 to $4.84 1/4. Corn

futures also declined, pressured by the news from Argentina. The country is a major

corn producer and reducing export taxes there could spur farmers to sell increasing

amounts of grain abroad. December corn closed down $.03 at $3.64 1/4. Soybean prices

settled slightly lower after the Argentine government indicated it would reduce soybean

export taxes by substantially less than corn and wheat. January soybeans shed 1/2 cent,

to $8.63 3/4.

Our lead forecaster is calling for heavy rain to affect South Brazil and Paraguay into the

weekend, followed by several days of needed drying. T-storms focus on Center-West

and Southeast Brazil over Sun.-Tue., slightly improving soil moisture. In the U.S., a

major system produces heavy to very heavy rain from the southern Plains through the

U.S. Corn Belt and Delta through the weekend, stressing some cattle before a drier and

milder pattern resumes next week. Heavy rain affects South Brazil/Paraguay into the

Daily Grain / Hogs Marketing Outlook Written by: Jim Gerlach

11/25/2015

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weekend, followed by several days of drying. Scattered t-storms affect Center-West and

Southeast Brazil over Sunday-Tuesday. Heavy rain affects Argentina Thu.-Fri.,

followed by sustained drying for planting. Cold and wind-driven rain affects U.S. cattle

from Texas through OK and southeast Kansas within Thu.-Sun. Excessively muddy

cattle lots develop in the southern Plains, though sharply drier weather follows next

week. Heaviest rainfall and pockets of field flooding develop between concerned U.S.

HRW and SRW wheat.

Trading looks to slow down dramatically today and Friday as many take extended an

extended holiday. Fundamentally, weather remains mostly benign in the U.S. and South

America, while technical indicators are trying to form short-term bottoms. Fallout from

Argentina’s election this week continues to provide the likely direction of the next

move in the grains, along with U.S. dollar strength. While the true impact on

grain/oilseed production and exports in Argentina following the weekend’s election win

by the opposition party’s Macri remains to be seen, there certainly is plenty of optimism

in the country for notably rising levels of both over the coming year. A long-time

Argentine ag consultant said he expects corn acreage will see a 25% increase for next

year’s crop (not the one currently being planted), with corn exports possibly rising as

much as 44% to 23mmt over the next 3 years. He said wheat exports could rise to

11mmt by 2018/19 from 4.3mmt this year, while soybean exports could rise to 52mmt

in 2018/19 from 45mmt this year. The debate over this year’s export potential remains

heavy, though, as the actual impact of Macri’s vow to eliminate the current export quota

system for corn and wheat immediately upon his December 10 inauguration is uncertain

in the current global depressed price environment. UkrAgroConsult sees Ukraine’s corn

crop rising to 25.8mmt next year from 23.0mmt this year on an expected rise in acreage

as farmers increase area to spring grains following reduced winter wheat planting this

fall given the extensive dryness issues. Soybean production is seen rising to 4.9mmt

from 3.8mmt this year, with sunseed production seen at 12.0mmt vs. 11.3mmt this year.

On the demand front, the cost of transportation keeps on getting cheaper. Spot barge

freight fell to 275% of tariff and December freight was at 290%. The cost of

transportation has cheapened the value of grain delivered to the Gulf, yet river markets

have been generally been unchanged in their bids. Dec corn barges were bid $.48 over

with offers at $.51. Dec was bid $.57 over early last week and was bid as high as $.62

over in late October. Last half Dec barges were $.49 on $.53, Jan was bid $.49 over and

Feb had a buyer at $.51 over. There aren’t many offers above the market. At what point

does the cheap basis attract better export demand? Stations along the IL River were

bidding option to $.02 over for corn and on the Ohio River, where barge freight was as

cheap as 190% of tariff, elevators were bidding $.10 to $.15 over for corn. Elevators on

both the IL/OH Rivers had been bidding as little as $.35 to $.50 under in late September.

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Domestic bids in the east were steady to weaker, but bids in the west were steady to

better. Celina, OH was bidding $.45 over the Dec and Fort Recovery was at $.35 over.

Dayton, OH was bidding $.33 over the Dec and Winchester, IN was at $.32 over.

Bluffton, IN and Lima, OH were bidding $.30 over the March, Decatur, IL was paying

$.26 over the Dec and Clinton, IA was at $.15 over. Columbus, NE was at $.06 over and

Blair, NE was at $.05 over. Nov bean barges were bid $.63 over and Dec was $.64 on

$.66. Dec barges were bid at the lows of the marketing year, bid $.72 over last week and

$.76 over the week before that. Dec barges spent much of October with bids of $.78 to

$.82 over. Stations on the IL River were bidding $.05 to $.10 over for spot beans and on

the Ohio, they were bidding $.20 to $.25 over. Jan board crush margins continue to

bounce between $.70 and $.80 after Jan spent much of October trading between $.88

and $.98. Processors have been less aggressive in bidding for beans. In OH/IN, they are

published at a discount to the river market. Claypool, IN was bidding $.18 over,

Lafayette and Morristown, IN were at $.15 over. Decatur, IL had the best bid at $.20

over. Gilman, IL was at $.15 over, Cedar Rapids, IA was bidding $.14 under and Iowa

Falls was at $.19 under. Cash meal was trying to be talked a bit higher out west with

crusher slowdowns. The occasional $30 under trade was still reported as traders focus

on deteriorated cash margins and reports of various crushers slowing down. The over

Chicago market was reportedly still offered at $4 under Dec and there was talk of IL

soymeal trading near that level or slightly weaker. Crushers are again trying to talk up

offers for Jan-Mar, but there are few takers. Crushers suggest they have on average

about 30 days of ownership.

In export-related news, the USDA announced a 190,000mt sale of 2015/16 soybeans to

an unknown this morning. Argentine president elect Macri officially said there would be

no holiday on soybean export taxes. Recall on Monday the market was rife with talk

Argentina might zero the bean and product export tax for one month or three months to

put dollars in the central bank. Yesterday, Macri indicated his position was unchanged

from before the run-off, a 5% decrease in bean export taxes each year. Some in the

market suggested this report was one reason why soybeans found price support against

corn and wheat on the day. Others suggested any devaluation now would be more

gradual, meaning fewer beans right away to the Argentine cash markets. Chinese

crushers suggest there are suddenly plenty of arriving soybeans for sale in the market

there. With cash margins deteriorating to just breakeven on a gross basis, resellers were

out trying to dish off a few cargoes to the major crushers. Apparently in parts of China,

some soybean crush plants have already halted operations. They are waiting to see if the

soymeal price in China can recover and provide a better margin. Egypt issued a tender

to buy wheat from international suppliers, with results due today during the session. The

wheat is for shipment from Dec. 21-31. The cheapest offers in Egypt's latest state wheat

tender were for French wheat, traders said Wednesday. Jordan's trade ministry called off

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a tender to buy wheat from international buyers yesterday after no offers were made.

That is the second time Jordan has cancelled the tender, which called for 100,000mt of

grain for delivery in February or March next year. The cancellation is the latest in a run

of unsuccessful tenders for wheat and other grain, which traders blame on over-exacting

quality specifications in the tender terms. Malaysian palm oil exports for Nov 1-25 were

0.8% vs. a month ago, according to two, private cargo surveyors.

The corn market remains on edge awaiting a decision by the EPA expected in the

coming days. The odds favor that targets will be an improvement from those initially

proposed. The soyoil market has also firmed in anticipation of "good news" from EPA

on the RFS targets for biodiesel. The trade appears to have bought the rumor of friendly

EPA RFS numbers. The Environmental Protection Agency is supposed to determine

how much ethanol is needed for the next year by Nov. 30, but the agency has missed its

deadline at least each of the past two years. Last May, EPA announced in a response to

litigation by the petroleum industry that the agency would make the call on the blend

volumes by Nov. 30. As a result, the 2014, 2015 and 2016 Renewable Volume

Obligations (RVOs) are expected to be issued before Tuesday. The RVO levels for

ethanol are determined by estimating gasoline demand for the years in question. EPA

had initially considered cutting the blend volumes by about 20% below the statutory

levels because of earlier data showing weak demand for gasoline. Given the fight since

2013 over these blend levels, it's likely biofuel supporters or the petroleum industry will

cry foul once the blend volumes are released and immediately file a lawsuit over the

EPA's handling of the issue. Estimating gasoline demand has been a challenge due to

the fact that the U.S. economy is resilient, but the global economy has been affected by

the Chinese slowdown. However, prices for unleaded gasoline and 10% ethanol-blended

gasoline across most of the country are now below $2 a gallon, the lowest for the

Thanksgiving holiday since 2004, according to market analysis from the website

GasBuddy.com. EPA's proposal released in May would set renewable fuel mandates at

15.93 billion gallons for 2014, 16.3 billion gallons for 2015 and 17.4 billion gallons for

2016. The proposal reflects between 9% and 10% of gasoline volumes.

RFA President and CEO Bob Dinneen said the U.S. ethanol industry would have no

problem meeting the 15 billion gallon blending level specified by the statute, citing data

from EIA showing that gasoline consumption projections for 2016 have increased to a

nine-year high. The American Petroleum Institute, the nation's largest trade group for

the oil and gas industry, has increased its lobbying campaign to lower the ethanol

mandate. API has not been a fan of the RFS. The petroleum industry had its own

meeting with White House officials late last week. API argues that ethanol mandates

should be kept below the current 10% threshold acceptable for use in all cars and trucks.

The American Fuel and Petrochemical Manufacturers had a similar message. Even

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foreigners have got into the act. The Union of Sugarcane Industry Association, Brazil's

largest trade group for sugarcane and ethanol producers known by its Portuguese

acronym UNICA, said it had earlier submitted comments opposing the proposed

changes to RFS or lower ethanol mandates. UNICA said lower statutory RVOs are

"unnecessary" since Brazil has increased its output and exports to the U.S. over the past

three years by 6%, and hopes to raise exports to the U.S. over the coming years to 2

billion gallons. Lawmakers remain divided on the issue. A bipartisan group of 184

House members recently sent a letter that calls on the EPA to set the final volume for

ethanol in 2016 at a level that would account for the blend wall. But last week, House

Minority Leader Nancy Pelosi, D-Calif., and Democratic Whip Steny Hoyer, D-Md.,

wrote to the White House urging it to push refiners to use more ethanol. Those

producers say oil companies could provide ethanol blends of up to 85% if they were

prodded to do so by the government. A rule that locks in the "blend wall" would be

"counter to our efforts" in the 2007 law.

Hogs: Cash hogs are called mostly steady, though prices in some regions could climb

as plant buyers prepare for a more normal week of production ahead. That probably

means a brief flurry of steady/firm bids with buyers retreating to the holiday sidelines

ASAP. Peoria is called steady after holding steady at $30.00 yesterday. The national bid

lost $.21 to close at $50.68 while the IA/MN bid lost $.04 to close at $51.88. Cutout

values rose $1.32 yesterday to close at $73.62 on very good movement of 477 loads.

Pork processors have maintained stout margins on hogs purchased and resold to retailers

in the form of hams, loins, and other products this fall, despite a dip in the wholesale

value of pork. Estimated packer margins were $40.25/head for non-integrators and

$7.15/head for integrators vs. $37.37 and $4.31 the previous day. Bids for livestock

have remained in a narrow range in the past week as packers prepare to restrict

production around the Thanksgiving holiday, with most plants planning to remain dark

at least on Thursday. Packers Tuesday have begun to secure hogs for next week, when

schedules will return to a more normal level. Weekly kill is up 0.57% so far this week

and projections for Saturday's load of hogs to be processed total 365,000 head, up

around 160,000 head from last weekend's estimated production, as plants add extra

shifts to make up for the reduced slaughter on Thursday. For the week, an estimated

2.111 million head are expected to have been processed. Last week, U.S. pork output

was estimated to have climbed to 510.5 million pounds, up 6% from this time last year,

and total year-to-date production has surpassed 2014 levels by 7.1%. The total number

of hogs processed last week exceeded the same period last year by 7%. Weekly IA/S.

MN hog weights came in at 284.3 lbs vs. 283.7 lbs last week and 284.0 last year.

February lean hog futures closed lower for the second session in a row on Tuesday. The

contract remains under the influence of Monday's bearish shooting star on the daily

candlestick chart. Monday's high at $59.65 stands as strong resistance and could mark

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out the top of the recent corrective rally phase. The lean hog contract continues to retreat

from 20-day moving average resistance, which is a weak-trend signal. On the upside, it

would take gains above $59.65 to return the focus on the upside, with the next bullish

target at $62.82. On the downside, support lies at $55.80 and declines below that zone

would be a weak signal and would leave the market vulnerable to a retest of $53.97, the

Nov. 17 low. The longer-term trend is bearish.

Hog futures rose Tuesday after a USDA cold-storage report showed volumes of pork

were lower than anticipated amid stout demand, which helped buffer hog futures from

the selling on Tuesday. December lean hogs slid 0.225 cent to 57.225 cents a pound.

Hog futures for February declined 0.775 cent to 57.50 cents a pound. The seasonal for

the December lean hog contract has a very strong up pattern as December moves toward

contract expiration. With last week's reversal, the seasonal may have kicked into high

gear. Iowa State estimates that hog producers are now seeing the lowest breakevens

since March 2007. ISU further estimates that farrow-to-finish operations realized profits

of $13.97 per head in October, the seventh-consecutive profitable month for Iowa

producers. Such data would seem to stoke the general fire of herd expansion. Though

some are willing to bet that last week's hog slaughter of 2.4 million head marked the

season's top, it is not unusual for the first full kill week of December to surpass the

November peak.

Cattle futures ended the session lower on Tuesday, pressured by profit-taking as

investors reconsidered hopes that demand will get a boost after this week's

Thanksgiving holiday. December live cattle futures fell 1.925 cents to $1.3025 a. Cattle

futures for February slid 1.7 cents to $1.3250 a pound. Feeder cattle futures for January

fell 0.725 cent to $1.64675 a pound. The cattle market has swung in a wide range in

volatile trading during recent weeks, amid conflicting opinions on whether or not

buying interest is bound to pick up due to the lower costs for meats to retailers. Beef

prices have tumbled since the start of the year, leading some to suspect that after

Thanksgiving, for which retailers typically offer more deals on turkey and ham

products, driving consumers to those products, grocery chains and restaurants will stock

up on steaks and roasts. After a rally on Monday, some profit-taking curbed further

gains. Analysts also say a turnaround in demand for beef could be delayed by the fact

that supplies of all meat and poultry products for retailers are relatively large.

Taking a closer look at Monday’s monthly frozen stocks report, all protein categories

except turkey showed cold storage volumes above year ago levels as of October 31st.

Frozen beef levels were 34% above 2014 to total 512 million pounds. Since this data

series started in 1990, for the month of October only 2002 recorded higher levels of

frozen beef than this year, at 525 million pounds. Pork in cold storage was up 13% over

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a year ago as packers have started to move some bellies into the freezer as prices have

fallen, but there is still 39% fewer bellies in the freezer than a year ago. There were 41%

more ribs and 22% more hams in cold storage. Variety meats, which are almost

exclusively for the export market, were up 49%, which suggests that exports are

not fully clicking yet as most variety meats are exported. The frozen pork total was

down 8% from October so this will be seen as a positive that demand overall is

improving. The big ugly in the cold storage report was frozen chicken up 31%, setting a

new record high for chicken in storage. If chicken had been really cheap and the amount

in cold storage had surged, that would have been a good thing as frozen chicken would

have gained value. Unfortunately, this chicken put in the freezer went there because the

market rejected it because of high prices and over production. Dark meat, which is

typically exported leg quarters in the freezer, were up 29%.

Weather: The U.S. and European models are in fair to good agreement only at days 1

and 2, fair to poor agreement after that. Today's U.S. model for the middle to late part of

the outlook period is more likely to verify, but there is some uncertainty in this outlook.

A series of weak to sometimes moderate troughs will move across the north and

sometimes the central U.S. during the outlook period. This maintains a variable

temperature pattern, but there is no indication of any very cold weather in the mostly

Pacific flow. There is also some suggestion of weak southern branch troughs tracking

across the southern Plains before turning northeast through the Miss River valley and

into the northeast U.S. This suggests additional precipitation chances for the southern

portion of the Plains wheat belt, the Delta and the southern and eastern Midwest. It does

not appear likely that significant moisture would reach into the northern storm track

during the period. This should mean that the northern Plains and the northwest Midwest

would be somewhat drier. However, occasionally there could be some chance for light

precipitation in the area. Precipitation type within the southern storm track would be

mostly rain, however occasionally we may see freezing rain or snow depending on

whether there is any interaction between the northern and the southern storm tracks.

Dry weather dominated most of the Argentine growing regions yesterday, with some

rains moving into the far SW late. Rains .25-1”, isolated to 1”+ fell from northern

Parana into Sao Paulo, MGDS and southern Goias, Brazil. Things were mainly dry in

the rest of the Brazilian growing regions. Temps were in the 70’s and low 80’s for highs

in Argentina, with 80’s and a few 90’s in Brazil. Average to above average rains will

fall across most of the Brazilian growing regions in the next week to ten days. Fairly

soaking rains will fall across most of the Argentine growing regions the next 2 days,

with things mainly dry weather for Friday and the weekend. Things also look to be

mainly dry for most of the 6-10 day period. Temps will run average to a bit below in

Argentina and average to a bit above in most of the Brazilian growing regions.

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Things remained mainly dry across the Plains and Midwest yesterday. Temps warmed

to above average in the Plains and far western Midwest, with highs in the 60’s in the

southern Plains and 50’s in the western Midwest. Highs in the rest of the Midwest were

in the 40’s. Dry weather will hang on through the day today and then widespread precip

will fall in the southern Plains and Midwest Thur-Fri. Most of the precip will fall as

rain, although will finish up as a few inches of snow in the SW Plains as well as

portions of the northern Midwest. Rains will be heaviest to the SE of a line from the

panhandles of TX/OK to Omaha NE and Green Bay WI. Totals there will be in the .50-

1” range, with areas of 1”+. Rainfall amounts in the rest of the southern Plains and NW

Midwest will be under .50”. Ideas are mixed in the 6-10 day time frame. The European

now sees another system looks to bring light to moderate rains/snows to the southern

Plains and most of the Midwest early next week, while the GFS sees things to be mainly

dry for most of next week. Temps will run average to a bit above in the Plains and

Midwest for the rest of this week and then cool back to average to below average

readings for the weekend and next week, but overall, nothing dramatic.

North American Crop Impact: Episodes of rain or showers return to the SRW wheat

areas at the end of this week and this weekend. This maintains favorable conditions for

this crop, especially in the absence of any significant cold weather. There is some risk

that freezing rain and some snow will impact travel and transport in northwest and west

areas tonight or during Thursday and Thursday night. Rain during this period will

maintain adequate to surplus soil moisture for HRW winter wheat development in many

areas, but especially through east and south locations. There’s some risk for local

flooding of fields in southeast and south-central areas. Freezing rain may occur through

many areas within the next few days. This impacts travel and transport and will be

stressful for livestock, for a time. No major cold outbreaks are expected at this time, but

below normal temperatures are possible at times.

Global Weather Highlights: Episodes of rain and showers will favor development of

earlier planted corn and soybeans through south and east-central crop areas of Brazil.

Some delay to planting is possible. Episodes of scattered showers help ease stress to

soybeans in Mato Grosso, but more widespread rain and cooler temperatures is still

needed. Episodes of scattered thunderstorms in Argentina favor developing wheat and

earlier planted corn. Rainfall at the end of this week will maintain soil moisture for

crops, but may also cause some delay to the planting effort. Recently moderate to

locally heavy rain and snow has occurred in Ukraine, Belarus, South Russia, western

areas of Central Region and in the Black Soils Region. Precipitation will help to ease

drought conditions somewhat, but it is unlikely that crop condition would improve at

this late date. This crop remains vulnerable to increased winter kill as it is poorly

9

establish and there is uneven germination and emergence. The eastern areas of Central

Region Russia and the Volga valley region continue quite dry at this time.

Temperatures, while cold at times, are not expected to be very cold during the ten day

period. Scattered showers and thundershowers have been reported in many key corn and

sugarcane growing areas during the past week. This will likely encourage increasing

planting activity for corn and will favor development of sugarcane. Hot temperatures

redeveloped yesterday and should continue today. Hot weather eases again tomorrow or

during Friday with a new cold front in the area. Despite recent rain, more rain is needed

to support favorable development of corn and sugarcane, especially during periods of

hot temperatures.

Macros: The macro markets were mixed as of 8:55am EST, with Dow futures up 0.3%,

the U.S. dollar index is up 0.5%, crude oil is down 1.8% and gold is down 0.4%. The

S&P 500 on Tuesday closed 0.12% higher, the DJIA gained 0.11%, and the Nasdaq lost

0.12%. Bullish factors included strength in energy producers as crude oil rallied to a 1-

week high, and the as expected upward revision in U.S. Q3 GDP to 2.1% from 1.5%.

Bearish factors included heightened Middle East tensions after Turkey shot down a

Russian warplane that apparently violated its airspace, and the unexpected 8.7 point

drop in the U.S. Nov consumer confidence (Conference Board) to 90.4, weaker than

expectations of 1.9 to 99.5 and the lowest in 14 months. The market is expecting today's

final-Nov U.S. consumer sentiment index from the University of Michigan to show a

small 0.1 point decline to 93.0 from the preliminary-Nov level, thus leaving the final-

Nov index up by 3.0 points from Oct rather than up 3.1 points. While the preliminary-

Nov U.S. consumer sentiment index from the University of Michigan showed a 3.1

point increase in Nov, the Conference Board's U.S. consumer confidence index earlier

this week fell sharply by 8.7 points to a 14-month low of 90.4, which did not bode well

for today's final-Nov Michigan report. The market is expecting today's Oct new home

sales report to show a 6.8% increase to 500,000, recovering part of September's sharp

11.5% decline to a 10-month low of 468,000. U.S. home sales in September took a hit

from a drop in consumer confidence in the wake of the August stock market correction,

which sparked worries about the sustainability of the U.S. economic expansion.

Looking ahead, U.S. home sales in late 2015 are likely to see some fresh weakness tied

to the 22 basis point surge in the 30-year mortgage rate seen so far in November. The

market is expecting today's Sep FHFA house price index to show an increase of 0.4%,

adding to August's increase of 0.3%. Yesterday's Sep S&P CaseShiller composite-20

home price index showed a strong 0.6% increase, which bodes well for today's FHFA

index.

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The number of Americans filing for first-

time unemployment benefits decreased

last week, a healthily signal for the labor

market. Initial jobless claims, a proxy for

layoffs across the U.S., fell by 12,000 to

a seasonally adjusted 260,000 in the

week ended Nov. 21, the Labor

Department said Wednesday. Economists

surveyed by The Wall Street Journal had

expected 270,000 new claims last week.

Last week's level of claims is only

slightly above a four-decade low touched

in July. The four-week moving average

of claims was 271,000 for the Nov. 21 week, unchanged from the prior week. The

number of continuing unemployment benefits, claims drawn by workers for more than a

week, increased by 34,000 to 2,207,000 in the week ended Nov. 14. Continuing claims

are reported with a one-week lag.

Orders for long-lasting goods rose in

October, a sign demand for

manufactured products could be firming

after falling for most of the year. New

orders for durable goods--refrigerators,

combines and other products designed

to last at least three years--increased a

seasonally adjusted 3% in October from

a month earlier, the Commerce

Department said Wednesday.

Economists surveyed by The Wall

Street Journal had expected overall

orders to increase by 1.8% in October. September durable-goods orders were revised to

a 0.8% decrease from the previously estimated drop of 1.2%. Through the first 10

months of the year, durable-goods orders were down 4.2% compared to the same period

in 2014. The downturn reflects curtailed demand due to low oil prices, a strong dollar

and slow overseas growth. Excluding transportation, durable-goods orders were up a

more modest 0.5% last month, though the gain was the best since June. Orders outside

of transportation were down 2.7% through the first 10 months of the year. Excluding

defense, another volatile sector, durable orders were up 3.2% last month, but down 4%

so far this year. Defense orders increased 1% in October.

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Summary: Markets were mixed yesterday, with wheat giving up most of Monday’s

gains. Given the underlying fundamentals of the world grain situation, the market will

struggle to find a direction until we experience some crop problems around the globe.

The corn market was lower most of session as traders squared up positions going into a

long weekend. With first notice day on Monday and no deliveries expected, spreads had

a firmer tone. The minor uptrend corn prices have been in since the November report

ran into resistance that was tested again yesterday, with weak longs taking profits going

into the Thanksgiving holiday. At this point, private analysts are keeping South

American production estimates unchanged. The strong domestic cash markets are

keeping delivery ideas to a minimum. Soybeans tried to rally following the bounce off

of contract lows Monday, but gave back the gains late in the session closing near

unchanged. With the uncertainty about the timing of any tax changes out of Argentina,

prices will remain volatile. With many in the trade only speculating when and if there

will be any changes to the export taxes from Argentina, it is difficult to position for

them. In the end, the overall world supply situation doesn’t change, just the timing of

sales out of Argentina. Soybean prices tested the high end of the range they have been in

since early November before backing off late in the session. Technically, the long term

charts point to lower trade. The wheat markets could not hold Monday’s gains, giving

most back yesterday. The strong dollar continues to limit exports and domestic end

users have adequate terminal stocks to draw from for origination. A late season tropical

storm in the Pacific has the potential to bring moisture to much of the U.S. winter wheat

growing areas.

March corn slid slightly lower to form a consolidative inside day session on Tuesday.

Corn has entered a short-term correction phase. The primary long-term downtrend

remains intact, but a minor short-term bottom has formed on the daily chart at $3.64 1/4,

the Nov. 16 contract low. Resistance lies at Monday's high at $3.73 1/2. Gains above

that zone would be needed to target a test of higher levels, with the next bullish

objective at $3.76 1/2. On the downside, Monday's low at $3.66 1/2 is support ahead of

$3.64 1/2. January soybeans closed little changed on Tuesday after an intraday push

toward the top of the recent neutral range failed to gain traction. Since early November,

soybeans have shifted into a minor consolidation range bordered by resistance at $8.67

1/2-$8.72 and support at $8.50-$8.44 1/4. The long-term downtrend remains intact but

in the short term, soybeans are not in a strongly trending mode. It would take gains

above $8.72 to open the door to the start of a counter-trend rally phase. As long as that

ceiling holds firm, the near-term trend outlook will remain choppy and neutral.

From all of us at A/C Trading, have a happy Thanksgiving!

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THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE

RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION

WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A

SOLICITATION. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether

this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of

future results. Trading advice is based on information taken from trades and statistical services and other sources that A/C Trading Co.

believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading

advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice

we give will result in profitable trades.