The early optimism in the grain and soy trade could not find any real traction yesterday, and it would appear we have shifted back in to neutral and may even be flirting with reverse over in beans. A semi-improved weather outlook would appear to be the primary “reason” sighted for the loss of upward momentum, but I suspect many are taking a wait and see stance as we await the spate of reports scheduled to come out this week. The two critical reports for the grain/soy trade will most certainly be the acreage and to a lesser extent the stocks but we should not overlook the fact that we have a quarterly hogs and pigs report on Thursday and Canadian acreage numbers have been released this morning.
Stats Canada reports that total wheat acreage in that country is 24.595 million acres compared with last year at 24.7 million. Of this, 18.772 million is spring wheat and 4.894 million durum. Corn acreage is a touch higher than last year coming through at 3.694 million versus 3.64 and barely is at 7.402 million compared with 6.5 million. As with here in the U.S., soybean acreage slipped, coming in at 5.714 million versus 6.32 in 2018. Canola was also lower at 20.952 million compared to 22.7 million a year ago. All of these were pretty well in line with trade expectations.
Estimates for the hogs and pigs are as follows; All hogs as of June 1st 103% of a year ago or 75.05 million head. Kept for breeding 102.1% or 6.453 million head and Kept for market 103.1% or 68.609 million head. The March through May pig crop is expected to be 102.6% of last year.
I would be remiss to build up too much optimism as we have been disappointed so many times over the past 18-months, but the pre-U.S./Chinese Presidential meeting set for this weekend is being built up as the start of something good. Treasury Secretary Steve Mnuchin stated that the two countries are already 90% of the way towards an agreement and there are rumors that the plans for the next trade meeting are already in the works.
Up until this point in the year, the growing conditions in Europe have appeared to be on a different planet than the U.S. instead of a different continent, but their good fortune could be coming to an end. A meteorologist in Spain seemed to sum it up best by stating that “Hell is coming” as temperature across much of Western Europe are forecast to now push into the 40 to 45-degree Celsius range, which would be between 100 and 115-degree Fahrenheit. While I am unsure as to how long they are expected to experience those kinds of extremes, needless to say, they are suitable for neither humans or vegetation.
I find it somewhat amusing that it was yesterday that the equity markets decided that the dovish stance and comments now coming from the Federal Reserve are the reason to beginning selling in that arena. Last week this sentiment appeared to be lower interest rates as a positive for equities, but obviously, it dawned on some that the reason this could be needed was due to concerns about a slowing global economy. Nobody ever promised that the mass psychology of markets and how they react to the news needs to make sense.