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While the rain in Spain may fall mainly on the Plain, obviously over the weekend in Argentina, they have not been so fortunate. By it on the plains or just about anywhere else they plant beans in that country, quantities were again disappointing and temperature quite warm, which is prompting some to trim the projected output yet again. I have read that some of the more extreme estimates are projecting the Argentine crop could dip to as low as 42 MMT, and while not as extreme, in the latest update Dr. Cordonnier lowered his estimated another 1 million to 49 MMT. This would be nearly 9 MMT below last year and is 5 million under the latest USDA estimate.
Even though it is nearly imperceptible on the weekly chart, the Argentina concerns have given us a gap higher this morning, which is noteworthy not only for the fact that it is a weekly gap higher but also because it has produced a gap above what was the summer 2017 peak for spot beans. If this gap holds through the close on Thursday, it would offer a potential upside target of at least 10.85 and possibly 11.19 and would shift long-term charts into a decidedly bullish pattern.
Now, before I add any more bullish hype to this mornings’ commentary, we should talk about the one major caveat, and that is the large nation that sits north of Argentina; namely Brazil. Even with the late start that the soy crop experienced there, the weather has been nearly ideal since. The independent Brazilian consultant Safras & Mercado bumped their bean estimate higher by 1.7 MMT versus their December estimate and are currently projecting a total crop of 115.6 MMT. If correct, this would break last year’s record number of 114.1 MMT. Dr. Cordonnier is not quite as bold but did raise his estimate 1 million this week to 113 MMT. Using his estimates, this would project a combined Argentine/Brazil bean crop of 162 MMT, which would be down, right at 10 million from last year and would be 4 million less than the most recent USDA estimate. The point to keep in mind though is that even if we were to take that amount directly away from the current global ending stock estimate, it would still be the 2nd largest raw number on record, so it would be tough to call it a bullish supply scenario just yet.