We’ve only a few days left to complete the month of August and gauging from the level of activity we are witnessing in the grain/soy markets overnight, and it would appear that a number of people have checked out already. In many respects, you could not blame them if they did as it has been a volatile month, to say the least, highlighted by surprises from month than one branch of the government. It may be that bears just want to rest and tally up their winnings and bulls want to relax and allow the wounds to heal. Generally speaking, you would not expect September to hold the potential for similar type of fireworks, but with this already most unusual year, I am not so sure that will be the case.
There is one government report scheduled for today, but it is not coming from Washington, but rather out of Canada as Stats Canada will be issuing their crop production estimate. The average pre-report estimate for total wheat production is 32.3 MMT, which would be a slight increase over last year’s 31.7. Corn production is also expected to increase a bit with an estimate of 14 MMT compared to 13.8 last year. Oilseeds are not expected to fair out quite as well as soybeans are expected to tally 6.3 MMT compared with 7.2 last year and canola 18.9 MMT versus 20.3.
As global politicians continue to banter back and forth about what should be done and who’s feelings were hurt due to comments made, the rain forest in Brazil continues to burn away, potentially open more area than usual for agricultural purposes. Of course, the fact that the current President Jair Bolsonaro made no secret of the fact that he wanted to encourage the expansion of agriculture in that country has led many to make accusations that they were not putting the best effort forth to stop the spread of the fire and a number of comments that he himself has made would tend to make one believe that may be the case. Convenient for them that this is happening at a time when China is interested in stepping up their investments in global ag production and transportation. Regardless, here is an excellent visual of what the deforestation of the Brazilian rain forest has done since 1970 to enable Brazil to be the number producer of soybeans.
Fundamental and Technical Outlook for Grain Markets
Canadian Farms Anticipate Decrease in Canola and Durum