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Middle Tennessee | After a stretch where no one could talk about anything other than international currencies and yield projections, it’s refreshing that the bulls’ agenda has wormed its way back into the conversation: that is weather, and demand (where we can find it at least).
What better time to bring up the weather than when perhaps the world’s most important crop (that is the Brazilian soybeans) is just over 10% planted, and delayed a little bit by an ongoing drought. Every 2nd or 3rd day, there is another large sale announced to Chinese importers and their Unknown friends, and US terminals are shipping out 75 million bushels each week recently. An anonymous Kansan kindly pointed out to me today that the advanced rate of exports was a result of timely harvest. Like a rude Yankee (I’m actually a rude Left Coaster which I think is even worse) I must say, don’t fully understand the necessity of shipping every bean the day it’s picked unless there’s some buyer motivation out there in cash markets. Last week Reuters reported that shipping points in Southern Brazil were being hamstrung by unrelenting rain there, and the maps I look at forecast that rain will continue for another week.
Alas all of this bubbling bullishness could not help soybean prices today as short sellers turned their sights to soybeans and wheat during the later part of last week and today. Those new shorts look bored with corn, which posted a hook reversal Friday, and was satisfied to retrade Friday’s range today on ultra-low volume. The macro-environment was unfriendly to soybean bulls today. The support base building for the Brazilian real took a little setback, WX forecasts for Matto Grasso reported some drought relief on the way 10 days from now, and crude oil traded weak. Since Wednesday, soybean traders have taken big chunks out of the remarkable Tuesday rally every day, and the Tuesday gain is now about completely wiped out.
Wheat prices—just like the soybeans— fell in anticipation of heavy rains forecast for the Southern Plains. Export shipments announced today were a little bit sad, but if the rain system glances too far South or East we could be left with insufficient moisture conditions in the Central Plains to establish the winter wheat crop. Russian wheat areas also do not look like they’ve received drought-changing rains, but there has been sporadic relief, and there is more of that ahead. Whatever the weather, Friday’s sell off was on a very large increase in open interest, and evidently short sellers are eager to see prices fall even before the rain. | |
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LKCW Nightly: 10-19
