Recent WASDE reports had assumed another record Brazilian soybean crop and Argentina returning to normal, but the El Niño weather pattern might have something to say about that.
Changing your perspective from last trading day of future to the first notice day depicts the “gapping” lower due to inverted prices. Note: the price-gapping from old to new crop July to September is similar to 2012.
The value of capital assets and cash flow were concerns in 2008 — just as they are today. The evolution of dealing with inflation has yet to impact ag directly, but history shows a wake-up call is in process.
Technically speaking the price action of Chicago, Kansas City and Minneapolis wheat varieties are signaling a change is coming — one that might not be recognized until the price ship has sailed.
Sometimes it isn’t a matter of what direction prices are headed but where they are not headed. USDA has shaved demand, especially in corn. The long-term outlook might show corn prices have lower targets yet to come.
The major debate this year has been one of perceived tight stocks versus how high prices have or will impact global demand for U.S. agricultural commodities.
With the price premiums for war, trade distortion, demand destruction and weather fully discounted in the July price collapse, it suggests the stars are still aligned for more fireworks.
Price discovery suggests price will go high enough until demand is curbed sufficiently so we will not run out of stocks, but someone(s) might have to use less.
As we go into planting, perhaps the most critical in my lifetime, it is a good to review and anticipate how to navigate the unchartered waters we are in.
The inflation genie is out of the bottle and might be as difficult to get back in as it was in the 1970s. As Yogi Berra would say, “It’s Déjà vu all over again!” Or is it?
While the USDA crop report was not bullish is apparently was not bearish enough for the trade versus their anticipation reflected by the price collapses recently into the report.
The long corn/short bean spreaders were caught again leaning the wrong way and the exit door wasn’t big enough to let long corn folks out quick enough.
There are two basic decisions involved in marketing a crop. One involves action taken prior to harvest. The other decision is what to do with unsold/unhedged grains after harvest.
The paradigm shift in soybean trade that came to light in early 2018 actually began in 2017 as China began lowering the acceptable percentage of foreign material in U.S. imports, Jerry Gulke explains the implications.
This week in Rest of the Story Jerry Gulke discusses the evolution of the negative connotation from “irrational exuberance” in soybeans and how the psychology of the tariffs is affecting the markets.
As is so often the case, technical action (price changes) can predict fundamental changes in price direction market, and often does sometimes weeks in advance.
In spite of what we heard for months of sideways trading markets and media fear of being saddled long term by mountains of grains (especially corn), some real issues are surfacing.
Historically, USDA’s June 30 Acreage and Stocks reports are market movers, and they lived up to their reputation this year with a limit-up move in corn and a 50¢ move in soybeans.
A lot rests on whether or not we will sufficiently cut corn acres. Research firms go through this exercise every year to try to guess what we farmers will do.
The time may be right for wheat to come to life. For many months, wheat stocks have been viewed as excessive. When any commodity with negative fundamentals can post and hold a near 50% rally, it gets my attention, as it should yours.
Will we find this summer that the worst of the worst occurred before the stimulus programs had time to have a material effect, setting the stage for overstimulus and inflation?
