Prices finished lower today in a day void of fresh news. May corn traded in a narrow range, and closed 1/2 cent lower. New crop corn settled 2 cents lower. Soybeans bounced around in a 20 cent trading range, and closed near session lows. May soybeans finished the day 13 cents lower, with November futures dropping nearly 9 cents. Wheat futures were mixed. Chicago closed 2 cents lower, but KC closed 3 1/2 cents higher along with a penny gain in MPLS wheat. The funds sold 20 million soybeans, increasing their net short position. They also sold 5 million corn and wheat on the day.
Today, Federal Reserve Chairman Powell commented that the Feds lack confidence on interest rate cuts, and may need to possibly delay cuts. And, boom – that was all that was needed to stop a 6 session streak of lower closes for the Dow. The Dow finished 63 points higher. Oil was slightly lower and the dollar rallied .160 points higher. Gold continues to skyrocket. Prices rallied $18 today, with gold trading over $2400/oz.
Prices have struggled recently. The market was disappointed last week regarding the South American production numbers by the USDA. Many in the trade expected a lower revision, not “unchanged” estimates. We understand the reasoning behind the lack of cuts by the USDA due to acreage disparity between the two countries. Actually there are many countries with different production estimates versus the USDA. (Seriously. who can trust China’s numbers?) We just tend to pay attention to our competition crop numbers versus the rest of the world.
Despite USDA’s estimates, many analysts continue with their own independent projections. Dr Cordonnier reduced his corn production in Argentina 3 mmt to 50 mmt this week, due to disease. The most current USDA estimate is 55 mmt. He raised his Brazilian soybean estimate 2 mmt to 147 mmt. The USDA most current estimate is 155 mmt. Big differences, and we really won’t know the true number. Ever.
In addition to a larger than expected production in South America last Thursday, we found out that China bought a bunch of soybeans. But, not from us. China purchased between 35-40 cargoes of soybeans last week (primarily from Brazil) for April to June shipment. China also booked 3.8 mmt new crop Argentine soybeans for April-June shipment, presumably for its reserves. This will likely reduce the need for US soybeans down the road.
The graph below shows how much more profitable China’s crush margins are by buying Brazil beans versus the US. This is EXACTLY why we need to find and build new demand for soybeans. We can’t afford to be so dependent on China. In addition to a weak SA basis, a weakening Real gives Brazil additional price advantages versus our strong US dollar.
Mother Nature and/or political policy tends to disrupt the markets. We have an election in November and La Nina is making her presence known right now. Those are two things we have little control over. There will always be seasons of change. We just need to make it from one season to the next.
Meanwhile, it looks like the planters will be sitting for a spell. The map below is a forecast for today through Sunday. It is hard to complain about rain, given the past three dry years. So – we won’t and figure on getting it planted like we typically do.
Good night.
