As it seems we are going to basically be twiddling our collective thumbs between now and the release of the “word of gov” tomorrow, we might as well take a look at a few non-ag markets and see what has been happening as of late.
Looking first at energies, it would appear that after a bit over four months of recovery, the energy markets are beginning to embark on a downward corrective phase. Seeing that we have moved beyond the summer vacation season, or at least the 2020 coronavirus version of such, a setback should not be unexpected. Still for an already stressed energy sector, particularly those in the shale production business, it would appear to be pointing toward a bleak fourth quarter.
Next up, we have the 2020 darling of the commodity world; Gold. As we are aware, the global pandemic and concerns about the viability of fiat currencies sent the gold market into record highs this year, but after reaching a peak of over $2,000 an ounce in early August, prices have stagnated. I recently read an article by a farmer from Georgia who pointed out that an ounce of gold was now worth more than an acre of ground in his part of the country and questioned if something was not wrong with that picture. According to the USDA, the average price of farm real estate in 2019 was $3,160 per acre, so technically, it would take 1.6 ounces of gold to make a purchase, but you get the point. No matter how you try and prepare it, gold will never make a nutritious meal. It is interesting to point out that since the peak in August and subsequent pullback, spot gold futures appear to be finding support around the old record highs at $1920.
Last but not least, we need to look at the U.S. Dollar. After closing lower for four months in a row and pressing to the lowest point traded since May of 2018 in early September, the index has now rebounded. It is worth pointing out that we have yet to reach back to even August’s high, and with long term indicators still pointed lower; there is little to suggest we are ready for a turnaround, just yet. That said, we have just recorded the first weekly higher high in the past 10-weeks and considering who oversold short and intermediate-term indicators are, a corrective rebound would certainly not be out of the question.
We do have a couple of economic releases out this morning. The Producer Price Index for August was up .3%, versus an expected .2% increase. The number ex. Food and Energy actually increased .4%. Weekly initial jobless claims were also released, and the number was unchanged from last week at 884,000. Economists were expecting a decrease to 851,000.
Thankfully, China’s appetite for beans has yet to be satisfied. This morning the USDA reports another sale of 195,000 MT. Weekly sales will be released tomorrow morning.
Of course, the numbers we have all been waiting for will be released tomorrow at 11:00 CST. Once again, here are trade survey estimates to set the stage; For corn, the average estimate for yield came through at 178.3 bpa (-3.5 from Aug.), giving us a total production estimate of 14.89 billion bushels. The 2019/20 carryout estimate stands at 2.234 billion and 2020/21, 2.456 billion. The average bean yield estimate is 51.8 (-1.5 from Aug.), with the estimated production coming through at 4.294 billion. 2019/20 carryout is expected to slip to 603 million bushels and the 2020/21 number down to 467 million. The 2020/21 wheat carryout is expected to change little at 925.5 million. Looking at the world ending stocks, corn for 2019/20 is expected to total 310.9 MMT and for 2020/21, 311.11. Beans for the 19/20 at 95.7 and 20/21, 93.11, and finally wheat in 19/20 at 300.46, the rising to 315.81 in 20/21.