It appears that the trade is waiting to see how corn and bean harvest proceeds and if there will be an increase of hedging pressure as momentum grows……………………………Field reports continue to show very good yields yet, there always is the exception!
Friday’s Small Grains Summary and Stocks-in-all-Positions reports typically do not get the hype that Production reports receive yet, these figures have to be respected and we’ve seen this report spark significant price movements in wheat and oats! Traders are still concerned with wheat production declines in Australia and seeding concerns in the Black Sea areas…………………….In my opinion wheat remains the grain with the most rally potential as the USDA and others report a very historically tight stocks/use ratio………………………..Friday’s figures may fan more fears!
If it wasn’t for all the drama surrounding Washington DC with trade tariffs and pacts and other political happenings we would be focusing on how the corn and bean crops are being harvested and stored…………………………..In my opinion, we might start feeling a lot more tightness and snugness in off farm storage when we get past the half way point which may come a lot sooner than normal if Mother Nature continues to cooperate with warmer and drier than normal conditions in the Heartland……………..And, it’s my opinion that end users are in no hurry to chase rallies until we’re past the 80% harvested level………………….So, that’s a few weeks away and all the drama in DC is providing diversion…………………..
We are also facing the Federal Reserve meetings this week over monetary policy and we could extrapolate the grain rally this past decade with the period of quantitative easing and the return to “normal” prices in the late 1990’s and early 2000’s to quantitative tightening………………………Of course, many other macroeconomic forces work on grain prices yet there is a high correlation with money supply! In my opinion any changes to the current stance by both China and the USA to trade policies and tariffs are too tough for any mere mortal to project and anticipate……………………Our eyes and ears are open and we monitor the situation to the best of our abilities……………………..Some analysts are saying that we will only see posturing until the results of the midterm elections are known……………..
Steve Bruce
Walsh Trading
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