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It is less than 24 hours until T-Day and grain and soy markets are eerily quiet. Of course, that fact that we have not resumed trade after the Independence Day holiday would account for this. While it could be my imagination or maybe just the belief that we have pushed the ag sector further to the downside then should have been reasonable, but looking at some of the trade in the outside markets it would appear that there may be a possible shift in attitude. The dollar is under fairly decent pressure morning and appears to be on the cusp of turning lower, and metals and the equity trade are enjoying a little rebound. I certainly do not want to build up any major expectations, but could we be dealing with a sell the threat – buy the fact type scenario. The only thing that might be better would be a surprise resolution and commitment by countries to works out these differences amicably. Now I know my imagination is getting carried away. Actually, the Chinese finance minister on Wednesday did go on the record stating that they will not be implementing any tariffs on US goods beginning tomorrow. The reason given was they will not be the first to fire shots in this trade war. One would also have to suspect they understand quite well that these tariffs and counter tariffs cut both ways. Do note that in the weekly grain auctions, as a percentage at least, there would appear to be more interest in soy than in the grains. Yesterday they sold 1.087 MMT of corn from government inventory which represented 27.1% offered and 283,559 MT of beans (vintage 2013) which was 56.7% of the quantity offered. Maybe that was a very good year for beans, full body with a hint of fruitiness. Regardless, as I have commented previously, now that the trade has fully accepted and I believe factored in the worst case scenario of trade tariffs, any delays of hint that these will not be enacted, could produce a solid relief rally.
There have been additional reports coming from Europe concerning problems from the excessive heat this summer and wheat production estimates are being ratcheted lower. According to industry surveys, the Union will produce 136 MMT of soft wheat this year, which is a 4% reduction from last year’s 141.8 MMT. The biggest problems have been in northern reaches with issues in France and Germany but partially compensated with better crops in Spain. French wheat futures have now pushed to the highest level in over three weeks. Keep in mind that this does not suggest that the world will face any wheat shortages, but we should see global ending stock reduced on next weeks’ reports.
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