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The USDA will release production estimates on Thursday. This report will be of importance to the soy complex, in my opinion. The expectation is for a larger yield, approaching a record. The carry will continue to rise to unprecedented levels if the numbers continue to climb. The global picture remains much the same. The Brazilian is way ahead on planting with some key areas as much as 30% planted. In addition, the cash sales there are well ahead of the norm. As much as 27% of the beans is estimated forward contracted. The norm is approx 4%. This is important because the Brazilian is expecting a large crop. In addition, they are perceiving the current price as a good one. This has been my thought. I have suggested selling Nov 2019 above 920 level. This is currently the case. It is my belief these prices will look rich come next year. There could be a chance here to have two hedging cycles. This assumes the China spat is ultimately worked through.
The Corn was weak yet again. There is no concern at present while harvest is rolling. The President is speaking tomorrow in Iowa. There is a thought he could mandate E15 production and sales 12 months out of the year. This could provide a market spark. The corn exports remain very strong. In addition, the ethanol exports as well as DDG exports remain very high. This continues to fuel the friendly corn market. The numbers on Thursday are important for corn. The market anticipates an increase in yield. If confirmed, this could present resistance to higher prices. However, a flat sideways report could be the spark the market has waited on.
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