While shifting around the balance a bit last week, Managed Money’s appetite remains relatively stable. During the week ending November 10th, they were purchasers of over 10,000 contracts of beans, 8,000 bean oil, 471 KC wheat, and a whopping 10 contracts of oats. They were sellers of nearly 16,000 contracts of Chicago wheat, 360 Minneapolis, 9,200 corn, and 1,300 of meal. The net result is that they are still quite long in all these markets, particularly in the corn and beans. 280,835 contracts and 221,094 contracts, respectively. Realistically, who can blame them as we have seen a generally steady diet of positive news in the past week.
Beginning with the bullish production and supply/demand report last Tuesday, we followed up with lower but still respectable export sales for corn and beans, and consistently positive news since.
In Brazil, AgRural now estimates that 70% of the soybeans have been planted, which brings them right up to an average pace, and while recent rains have been beneficial, the extended outlook is tentative at best. In Argentina, 31% of the corn is planted, 7% behind average, and 20% of the beans, 4% behind average. Conditions and the weather outlook are concerning here as well.
In Russia, farmers have sown 99.7% of intended winter crops, but conditions have been dry, and it is estimated that the amount of crops rated poor will be close to a record high. Over in Ukraine, APK-Inform now estimates the grain crops will total 67.1 MMT (the government has been at 68), and that exports will decline to 47.6 MMT. Corn and wheat prices pushed another $4 to $7 per tonne higher during the past week.
Here in the U.S., we crushed a record number of soybeans in the month of October. 185.24 million bushels, which compared with 161.49 million the previous month and 175.4 a year ago. The previous record was set in March this year at 181.37. And finally, Mexico returned to our corn market overnight with the purchase of 195,000 MT.
There is one last element that should not be overlooked as well: the U.S. Dollar. After having bounced off contract lows last week, we have been steadily eroding once again and appear poised to attack that bottom. If we can begin closing below the 92-cent mark, the door opens for a potential push down to the 88-cent realm, which has not been seen since early 2018.
As long as well continue feeding this bull with a steady diet of positive news such as this, it should be able to at least sustain weight and vigor and, as witnessed this morning, can exhibit bursts of energy. But do not become complacent in assuming we can keep this up. The larger the animal becomes, the more calories it requires each day just to maintain itself.
