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I have a sneaky suspicion that bean oil was the tattler as it was the only kid in the grain and soy yard that was not taken back behind the woodshed for a lashing yesterday. I am not completely sure what the others had done so wrong to warrant the punishment. Maybe they were getting too close to climbing over the fence that has contained them for the past three and half years and ma and pa were just not ready to allow them that kind of freedom yet. Or maybe they were getting a bit of an inflated ego, seeing that suitors who have been only paying attention to those hussies over in the equity markets have been back, hanging around the gates and trying to lure these commodities out with their monetary gifts. Whatever it was, the punishment yesterday was swift, and it may take a bit for the sting to wear off before they feel emboldened enough once again to venture toward those forbidden territories. That said, once you have had a glimpse of a taste of something better, I doubt that they will remain content to stay here indefinitely.
Updates from Argentina reflect continued deterioration in the crop but nothing that would be unexpected. In his weekly update, Dr. Cordonnier lowered the bean estimate another 1 MMT to 42 MMT and states that he still has a lower bias moving forward. This estimate is now the same as the Buenos Aires Grain Exchange and is a couple of tonnes above the Rosario Exchange estimate. Further north, there has been quite an increase in the number of reported instances of rust showing up in Brazilian beans, but evidently, this has not impacted the production forecasts. Currently, Dr. Cordonnier is projecting a total crop of 115 MMT, which would be 1 million above last year’s record production. At the current estimates, he is looking for total South American production to fall in around 171.3 MMT, which would be a 16.4 MMT or 8.74% under last year. The last USDA estimate was projecting right at a 7% hit.
As I have noted previously, the rally in prices over the past couple months did provide Brazilian farmers with the incentive to plant the second crop, or safrinha crop of corn. According to AgRural, this is now 92% planted compared with a 5-year average of 90%, and as a whole the condition ratings are good. The major caveat though is that because of the lateness as which some of this has gone into the ground, the potential for frost damage has increased. Normal frost dates in Parana line up in late May. Granted, they could be lucky and see later than normal cold temperatures, but this is something to keep an eye on. Anyone that deals in physical commodities understands the quality issues that accompany an early freeze.