Feb 16, 2017
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Just when it appeared the darkest and that the last lines of defense were ready to crumble, a battle cry rose from deep within the troops of the courageous bull battalion and the general led the mighty warriors forward once again. The charge pushed back the fierce bears and was successful in claiming territory that has not been held for weeks if not months. Okay…I will admit that this may be a bit of a melodramatic description for the grain markets but in many respects, this is a battle for control of the direction for the future and one has to be slightly impressed that we can continue to gain ground in light of little fresh news to spur the action. Both corn and beans posted outside higher reversals yesterday and while we have not followed through significantly this morning, many indicators would suggest we can eek out a bit more strength from here.
It is almost ironic that in this current era of expanding grain production and ample global supplies that there would be any discussion of drought and/or famine but that is exactly what Arif Husain, chief economist for the UN World Food Programme is forewarning. He stated that for the first time with the 15 years he has been with the organization, there is the potential for famine in four different parts of the world simultaneously within the next six months. The key areas identified are Yemen, Nigeria, South Sudan and Somalia and just these alone would comprise over 20 million people. Keep in mind as well that food insecurity is not restricted to the continent of Africa either as other conflict plagued areas such as eastern Ukraine are in desperate need of food assistance. Of course, we know that politics always present obstacles when discussing these kinds of issues and may very well have been the cause of the problem to begin with but that does not take away from the fact that there are people that are or could soon been needlessly suffering while the granaries of the world remain full. Taken one step further, it does bring to mind as well the fact that for many around the globe, they exist on a fine line between adequate and inadequate supplies of food and it would not require much of a hiccup in production in one of the major producing regions to set off a panic.
It is Thursday morning which means weekly the export sales report has been issued. For the week ending February 9th we sold 783,500 MT or 30.85 million bushels of corn. This figure was down 19% from last week and slipped 35% below the 4-week average. The best purchaser for the week was Japan with 708.8k MT, followed by Peru with 83.6k and Mexico taking 69.2k. Unknown destinations cancelled 381.2k MT this past week. Beans sales bounced back quite nicely this past week coming in at 890,000 MT or 32.7 million bushels. As you might suspect, China was the top purchaser taking 262.3k MT, followed by unknown destination with 175.6k and then Germany at 152.4k. There was a slight improvement in wheat as well as we sold 569,100 MT or 20.91 million bushels. Here we found increases to unknown destinations of 149k MT, followed by Mexico with 99.6k and then Nigeria with 62k.
As the morning has progressed, grains have extended into higher highs for the swing once again and beans have returned to positive territory so bulls remain on the offensive. At least today we may be finding a little extra support from a weak dollar but I continue to remain in the camp that believes this phase of the 2017 advance should soon be drawing to a conclusion.