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3 Big Things Today, December 3

Soybeans, Grains Jump Overnight; Money Managers Increase Bearish Bets on Futures.

1. Soybeans, Grains Surge After U.S., China Reach Trade Deal

Soybeans and grains jumped after the U.S. and China came to an agreement that gives hope that a full deal normalizing trade can be reached.

President Trump agreed to leave tariffs on $200 billion worth of Chinese goods at 10% rather than raising them to 25% as planned. China, in return, has agreed “to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” the White House said in a statement.

China will begin purchasing agricultural products from U.S. farmers immediately, the statement said without giving specifics.

“President Trump and President Xi have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, nontariff barriers, cyber intrusions and cyber theft, services, and agriculture,” the White House said. “Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If, at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%.”

Prices last week fluctuated and ended slightly higher amid concerns about whether a deal could be hammered out. Most analysts expected a cursory deal with few details to prevail, and it seems they were right.

Market-watchers will be keeping an eye on negotiations in the next three months to see what sort of concessions China will be willing to offer.

Soybeans for January delivery surged 16¼¢ to $9.11 a bushel overnight on the Chicago Board of Trade. Soy meal jumped $5.90 to $316.40 a short ton, and soy oil gained 0.27¢ to 28.33¢ a pound. 

Corn futures for December delivery rose 3½¢ to $3.81¼ a bushel.

Wheat for March delivery added 4¼¢ to $5.20 a bushel overnigh, and Kansas City futures rose 4¼¢ to $5.04½ a bushel.

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2. Money Managers Increase Bearish Positions in Soybeans, Corn Through November 27

Money managers were more bearish on soybeans and corn in the seven days that ended on November 27 – before the Group of 20 meeting in Argentina – amid worries about trade with China.

Speculators extended their net-short positions, or bets on lower prices, to 59,303 futures contracts last week, according to the Commodity Futures Trading Commission.

That’s up from 53,179 contracts the prior week and the biggest such position since the week that ended on October 30, the CFTC said in a report late Friday.

Net-short positions in corn more than tripled last week, jumping to 31,054 futures contracts from 9,852 contracts just seven days earlier, the government said. That’s the biggest bearish position in the grain since October 9.

Investors last week were concerned about whether a trade deal between the U.S. and China could be worked out, and at the Group of 20 meeting in Argentina, presidents Trump and Xi Jinping came to an agreement in which the U.S. wouldn’t increase tariffs as planned on January 1.

In wheat, money managers raised their net-short positions in hard red winter futures to 10,748 futures contracts last week. That’s up from 7,870 contracts a week earlier and the biggest negative position in the grain since January 23, the CFTC said.

Speculators lowered their bearish bets slightly in soft red winter wheat, where they held a net-short position of 38,744 futures contracts, down from 39,642 a week earlier, according to the government.

The Weekly Commitment of Traders Report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Slippery Roads Expected in Areas Where Snow Refreezing, NWS Says

Slippery roads are expected in parts of the Midwest as snow that had fallen and moisture on surfaces froze overnight.

In parts of eastern Nebraska and western Iowa, snow that had fallen and melted or streets that had been treated likely refroze last night, meaning conditions will be dangerous in spots this morning, according to the National Weather Service.

Farther east, in eastern Iowa and western Illinois, the same conditions are being seen, the NWS said in a report early this morning. Travelers are being told to watch for slick spots on streets and roads.

“The combination of light accumulations of snow and freeze-up of wet surfaces will lead to slick spots on untreated pavement early this morning,” the agency said. “Additional snow accumulations are expected to be less than ¼ inch before snow diminishes to flurries this morning.”

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