As we head into the weekend before the midterm elections there appears to be a cautious attitude towards the grain markets as the results might sway and determine shifts in trade policies and, the talking heads are unsure of projecting any outcome and that’s a good thing given their recent results………………………………….On Wednesday we may be in gridlock or we may be in a “full steam ahead” mode……………………………………………it’s too close to call! The macroeconomic influence on the grains could be heavily influenced by the political climate………………….A trade pact with China is constructive on everything as it could breed hope for expansion………………………………………….
The microeconomics of grains is still, in a simple sense, bearish on corn and beans as stocks are comfortable to surplus while with wheat we are not that comfortable with milling quality stocks with the northern hemisphere supply and there are some concerns with just how the Argentine and Australian crops shape up at harvest. Beans and products pop on hints of a trade pact and if a real solution is found there might not be any nearby hedging pressure until we reach harvest in South America……………………………..The path of least resistance is higher at present price levels ……………………………………………
Regardless, spreads might remain on the defensive for corn and beans as carryover projections have been considered to be comfortable to surplus and the USDA will present another rendition of their supply/demand report on Thursday………………………………………………..Basis levels are still below year ago levels and any happiness with a Chinese pact doesn’t change the weight of carryover………………………………………..
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.
Steve Bruce
Walsh Trading
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