Weekly Market Report Proudly

Sponsored by

Monday, 18th December 2017

Weekly Overview continue to be burdensome. the market focus, till the Wasde
Price changes week on week. report on the 12th, will be on the South-American whether,
Price Change Change% 30 Day Low 30 Day High as there are no new fundamental inputs expected in
Corn 347.50 -5.25 -1.49% 346.50 364.50 between.
Wheat 418.25 -0.75 -0.18% 410.50 450.25
Beans 967.25 -22.50 -2.27% 964.00 1015.00
Meal 320.60 -11.10 -3.35% 311.60 348.20
Beanoil 33.16 -0.46 -1.37% 32.80 35.61
Palmoil 2551 37 1.47% 2458 2852
DCE Beans 3633 4 0.11% 3581 3830
DCE Meal 2806 -56 -1.95% 2734 2927
DCE Beanoil 5836 -80 -1.36% 5790 6358
DCE Palmoil 5300 -82 -1.54% 5208 5812
Cotton 75.92 2.20 2.98% 68.34 76.75
WTI 57.30 -0.06 -0.10% 54.63 59.05
BRENT 63.23 -0.17 -0.27% 61.00 65.83
EUR 1.17 -0.00 -0.20% 1.16 1.20
USD Index 93.93 0.03 0.03% 92.50 95.15
CNY 6.61 -0.01 -0.18% 6.5750 6.6520

As planting weather looks to improve in Argentina, Market

took risk premium off prices. No surprises in the Wasde
report. The market will look towards January weather post
planting competition. The yield-sensitive period would be
Jan/Feb.

As we had anticipated, funds would have added to short

positions on Corn due to improved weather outlook. Funds
added close to 40 k contract short on Corn and Wheat. At
current prices, it is quite possible that funds positions could
go well beyond their record short. Managed money reduced
Soybeans long position by 33 k contracts. We expect the
position in Soybeans to be short by next week’s report.
COT Report Managed Money Positions 12/12/2017

Position Change Max Long Max Short Average

Soybeans 20 (33) 254 (119) 82
SBM 68 4 102 (54) 32
Bean oil 13 (1) 127 (65) 20
Corn (197) (37) 429 (231) 103
Wheat (158) (39) 81 (162) (19)

Oilseed Complex (Soybeans, SBM & SBO)

USDA Wasde report had no surprises on oilseed complex,

the only change in was in Exports numbers, down 25 million
bu, to 2225 mbu. If using USDA export estimate,US still
needs to sell and ship 761 mbu from Dec to Aug next year
with is good 7 million mts higher than what the US had
Fundamentally, we need lower prices to solve the current
shipped last year. Ending stocks reported at 445 mbu.
balance sheet assuming we get benign weather in South
America. Firstly, US beans basis as well flat price need to
Weather forecasts have turned better for Argentina going
trade lower to start attracting demand back into the US.
into the New Year and with outlook where there is no let up
Secondly, with burdensome stocks, ideally, prices should not
of exports from South America, US balance sheet would

Arcadia Agri Pte Ltd Arcadia Agri Ltd

1 Wallich Street 6th Floor
#14-02 Guoco Tower 100 Brompton Road
Singapore 078881 London, UK SW3 1ER
Tel: +65 6411 5080 Welcome@ArcadiaAgri.com Tel: +44 20 7734 2774
 Weekly REPORT |18th December 2017
incentivize more planting on beans acres, which would
happen at a lower price than current levels.
A couple of issues with a bearish trade view, firstly the SAM
farmer selling issues covered in a detail couple of weeks back
and with trader looking to trade this from the long side, any
short trade would require patience.
Over in South America, Rosario grain exchange increased the
Argentine crop estimate marginally.The fact that it was an
increase, even though small, has reduced the market’s
concern on the issues with the current crop. Argentina crop
is 64% planted, and expect it complete by the end of the
year. Brazil crop estimate at > 112 million.
Arcadia Agri Pte Ltd
1 Wallich Street
#14-02 Guoco Tower
Singapore 078881
Tel: +65 6411 5080 Welcome@ArcadiaAgri.com
Soybean oil ending stocks were left unchanged as well,
though, with confirmed import duties, USDA has increased
soyoil biodiesel usage by 500 million pounds, and increasing
overall usage by 200 million pounds. Export was dropped by
200 as well to keep the ending stocks unchanged.
Argentina introduced a nominal 8% tax on biodiesel vs.
Soybean oil export tax at 27%. The logic behind this is
baffling, as this would not help the economics of shipping
Argentine SME unless this was part of some backroom deal
negotiation deal with the US. This is just a guess at the
moment. Brazil Senate passed legislation to increase biofuel
use mandates. In the US, there is a rumor that Senate
finance committee has agreed on the tax extenders package,
including a continuation of the $1/gallon blending credit
retroactively for 2017 and also for 2018.
Meal dropped sharply as well, as the main reason for its
recent rally, the SAM weather concerns are no longer there
in current forecasts.
Arcadia Agri Ltd
6th Floor
100 Brompton Road
London, UK SW3 1ER
Tel: +44 20 7734 2774
 Weekly REPORT |18th December 2017

With vol. trading at its very lows, we think it would be a good

opportunity to express trade view via long options, as there
is still time for yields to get impacted in South America.

Grains (Corn and Wheat)

Corn continued to trade lower this week due to improved

weather extended forecast for Argentina.

Corn vol., like most of options complex, continues to trade

very low levels. With most of the global Corn balance sheets
looking comfortable, there is hardly anyone ready to pay for
the price of optionality.

WASDE report changed little for Corn balance sheet, leaving BA grain exchange estimated Corn to be 45% planted vs. a
the ending stocks burdensome at 2.437 billion bu. Current year ago. Argentine Corn is due for pollination next week
burdensome stocks would prevent a significant rally. Similar until early next year, adding significance realized weather.
to Soybeans, there are no new fundamental inputs there till
12th Jan. report, so price moves would mainly be dependent
on how the much publicized improvement in South
American forecast get materialized.

Arcadia Agri Pte Ltd Arcadia Agri Ltd

1 Wallich Street 6th Floor
#14-02 Guoco Tower 100 Brompton Road
Singapore 078881 London, UK SW3 1ER
Tel: +65 6411 5080 Welcome@ArcadiaAgri.com Tel: +44 20 7734 2774
 Weekly REPORT |18th December 2017

between 6 -8 cents spread, depending on the size of any

potential issues.

CBOT Soybeans Put Spread Feb -18 (expiry 26-01-2018)

reference March -18 future @ 979.50. Buy 960 Put and Sell
940 Put for cost of 3.80 cents. Maximum payoff from trade
is 16.20 cents or 4X inintial outlay. Maximum loss limited to
upfront premium payment. Bearish market strategy while
taking advantage of low vol. environment.

Wheat carryout was at 960 mbu vs. a market avg. estimate

at 930 mbu. Only change was the 25 mbu drop in exports.

Managed money continued to add shorts, but by the end of

the week, price action suggests that there would have been
some short unwinding.

US Wheat found support due to some interest cropping up

in US origin Wheat in export market at current prices.
However,export competition continues to strengthen. The
initial dismissal of large Russian crop, due to estimated that
they can possibly only export only 30 million mts were
wrong, currently the same number is close to 37 million mts.

Earlier, the risk premium on Wheat has been due to

forecasted colder winter, which would have created
winterkill issues, however current weather forecast does not
show any signs of threat.

Wheat prices last week were pushed lower due to higher

than expected Canadian Wheat crop estimated by StatsCan
at 30 MMT vs. market at 28 MMT. Trader are having a hard
time digesting this, due StatsCan using satellite images to
predict the numbers. this method has not been proven
robust in the past, hence the skepticism.

Fundamentally, not much has changed for Wheat, and we

expect to continue to trade in a range.

Trade-Ideas:

CBOT Corn Calendar Spread March 18 – July 18.

Buy Mar 18 and Sell July 18 for 16.50 cents spread. It is
currently trading at 71% of full carry of 22 cents. Target level

Arcadia Agri Pte Ltd Arcadia Agri Ltd

1 Wallich Street 6th Floor
#14-02 Guoco Tower 100 Brompton Road
Singapore 078881 London, UK SW3 1ER
Tel: +65 6411 5080 Welcome@ArcadiaAgri.com Tel: +44 20 7734 2774
 Weekly REPORT |18th December 2017

Disclaimer and Important Disclosures

The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or
otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report
may have had many, varied views over the past 12 months, including contrary views. A large number of views are being generated at all times,
and these may change quickly. Any valuations or underlying assumptions made are solely based on the author’s market knowledge and
experience. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the
independence of investment research. The given material is subject to change and although based upon information which we consider reliable,
it is not guaranteed as to accuracy or completeness. Arcadia Agri believes that the information contained within this report is already in the
public domain. The material is not intended to be used as a general guide to investing or as a source of any specific investment recommendations.
Investors with any questions regarding the suitability of the products referred to in this presentation should consult their financial and tax
advisors.

This material does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or
to any person to whom it is unlawful to make such offer or solicitation. Persons into whose possession this document may come are required to
inform themselves of and to observe such restrictions.

This document is confidential. It may not be reproduced, distributed or transmitted without the express written consent of Acadia Agri Limited
which reserves all rights.

Arcadia Agri Pte Ltd Arcadia Agri Ltd

1 Wallich Street 6th Floor
#14-02 Guoco Tower 100 Brompton Road
Singapore 078881 London, UK SW3 1ER
Tel: +65 6411 5080 Welcome@ArcadiaAgri.com Tel: +44 20 7734 2774