It is Monday morning, and the sun is shining across much of the Midwest (Sorry Carolina’s) and combines are rolling. That can only mean one thing; markets have the harvest blues. Realistically the pressure is not too significant in either corn or beans as we remain within last week’s range, but that is minor consolation after the post report shellacking we recently experienced.
Not helping the market attitude this morning has been additional trade war rhetoric coming from both Washington and Beijing. Over the weekend President Trump reiterated his desire to imposed tariffs on an additional $200 billion of imported Chinese goods, which could be announced as early as today. China responded by saying there is no sense even scheduling additional talks that had been requested by Treasury Secretary Mnuchin in light of the threat. In case you had not heard, there were rumors circulating that Washington may be looking into the possibility of another round of aid to the farm sector, which if correct might suggest they are not expecting anything to be resolved with China soon.
The wheat market has been the exception this morning and not just because we have moved posted harvest. There are additional concerns about both Russia and Australia. In Russia there has evidently been quality complaints from wheat importers and the government is reportedly trying to strengthen quality controls. Of course, if the crop is of poor quality due to the adverse growing season, I am not sure what they can do, which again raises concern issues as to if they will be able to export the quantities projected. Down under, a new problem has developed, but this time it was a visit from Jack Frost in the western side of the nation. As we have discussed recently, it is the western wheat crop that has looked promising for that nation this year, but it would appear freezing temperature over the weekend trimmed that potential. The USDA currently has the Aussie crop pegged at 20 MMT, but many, including ABARE, are looking for something less than the 20 MMT mark.
One bright spot this morning is a solid export sale of soybeans reported. 241,000 MT were sold to Unknown destinations for this crop year.
While we have not exactly collapsed, it is worth noting that the U.S. Dollar is under pressure once again this week and is close to confirming that a peak has been
established. A weekly closing violation of the 94.34 level should do the trick. By no means would a breakdown here bring buyers rushing back to the commodity markets but psychologically could cut the line on one of the weights that has pulled us lower.
According to the CFTC, managed money is now short 63,000 contracts of corn, 68,000 contracts of beans (up 7,000 and 6,000 respectively last week) and long 18,000 contracts of wheat, but this reflected a reduction of 24,000 contracts.
Outside of this, we have little else to be considered market movers this morning. Crop progress will be released this afternoon with the trade estimating corn harvest could be around 15% complete, which would be around 5% ahead of normal. Bean harvest is expected to be around 5% complete.