What the "trade" is watching this week!

Published on: 08:36AM Aug 29, 2013

 Grain and soy traders are trying to put all of the pieces of their puzzle together as well. I thought it was time for a little review session:

  • Weather - Too hot, too dry, not enough sunlight, threat of a freeze, hail, winds, etc... With the crop being planted so late and so many weather variations in play "weather" is currently our biggest wild card. As for right now forecasters are....Click to Read More
  • A long three-day holiday weekend - With Labor Day on our doorstep the trade will have to go a lengthy 3-days with major weather uncertainty. WIll the cooler temps and rainfall stay in the forecast while the markets are closed?
  • Soypocalypse - We have obviously been hit by soy mania as the trade buys every bullish headline that comes across the wire. Low pod counts, small plants, wet feet, limited sunlight, heavy weed competition, early frost, and now talk of more extensive disease problems. From what I hear...Click to Read More
  • Yields - Obviously with so many variables yields remain up in the air. As of right now the consensus is clearly that the soybean yield is currently too high and will need to come down closer to 40 bushels per acre. Corn seems to be under a little more debate, with bulls saying we should be closer to 152 bushels per acre, and the bears saying will end up closer to 158 bushels per acre. 
  • Month-end is quickly approaching - A period of time when many money-managers like to traditionally book profits. The question is will those who have been long take profits and move to the sideline?
  • The upcoming Sept USDA report - With surveys currently in farmers hands it is most likely the USDA will be receiving negative yield data. the question is how far will the USDA drop their yield estimates?
  • Unanswered acreage questions - Will the USDA address the questions surrounding "preventive plant" acres and if so how will it ultimately influence harvested acres? Several sources thinking corn harvested acres are still 1-2 million too high, soybean acres....Click the Read More
  • New-Crop Supplies - Bears are talking about possible record breaking corn being harvested down South. The problem is the crop still has high moisture levels, that once dried down might not actually be a new record. There is no doubt however that this corn is starting to make its way up north in limited supply. Time will tell if it can help ease the lack of supply. May soon start to more directly impact the old-crop basis. 
  • Money-flow coming back into commodities - With threat of war looming in the Middle East, in turn pushing more money back into crude oil and precious metals will it continue pouring over into the Ag markets? Keep in mind Barclay's is now estimating $900 million went into commods in July (the first increase in 5 months).
  • Demand - In my opinion this is one of the biggest question marks, but unfortunately this card is buried so deep in the deck we aren't going to hear much about it for several more weeks. The trade is clearly focused on production, so until the crops are completely out of the fields I suspect demand will remain on the back-burner. 
  • Wheat Demand - There continues to be bullish talk in regards to abnormally strong Chinese and Brazilian wheat demand. Talk in the trade is that China will ultimately import 10 million metric tons compared to just 3 million last year. Last year at this time frame Brazil had purchased about 50,000 tons of US wheat, this year they have already purchased close to 1.8 million tons of US wheat. Addition l thoughts are limited wheat supplies in Brazil and China could limit their ability to use wheat as a substitute for corn, hence they will need more domestic corn supply.
  • Chinese Corn Demand - There has been very little talk about Chinese corn demand, but I should let you know I am starting to hear a little more buzz as of late. There is actually some talk...Click to Read More.
  • Chinese Soybean Demand - Chinese buyers have clearly stated frustrations with South American logistical hiccups and have been strong buyers recently of US soy, the question is how much longer will they buy from the US? Several Brazilian and Argentine cargoes have started being booked, and talk is from Feb-forward the US is simply not competitive. In fact I have even heard of some Argentine cargoes being booked for Nov-Dec deliveries. 
  • Upcoming South American Crop -  We have all heard the talk that South American producers (in just a couple of weeks) are going to start planting record soybean acres. Theory is corn has become to expensive to plant and soy is providing more profitability. There are some though who think the extremely dry conditions might cause some producers to pause and in turn not show as big of a jump as some are forecasting. There is also the fear that dry conditions will delay planting, in turn leaving global importers searching for supplies in early 2014 as South American beans show up late to the docks.      


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