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Game Plan:
Make sure you get current with our 2019-crop sales advice on a further rebound in prices. We'll likely make sales on a push back near the October highs. Also plan to make some 2020 sales on strength.
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Fundamental Analysis Futures extended the price rally to a three-week high on news the U.S. and China have agreed in principle to the first phase of a trade deal that will boost Chinese purchases of U.S. farm goods. But no specific volumes or values were announced. Both sides agreed not to raise tariffs on Dec. 15. Much of the strength this week was tied to fund buying back of short positions that had reached a six-month high. The market will be watching for new Chinese buying to sustain the rally. China may need 4 MMT to 6 MMT of beans to meet crusher demand before South America supplies are available. Weather in South America remains beneficial, though parts of Argentina are too dry, increasing crop stress.
Exports are improving along with crush margins. New Chinese purchases tied to a completed Phase 1 trade eal and new weather risks to South American crops could trigger fund short-covering rallies.
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