Published on: 16:51PM Aug 29, 2018
There is nothing like a good rumor to get the hearts of the bulls pumping once again. While nothing more than rumors, thus far stories are circulating once again that Russia may cap off wheat exports sometime this year. It would seem this is the third of maybe fourth time this story has been resurrected which makes one almost think that where there is smoke, the could be an actual fire. Of course, after one of the previous incarnations, exporters seemed to take the news to heart and appeared to really push as much product into the export channel for fear of being cut off later, which in turn resulted in the recent breakdown in prices. I would not be surprised that a report from the Russian consultant firm IKAR, helped fan the flames just a bit. They did leave the Russian export estimate unchanged at 32.5 MMT but trimmed the overall crop estimate a little over 1 MMT to 69.6 MMT. From a technical perspective, the recent breakdown produced what appears to be a classic A, B, C correction lower, which in the process has pushed indicators back down to an oversold position. While not confirmed just yet, from my perspective this would appear to be a market that is positioning for a fall low.
News from Washington would indicate that Canada in now in the discussions concerning a new NAFTA agreement. By no means does this assure that a new three-way agreement is an absolute, but one has to believe that if Mexico and the U.S. are ready to move forward, our neighbors to the north will not want to be left behind. In an ideal scenario, we will have a new NAFTA agreement headed for congressional approval within the next week and then news that U.S./China discussions are moving forward with great promise to end the trade war. As I said though, that would be an ideal situation, not necessarily a realistic one.