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Speculative funds returned as sellers in the grain/soy market yesterday, and with only moderate end user and export interest on the buy side, prices responded with a weak performance all around. We have attempted a half-hearted rebound in the overnight session, but at this point, it is looking a bit shaky. I would not say that anything distressing has emerged from the U.S./Chinese trade negotiations but the longer this has dragged on, the less of a positive impact it will have on prices, and even if a surprise deal were announced this afternoon, I suspect the reaction would be muted at best.
Most, if not all of you have probably already heard about the proposed 2020 budget that President Trump unveiled yesterday. It calls for a 15% or $3.6 billion cut for the Department of Ag, with crop insurance premium subsidies taking one of the most significant hits. I recognize that this is a proposal and has about as much of a chance of getting through Congress as the proverbial snowball in hell. That said, the very fact that it has been proposed, particularly in light of the existing farm economy which is in shatters in large part due to the various tariff wars we have had to contend with over the past year would seem to speak volumes about the attitude of this administration towards agriculture, which as we know has been one of its staunchest supporters. It brings to mind a comment made back during the campaign about shooting a gun down Broadway and not losing any supporters.
According to AgRural, the Brazilian soybean crop is now 57% harvested, compared to 48% last year at this time and an average of 47%. They have increased their bean estimate by 400,000 MT to 112.9 MMT. Dr. Cordonnier has left his bean estimated unchanged at 113.5 MMT but comments that he has a slightly higher bias moving forward. The USDA currently stands with an estimate of 116.5 MMT. Dr. Cordonnier did raise his Brazilian corn estimate 1 MMT to 93.5 MMT this week (USDA 94.5) as well as raised his Argentine corn estimate 1 MMT 44 MMT (USDA 46). He kept the bean estimated unchanged at 54 MMT which compares with Uncle Sam at 55.
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