Free Commentary

No doubt, most of us are familiar with the old trading adage, Bulls make money, Bears make money, but Hogs go to slaughter.  Be that as it may, it is not all that often that we get to see this played out during a single session as we did yesterday.  Bulls enjoyed an early feast, with bears dining on the later servings and no doubt, both, at some point within the session, wishing they have stepped away from the table without overindulging. I suspect we will witness such days, numerous times yet before we bring the harvest home this year.

No surprise here, but planting surged ahead this past week.  As of the 2nd, the USDA estimate that 46% of the corn is in the ground and 24% of soybeans.  This places us 10% and 13%, respectively, ahead of the 5-year average.  We did see a nice band of showers scoot across the upper Midwest yesterday, and if we can just see one of those come around every week to ten-day days now, things will be looking quite good.  Looking across the other crops, we find cotton planting at 16% right on the average, sorghum slightly off the pace (4%) at 20%, rice 64% complete, and barley 53%.  Sugarbeet producers really got with the program this year as 81% of the crop is planted compared with the average 51%. Spring wheat is now 49% planted versus the average of 32%, and winter wheat conditions slipped 1% to 48% good/excellent.

Obviously, things are progressing nicely over in Ukraine this year.  The private consultants SovEcon bumped up estimates for both wheat and corn.  They now projected record production of 28.6 MMT of wheat and 36.6 MMT corn.  This compares with last year’s output of 24.9 MMT and 30.3 MMT, respectively.

Looking to Brazil, weather conditions for the safrinha corn remain iffy at best with an ongoing hot and dry outlook.  The only major area with beans still to harvest is in Rio Grande do Sul, where it is estimated that 20% of the crop is yet to come in.  Dr. Cordonnier made no changes in estimates this week.  In Argentina, bean harvest has reached 33% complete, which is 23% behind average, and corn harvest is now just shy of 20% complete, versus an average of 30.5%.

There was another interesting story emerging from Brazil this morning, and it would appear there is a tussle going on between some producers and grain merchants.  With the current price beans anywhere from 70% to 100% higher than they were a year ago, there are reportedly more than a few challenges going on as to what is a legally binding contract or commitment.  Evidently, word of mouth commitments are still used in many areas, and even the chat service, “WHATSAPP,” has been used for sales, at least according to some. According to the major grain companies, the problems have been isolated, which you would hope, but needless to say, it has been large enough to be reported on major news wires.

On the macro front this morning, we have energies and metals higher, financial instruments quite strong, equities under pressure, and the dollar pressing higher once again.