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Welcome moisture has come to some of the driest regions of the grain belt with showers in NE Nebraska, South Dakota, MW Iowa and SW Minnesota overnight. I have seen reports of accumulations of 2/10th to as much as 1.5 inches and while I am sure any and everything would be welcome to a parched crop but that certainly does not sound like a stress breaker. Thankfully in those regions, temperatures have moderated but needless to say, those little piddles of moisture need to become more consistent if they are to provide any lasting relief but one has to suspect that for the earliest planted crops, we have already moved beyond the point of improving yields. The best that could be hoped for would be to sustain.
I would not go so far as to say recognition of this is the reason prices have snapped back this morning but after some initial pressure, we have seen grain and soy markets bounce back into positive territory. Maybe sell the forecast, buy the rain? Regardless, we have pressed corn back to the low ebb of what has now been a ten-month trading range, and wheat and beans have reached decent retracement ranges and levels of support. Actually, I would like to put this into an even longer-term perspective as the corn market has now realistically been in broad sideways pattern for nearly four years and appears to be finding support/value not just at the low end the trading range for the past four years but realistically for the past decade, which should encompass the “ethanol era”. Combine this with the fact that we are rapidly winding down another calendar month and one would suspect that barring any “fresh” shocking event traders may be reluctant to establish new positions until they have a clean slate to work with on August 1st and even then, the incentive to come back as a bear would appear limited.
Just two years after it was announced that JBS intended to purchase the hog operations of Cargill, there are rumors that somewhat of a reverse deal could be in the making, but with a different kind of meat. It well known that JBS has been struggling of the past year with political scandals in their home country of Brazil as well as issues with potentially tainted meat and they are trying to sell assets to raise capital. While denied by JBS and no comment from Cargill, the rumor is that the later may purchase the major U.S. based chicken producer, Pilgrim’s Pride Corp. Note that this company was purchased by JBS back in 2009/10.
One final note on the ongoing aftermath of the commodity bubble bursting and the struggle for firms in this industry, the once giant Noble Group has announced plans to once again dramatically shrink the size of its footprint. After warning that second quarter losses could be as high as $1.8 billion, the have announced plans for what would appear to be a major and dramatic cut in size. If you recall, Noble sold the balance of its agricultural unit to the Chinese giant Cofco last year.