It took a slightly bearish Sept USDA Report last Thur to “stop the bleeding” – and Even more – put in a seasonal low! Production & yield estimates – while under last month
Were both over the estimates – however, conventional wisdom said the higher yields were Already factored in – as the mkt basically said ENOUGH IS ENOUGH!!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 421,803 (LW – 612,065) & Thur sales were 498,000 (450-950)
9/12 -113,036 – Mexico
9/10 – 278,000 – Mexico
9/9 – 651,670 – Mexico
9/4 – 451,766 – Mexico
- USDA SEPT REPORT – 9/12 – was definitely on the unfriendly side With yield, production & all carryout over expectations – however The mkt took it in a positive way – key-reversing on the upside – Basically implying all the higher yields & production were already dialed in
Prod – 13,799 (exp-13614)
Yield – 168.2 (exp – 166.7)
US STK 2190 (exp-1965)
GLOBAL 306.3 (301.8)
- CROP RATINGS – good-to-excellent stayed at 55%
Ill – 41 (38) Ind – 31 (33) Iowa – 65 (63) Ohio – 34 (33)
Despite the benign “finishing weather”, maturity is still lagging
Maturity – 18 (avg – 39) Dented – 68 (avg-87)
Dough – 93 (avg – 98) Harv – 4( avg – 7)
- US/CHINA – some “goodwill buying” has taken place & this week China is in DC to set up early October face-to-face meetings – there’s a school of thought that Says Trump won’t get re-elected without some kind of “trade deal” – given how Instrumental THE FARM VOTE was in getting him in last time!
- WEATHER ISSUES – have flipped the script as “frost angst” has been replaced With above-average temps – perfect for finishing the crop!
- BULLISH KEY REVERSAL – following last Thur’s USDA less-than-friendly Report, The mkt soared- eventually challenging the Sept highs!
When “all the smoke clears” – after harvest, we still feel yields will be Disappointingly low – despite the recent spate of benign weather – & also, historically, Prices remain in the lower one-third of their 10 year range – which creates a fertile Export environment!
On the heels of a basically neutral USDA Sept Crop Report, Nov beans exploded to The upside for a plus-20 cent gain – confirming that seasonal lows are in! This doesn’t mean The mkt will race to the upside – only that it will consolidate at current levels – awaiting Harvest results! Two fundamentals were at play- one is the general attitude that the higher Yields are dialed in & two that some kind a trade deal will be forged – as Trump is beginning to realize he needs it to get re-elected!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 666,490 (977,914) & Thurs sales were A whopping 1,728 (700-1,100)
9/17 – 260,000 – China
9/16 256,000 – China
9/13 204,000 – China
9/10 138,000 Mexico
9/4 451,766 Mexico
- CROP CONDITIONS – good-to-excellent dropped from 55 to 54
Ill – 42 (41) Ind – 31 (32) Iowa – 63 (61) Ohio – 35 (34)
Setting pods – 95 (100) Drop Leaves – 15 (38)
- CROP REPORT – was basically neutral for beans – but the mkt took it Very well- rallying to its August highs
Prod – 3633 (exp – 3596)
Yield – 47.9 (exp – 47.2)
US STK – 640 (exp – 661)
Global – 99.2 (exp – 101.6)
- A WARM SEPTEMBER TO THE RESCUE – concerns about an early Frost were quickly abandoned as a much warmer-than-normal September Came just in time to finish off the late-planted crop
- DEAL OR NO DEAL!! China is in DC for the next two days – attempting to set the ground work for an October meeting – political pressure may well expedite some kind of deal – Trump needs the Farm Vote much more than last time
We see harvest lows converging with a trade deal -with prices coming off Historic lows – as all positive indicators that a seasonal bottom has been established!
A flurry of export activity – including Egypt -180,000, Algeria – 600,000, Ethiopia -400,000, Tunsia – 42,000 & Turkey – 250,000 – has buoyed the wht mkt – also helping was spill-over support from corn/beans after the post-USDA Report rally! Finally positive rhetoric about the US/China trade deal has the mkt hopeful that more exports are on the horizon!
Well, a picture is certainly worth a 1000 words – as this chart demonstrates! The downside gap was the result of a packing plant fire that sent the mkt into a $15 tailspin – to a level – some $25 off its Spring highs & cheap enough to generate solid demand – forcing a spike rally of $7 (98-105)! More positive trade-talk rhetoric also supported the rally! A 7-State Cattle-on-Feed tomorrow at 2pm should corroborate this sudden change in trend – with placements reputed to be 5-6% under last year!
Chart Gaps also speak volumes about the Dec Hog chart – as positive trade rumors sent this contract surging to the upside – leaving almost a $5.00 gap in its wake! China’s Hog herd as experienced a 40% attrition due to ASF – sending their pork prices to record levels very simply, we have a glut of pork & China is woefully short – so a trade connection between us two is a natural & looks to be happening! The mkt tried to fill the gap today but was unable to do so – a $30 break off the highs ($90-60) since early April made the mkt plenty cheap enough to forge a low & it did – an unfilled gap is a very powerful technical indicator
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