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After enduring two sessions of a WWF worthy “smackdown,” grain and soy markets have found a bit of buying interest during the overnight hours. If we can hold for the balance of the day or not remains a question as there would appear to be little threatening on the weather front (no pun intended) currently but we should at least be entitled to a little sympathy bounce. Never forget, as it is written in the second chapter in the book of commodity prophecy; Live by a weather market, die by a weather market. At least we have witnessed a pickup in volatility and as we all have painfully learned in the past couple years; no volatility = no opportunity. I actually believe that is written in chapter three.
Seeing there was a federal holiday on Monday, reports have been pushed back one day, so export sales will not be released until tomorrow morning. We did see a nice round of corn sales reported yesterday as South Korea obviously decided it was time to book, with various sources purchasing 259,000 MT. Do keep in mind though that 54% of this was optional origin.
While I am not sure we can consider it a trend just yet, the demand for corn offered at auction in China appears to be waning just a bit. This morning it was reported that 2.422 MMT or 61.7% of the total offer was sold. Considering the challenges (losses) being suffered in the hog industry in that nation currently, this should not come as a shock. The Chinese Commerce Ministry also commented that they believe the proposed US tariff are in opposition to WTO rules but for now is reserving the right to take any countermeasures.
It is, I believe worth pointing out the that US Dollar broke fairly hard yesterday and while by no means did that provide any support for ag commodities, it has reached a level short-term, that should be of interest. From the lows posted shortly after the beginning of the year, the dollar has advanced over 7%, most of which came in the past 6-weeks and just on Tuesday, challenged the reaction highs that were posted in November last year. Looking solely at this daily chart, it would appear we have a market that should be ripe for a correction lower, and of that is to be the case, would remove at least, for now, some of the headwinds that commodities would face. If there were another weather scare to develop, that could open the gates for a little more buying interest. Of course, the key in that statement is “if there were another weather scare.”
Dan, you forgot to mention Chapter 4 which tells what happens when an idiot in Washington decides to use agriculture as a lever to penalize other countries in trade or political disputes.