The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
The Hueber Report is a grain marketing advisory service and brokerage firm that places the highest importance on risk management and profitable farming.
The few remaining bulls in the wheat market were given a pleasant surprise yesterday with one of the largest single day rallies that market has experienced in months. Possibly a better was to have stated that would have been to say the bears in the wheat market were given a very unpleasant surprise with one of the largest single day rallies in months. For some time this market has been a favorite short leg of speculative funds against longs in beans and once the unwinding began yesterday, it appeared to just feed on itself. It was estimated that funds bought around 11,000 contracts of wheat and sold 11,000 beans. The wet weather to the south potentially hampering winter wheat planting was cited a one of the possible reasons for the change of heart but we find that planting now stands at 83% compared with a normal 85% but ratings did come in a bit under expectations with 47% of the crop rated good/excellent. I guess we can throw in the concerns about a reduction in the Australian crop this year as well as less than ideal conditions in Ukraine and Russia but that is not exactly fresh or shocking news, which leads us to believe we had just leaned the boat too heavily to one side and began to shift the other way, which inevitably means there will be a few tossed overboard. We have seen a little balancing out overnight with beans a bit higher and wheat trading lower but overall, we believe this kind of action provides additional confirmation that grain markets are at the low ebb of their ranges and ultimately we have a greater risk of seeing prices begin to advance than decline.
No real surprises on the weekly progress as the report shows corn 75% harvested and beans 87% complete. These numbers are still 7% ahead of their average pace for this time of year. The states that remain with the most beans to harvest, at least percentage wise, sit in the south and with the remnants of Patricia emptying out on them, it could be a slow process for the next week. We do have some rains moving through the plains and upper Midwest this week and again forecast for the upcoming weekend, which of course should slow the pace of corn harvest as well. The only two states not over the 50% mark are Wisconsin and Michigan which both sit at 47% complete.
According to an article I read this morning, the United States and Brazil may need to move over as there could be a new player in the world soybean stage; Bolivia. This country sits on the western boarder of Brazil and while quite mountainous towards it western front does have very productive ground in the state of Santa Cruz. This nation had already pushed soybeans production above 1 million hectares a few years ago but favorable economics have continued provide incentive for expansion, some via deforestation, and it is estimated that an additional 2 million hectares could be brought into production. Of course, this just amounts to 8 million or so acres so I guess they probably not become a major threat to our business. Still you probably thought they only exported Quinoa.
How do you pull up a previous article dated Oct. 27, 2015 and post it today as current ?????