USDA Uncertainty

Steve Bruce Grains Leave a Comment

                                Sonny Perdue has the USDA working through tomorrow, December 28  and probably next week yet, things may change in early January when we see the transition in  the House of Representatives………………..There is uncertainty over if and when reports are issued given the government slowdown/shutdown and we will be learning as we go…………………………………..The January 11 reports are on the bubble!

                                Regardless, Mother Nature still rules the grain markets and we still need to contend with South American weather and the impending harvest in corn, wheat and beans…………………..As of this writing the potential for large crops of corn and beans still exists! Recent rains in Argentina and the forecast for more in the 10 day forecast may lend quality concerns for the wheat crop…………….Over 70% of the Argentine wheat crop has been harvested yet, Mother Nature doesn’t  make  it easy and quality concerns are just what the world doesn’t need right now…………………this may keep spreads strong as a flight and fight for quality may develop with the March contracts……………Traders might be wise to keep an eye on the South American weather everyday!

                                Flat price in grains is becoming as volatile as flat price in crude oil and equities………….Deflationary forces delivered by the Fed and quantitative tightening may continue to be the driving force with flat price and increasing the cost of capital may keep corn and bean spreads on the defensive as basis levels suggest that we’ve ample stocks domestically and if the South American crops reach their potential we may be playing defense through plantings this Spring………………..Wheat may be in another “disconnected from pedestrian logic and reason” state as Russia has been talking the market down while US domestic basis levels are firming………….Winter wheat acreage is expected to be smaller than it has been in a long time and the world stocks to use ratio remains tight yet, the recent price performance suggests the opposite……………..Reality may return as we approach March deliveries and until then buying dips might be safer than selling rallies…………………..                                                                       

 The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.     

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Steve Bruce

                                           
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