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If the weather that we have experienced thus far for the spring is indicative of what the balance of the growing season holds in store, we could have an interesting summer indeed. Excessive rains in the deep south but abnormally dry conditions in the southern plains and upper Midwest. Temperatures that feel like early July one day and late February the next. Granted, it seems that weather extremes have almost become the norm instead of the exception anymore so maybe none of this should come as a surprise but with one of the largest El Nino’s on record now evidently racing rapidly towards a La Nina, it would lead one to believe that we are in store for more of the same kinds of volatile weather and possible price swings in the days and months ahead.
Evidently the commodity speculative fervor in China has reached the point that the government has decided to step in and try to “cool” things off a bit for fear that there is another bubble in the making. Note that this has been quite broad based and led by trading in industrial metals but has benefitted nearly all markets. In the past two weeks alone, iron ore is up more than a third and for the year, steel futures are up more than 50%. Recognize that part of the buying interest has been stimulated by the fact that the Chinese government has been on a monetary mission to stimulate the domestic economy and it would appear that the real estate and construction industries may have turned the corner, but also note that part of the interest is due to the fact that investment money there has been flowing into commodities since the government took measures to crack down on excessive speculation in their equity markets. Whether this is a bubble or not, one has to believe that the advance there has been at least a psychologically positive factor for commodity markets on this side of the globe as well.
As expected the U.S. planting progress witnessed a huge advance this past week with 30% of the corn now in the ground. This compares with 13% a week ago and is nearly double the normal 16% for this time of year. While wet conditions should slow progress a bit this week, any idea of a late spring dragging on yields would appear to be pretty well out the window. Bean progress came in at 3% which would be 1% ahead of the normal pace.
The wet weather in Argentina as prompted Dr. Cordonnier to lower the bean estimate for that country by 2 MMT to 57. He also noted that with harvest only 16% complete, the bias would be to see that number drop even further in the weeks ahead. Last year this nation produced a crop of 60.8 MMT. Corn production was left unchanged at 25 MMT. That same cannot be said for Brazil as hot and dry conditions appear to be taking their toll on the safrinha crop and he lowered production 3 MMT to 79 MMT. He also reduced the projected bean production a half million tonnes to 98 MMT.
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