Once they had detected fresh bovine blood in the water, the sharks began to circle and yet again commenced a feeding frenzy on the near defenseless bulls, particularly in the grain lagoon. Beans were initially victims in the attack, but mercifully they were thrown a life preserver from a cargo ship that just finished loading at the gulf, and they were pulled back to safety. Obviously, these predators have had their fill for the moment at least and have moved on in search of other hapless prey, and this morning at least, appear to have a taste for all things gold. As I commented yesterday, there is very little fresh news, let alone fresh, positive news for the grain/soy markets to focus on right now, and as such, the path of least resistance has been to the downside. There will undoubtedly be a limit to this, and it would appear that a few bargain hunters have stepped in overnight, but it is difficult to view the rebound as much more than a dead cat bounce at this point.
While I do think it is a moot point to focus on crop rating at this point, but corn in the good/excellent category improved 1% to 58% while beans remain unchanged at 55%. That said, I do not believe the trade is paying enough attention to the overall development. Corn dented stands at just 41%, which is 22% behind average. Illinois is 30% behind the normal pace, Indiana 37% behind, Michigan and North Dakota both 36% behind average with that final state registering just 8% dented. Unless we experience an unusually extended growing season, it is difficult to imagine fairly wide swaths in these states will reach full maturity. At first blush, the beans would not appear to be so far off the pace as the percentage setting pods is just 10% behind average at 86%. That said, I was surprised while traveling over the weekend to witness fields that have already begun to turn and having knowledge of when these were planted, am quite sure they will not be producing a yield that anyone would care to brag about.
Brazilian farmers are ready to head back out with planted once again and in light of all the news of deforestation that is occurring due to out of control fires in the Amazon, it is interesting to note that AgRural projects that the soy acreage will only increase 1.1% this year. Over the past decade, the average annual growth has been 5.2%, and this would mark the slowest expansion pace in 13-years. While this may partially reflect the difficultly of expanding into new regions but more likely is indicative throttling back due to the slacked demand from the African Swine Fever epidemic.
For now, there is little more to do in these markets but remain patient as we move toward the next reports and more importantly, harvest activity. We should have trade estimates for the September report filtering in toward the end of this week and the beginning, but as I have commented previously, I cannot recall a year when there has been more uncertainty or skepticism concerning the figures. Just to keep things in perspective, here is a weekly chart of December corn and note that we have slid to within a dime of the 2018 lows for this contract, which just happened to be established just about one year ago now.