There have been times in the last forty years when, at certain snapshot times, the cash market and government figures tell different stories…………………there are times in the crop year when these differences get less noticed, like harvest, as the trade is mainly concerned with the tasks at hand and changes in old crop supply/demand figures are less noticed……………………..There have been instances when basis levels are extremely firm and carryover is at or close to pipeline and the USDA reports that there’s just enough to keep the market calm until the next harvest and then there are times when the USDA might be persuaded to assume greater demand in an old crop year when presenting the numbers in a new crop year when the new crop year is blessed with abundant production………………………in other words, there is a disconnect yet, the trade always has to trade the USDA figures, regardless……………………………..until the changes are made in following reports……………
In my opinion our next major report is Stocks-in-all- positions on September 28 and wheat traders will be looking at these numbers with a microscope………………..There are more than enough stocks at hand is all classes for the next few months but, that can change if the southern hemisphere, Australia, remains dry the next two weeks and seeding problems remain in Russia and the Black Sea growing region as we are in the gut slot of winter wheat planting…………………..Wheat is a sensitive entity and can get quite volatile if and when production/supply concerns develop……………………Lots can happen in the next six months and even though the USDA presented the trade with a more comfortable stocks/use ratio in the September report it could still be tight enough markets if the right scenarios unfold later this Fall and Winter…………………………..
Corn and beans have and will continue to be influenced by the weather and Washington………………………field reports, from some of the early harvested areas in the Midwest, have been very constructive and the momentum from the August to September increase in yields might continue into the October, November and Final figures in January……………Historically, in the last 20 years the final figure for corn production has been higher than the September figure 12 times and lower 8 times………………………For beans it’s 13/7…………….The average change for corn is 249 million bushels and beans 126 million bushels…………………………………………………….Unless Mother Nature hits us with a very early frost, more hurricanes, tropical storms entering the Midwest and/or some other unforeseen weather event the old adage of “big crops get bigger” might ring true!!!
As we approach the mid- term election there is a belief, by some, that the likelihood of agreements with China and Canada and others will be reached…………………………….Remains to be seen………………..
It is my opinion that given this information it appears that end users/buyers could remain patient with covering needs in feed grains and protein/beans…………………given the most recent government statistics off farm storage should be snug which usually instigates creative storage remedies ………………………………this typically results with weakening basis levels and wider spreads as harvest progresses……………………
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