Giveth and Taketh

Published on: 12:07PM Aug 12, 2015

www.thehueberreport.com/freetrial

 

As it was written by the “Profit” Volatilia in book of Economica, the market giveth and the market taketh away.  It stood to reason given the news at hand that the rally on Monday in corn and beans may have been a bit excessive but using the same logic, so was the reversal then posted yesterday.  It appears that after traders had digested the news of China devaluing their currency and dropping interest rates once again it sparked a new round of deflationary sentiment that bled across just about all commodities.  Note that we appear to have tempered the selling overnight and of particular interest is the fact that the dollar bumped slightly higher yesterday on the news but has crashed lower now overnight.  With failure to sustain strength on what should have been construed as positive news, could it be we have a turn in the making?

In fairness we were not completely void of negative news yesterday as there were a couple crop releases around the globe.  CONAB updated their projections of the Brazilian crop. Their bean estimate was left largely unchanged at 96.2 MMT but the corn production was boosted 2.5 MMT from last month to 84.3 MMT, reflecting an excellent safrinha crop.  This number is a little more than 2 MMT above the last USDA estimate and it will be interesting to see what changes they make later today.  Needless to say with the Brazilian Real at extremely depressed level versus the dollar, this is not positive news for US export business.  StrategieGrain also released changes in their estimate for the EU wheat crop boosting production a little over 1.5 MMT but this was at least offset by other sentiment that Ukrainian crops will fall 2 to 3 MMT below previous estimates due to the late season dry conditions in that region. 

We are just a few hours ahead of the USDA August release and what should be the base for future crop estimates. Of course there are also independent crop tours at the gate, particularly the Pro Farmer tour, which runs between the 16th and the 20th so the trade will be hearing plenty of fresh data to mull around during the next ten days.  For today though a final look at the average trade estimates; Corn – yield 164.5, production 13.327 billion and 15/16 ending stocks of 1.424 billion.  Beans – yield 44.7, production 3.724 billion and 15/16 ending stocks of 301 million. Wheat 2015/16 ending stock of 858 million.