If the world is experiencing an economic slowdown generated by trade wars and/or central bank overplaying quantitative easing/tightening then there’s little reason to amass inventories of corn, beans and wheat…………….What’s the rush to own?……………. South American weather is allowing the corn and bean crops to prosper and wet weather for wheat during harvest may lessen quality yet increases the need to sell it quickly…………………But,after the holidays is it possible to garner a trade deal with China? Could the weather turn a little detrimental in South America? Will the central banks stop tightening?
Regardless, there’s a lot of corn and beans that could move in the next two months which might keep pressure on spreads and basis levels……………..It’s a different story in wheat as Chicago spreads showed life into deliveries in December and the last half of December into the first half of March might generate some weather situations and winter kill fears…………..So, given the fear over the world economy and the need to find a home for the North American crop stored outside and the South American crop in the field the likelihood of corn and bean spreads tightening is limited…………….Flat price?Politicians and bankers are tougher than the weather to predict………………Yet, we are much closer to the low end of the decade’s price range so speculators may be very cautious sellers…..But, we need a reason to buy and as of this writing it’s tough to find one!
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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