Dec 07, 2017
Agricultural markets from grains to livestock to ethanol all took a turn for the worse yesterday, and the negative psychology has spilled over a bit into this morning. Nothing really has changed concerning the weather outlook in South America, but with nothing fresh and the macros, particularly the dollar, working against us, no fresh news is not good news. There is one market that continues to be on an incredible tear, and that is Bitcoin. Each day seems to bring along not just new highs but mind-numbing new high as in the past 24 hours alone it advanced over $2000, pushing above $15,000 as the cryptocurrency craze continues. It seems everyone is looking for the crescendo to end, but as of yet, the conductor continues to draw more and more sound from the orchestra. A year ago today, Bitcoin was trading for around $770. There have been all sorts of analogies offered such as the 17th-century tulip bulb insanity or a replay of the gold and silver craze in the late 1970’s, but I think the most clever comment came just this morning from Sir Howard Davies, chairman of the Royal Bank of Scotland. He suggested that “All authorities can do it to put up the sign from Dante’s Inferno – ‘Abandon hope all ye who enter here.'” One has to admit that an individual from the international banking community, which went through its own mortgage inferno not too many years ago, knows a bit about the risk at hand. The Chicago Board Options exchange is set to introduce Bitcoin options on the 10th of this month, and the Chicago Mercantile Exchange will begin trading contracts on the 17th. It will be interesting to see if this coincides with a peak.
It is Thursday morning, which normally means the release of weekly export sales and we have seen a nice rebound from the Thanksgiving impact number last Thursday. For the week ending November 30th, we sold 876,400 MT or 34.5 million bushels. This figure was 46% above the prior week but still 30% below the 4-week average, and China is nowhere to be seen. The top sales go to Colombia with 173.7k MT, followed by Mexico with 150.3k and then unknown destinations at 127.1k. Marketing year to date we now stand at 901.5 million bushels or 46.8% of the projected total. We have 39-weeks left for the year which means the weekly average now needed stands at 26.24 million bushels. There is no denying that bean numbers were solid as we sold 2,015,800 MT or 74.08 million bushels. This was a little over 2-times the previous week’s sales and just a smidge less than 2-times the 4-week average. On the top of the list, we again find China with 1.2926 MMT followed by Thailand with 141.8k and Indonesia with 101.5. Marketing YTD we now stand at 1.335 billion bushels or 59.3% of the projected total. We now need to maintain a weekly average of 23.5 million. As always, the wheat numbers pale in comparison as we sold 321,400 MT or 11.81 million bushels. This was 74% above last week but 22% below the 4-week average. Unknown destinations were the top purchaser with 69.8k MT, followed by Japan at 63.1k and then Taiwan with 36.2. Marketing YTD we now stand at 642.51 million bushels or 64.3% of target. To reach that 1 billion mark we now need to average 13.75 million per week over the next 26 weeks.