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The Hueber Report is a grain marketing advisory service and brokerage firm that places the highest importance on risk management and profitable farming.
Back in the early 1970’s, Paul McCartney and his band recorded an album under desperate conditions that revived his then sagging career titled “Band on the Run.” Yesterday, a collapse in the dollar after the recent advance, inspired by a possible financial bailout package for Greece, revived a sagging grains and soybean market that could be labeled as “Bears on the Run.” While I certainly cannot claim that the turnaround yesterday will produce the same effect for markets as the Wings album did for Sir Paul, but I do believe it is indicative of a market that had been pressed too hard and too far given the exposure to production risk that we still have in front of us. The US dollar has bounced back this morning after Greece continued to push for more concessions and grains have surrendered a minor portion of the advance but I would like to believe the reaction yesterday may have shaken the bear enough to give them pause for the time being.
In addition to the higher dollar and a weather outlook that appears quite favorable for crop development, at least that in the ground, pressure in the energy sector after a week of rally is also creating negative psychology. The selling in crude appears to the stimulated in part by the meeting of OPEC member in Vienna this week. While there is likely to be debate over the current production levels the cartel has set but Saudi Arabia believes its agenda of curing low prices through low prices is working and will remain steadfast. This of course tempers any ideas growth in the shale and ethanol industries and combined with lower mandates from the EPA, provides little support for corn.
Informa will be issuing an updated wheat estimate later today and we should soon begin seeing estimates surface for the June 10th crop production and supply/demand report. The June report is one that generally does not carry a tremendous amount of weight in the market place as we are so early in the growing season and will not even have “official” acreage numbers until the 30th. That said, you can almost always be assured of 15 seconds of nonsense once the report is released.
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