|
Another down day in the markets after a lackluster day of news. Not much has changed since our midday text update (Text GRAIN to 519-800-0436 to join the list).
Over the past 3 weeks, we managed to rally 77 cents on wheat, and now after just 4 days we have given back almost 1/2 of that. The 50-day moving average at 4.04 is the next support level for CZ24, which it is starting to near now. SX24 futures continue to battle around the 50-day moving average of 10.14.
Today's export sales report showed good sales for corn, poor for wheat, and exceptional for soybeans. Is it possible that even this early in the game, China is nervous about Brazil's production potential and buying more out of the US? They say low prices cure low prices... low prices find demand which improves the supply-demand relationship. Most of Brazil remains in a D4 drought. If that remains for another few weeks, the grain markets are going to pay attention. The worst drought on record has lowered the water level of the rivers in the Amazon basin to historic lows too which could impact logistics. This is translating over to Argentina as well. Grain ships loaded with soybeans and corn at Argentina’s major inland river ports around Rosario are hauling less cargo as water levels drop to near record lows due to a major drought upstream in Brazil.
77% of the Midwestern U.S. is abnormally dry as of this week, the most in 6+ months. 100% of the I-states are now abnormally dry, up from Iowa-65%, Illinois-77%, Indiana-92% a week ago. Some 59% of Ohio is in severe or worse drought. What does that mean for the finishing crop?
Overall, things in the Americas are dry... but how dry is too dry? The crop in the US is being harvested now. Early harvest yield data continues to be good, with the biggest storyline so far being the quickly drying soybean crop. Rains are predicted for a lot of the Midwest into next week which will help the situation, but a more normal pattern of rainfall will be needed into the Fall months. One benefit from the dryness has been a speed-up in harvest progress, with farmers in Missouri and parts of southern Iowa reporting 50% progress in some areas.
It will be interesting to see whether the geopolitical tensions flaring up in Ukraine/Russia will lead into any risk premium being built into prices ahead of the weekend.
Funds were thought to have been all sellers today.
| 
