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Grain and soy market continue to confound supply side fundamentalists as our spring rally was able to extend higher once again yesterday. In the case of beans, this means a push the highest levels traded since August of last year (and right in the midst of the So. American harvest) and for corn it has been enough to push us back into the upper end of the trading range for the year and above the levels that we were trading at when the bearish USDA acreage reports were issued. I do have to admit that wheat kind of remains in its own lifeless realm but realistically, in face of what are huge world supplies, we are in a sideways pattern and really have done little for the year at this point.
So, what seems to be the issue here? Does the trade not understand that the fundamentals are uber-bearish and that any light that we have seen in the tunnel has been little more than the proverbial train headed our way? No matter what anyone would like to tell you, with all complex systems there is never a singular reason for why something happens. Politicians are probably the best at perpetuating the myth that there are simple answers and solutions to complex issues. Regardless, once you begin to scratch the surface just a bit harder you will often find other subtle changes that are brewing that are not readily apparent just yet. We have maintained for sometime that this is what is occurring in the commodity world in general right now and that even commodities that on the surface would appear to have the most bearish fundamentals, have reached a point of value and if those holding the short side of the market perceive they are wasting their time trying to squeeze a few extra drops of blood from the bull, then they will most likely want to exit and begin to look for greener pastures. I have to suspect that has been at least a portion of the stimulus over the past week in the corn/soy and to a lessor extent the wheat markets. Take a look at a long term chart right now for all of these markets and simply ask; are we closer to the low end of the range for the past seven or eight years or are we closer to the high side of the range? The answer is obvious; we are much closer if not right on top of the low side and if that simple observation is correct, where is the price risk? I fully admit that if no crop issues develop around the globe during the upcoming growing season, the bear may be provided with enough fresh fodder to try and extend the down cycle but to bank on that being the case on the 14th of April would require quite a leap of faith.
Nice rebound in the corn export sales for the past week as we sold 1,135,800 MT or 44.71 million bushels. This figure was up 20% from last week and 21% above the 4-week average. Top buyers were Japan with 396.7k MT, South Korea taking 240.8k and Mexico for 161.5k. Marketing year to date we have now sold 1.328 billion bushels which is 80% of the targeted 1.65 billion. To reach that number sales will need to average 15.3 million per week for the remaining 20 weeks in the year. Beans sales were no slouch either coming through at 455,900 MT or 16.75 million bushels. This figure was up 8% from the previous week and 10% above the 4-week average. Top sales went to Mexico with 146.3k MT, Indonesia with 74.9k and the Netherlands at 73.8k. Marketing year to date we have sold 1.65 billion bushels which is 96.8% of the newly revised target of 1.705 billion. To reach that number we need only average 2.6 million additional per week. While we certainly did not set any records in wheat, after posting a negative number the previous week, at least we are in the green this time with sale of 124,700 MT or 4.58 million bushels. Top sales went to the Philippines with 66k MT, Mexico for 39.4k and Brazil with 23k. Marketing year to date we have sold 710 million bushels or 92% of the projected target and will need to average 8.1 million per week over the next seven weeks to reach the prize.
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