Free Commentary

By: Dan Hueber –

Before we begin to look at markets this morning, I would like to share with you a short verse that was composed by good friend William Medley from Agri-Financial Services that I believe quite succinctly captures the challenges that are being confronted in production agriculture today. The title is Plough On.

Beans at 10

Corn at 4

90 million acres more

For both, we hope

We’ll plant and pick,

Sell and cope.

Then depending on

Who buys the stores

Mexico, Japan and more

We need them, feed them

And ourselves

So let’s be careful;

Not to pick and fight

The globe has shrunken


And farms depend

On foreign lands.

Whose lives depend

On farmers’ hands.

                   William Medley

Of course this is only second hand information but I understand that Punxsutawney Phil, in infamous weather groundhog, did indeed see his shadow this morning predicting six more weeks of winter weather ahead.  It would seem obvious that Phil does not live in the Midwest as there has not been enough sunshine here for a month to cast a shadow from anyone.

Grain and soy markets posted an impressive rally back yesterday and are once again pressing against key overhead resistance levels.  While I am certainly not complaining, particularly seeing the it was the first day in which the spring price for revenue crop insurance will be set, but you have to be just a bit creative to come up with the reasoning for the advance.  Yes, it was nice to see an announcement of a decent export sale in beans yesterday morning but outside of that you really had to pick around to uncover something that would explain the buying, which appears to have been predominantly fund.  It is estimated that for the day they purchased 20 thousand contracts of corn, 8 thousand beans and 9 thousand wheat.  While I am sure there are other factors involved in their decision to purchase but I cannot help but think that the negative action and now acceleration lower in the U.S. Dollar has played a significant role.  It would appear that the Trump bump in the dollar for now at least is behind us as we have returned to almost the same levels as we were trading before the election.

It is Thursday and no holiday interruptions this week which means we have the release of weekly exports sales.  Grains did see figures slip a bit but there was a pickup in bean interest.  For the week ending January 26th we sold 623,900 MT or 22.93 million bushels of soybeans.  This number was 16% above last week and 38% higher than the 4-week average.  While somewhat reduced, the Chinese appetite is still there as they purchased 579.9k MT followed by the Netherlands with 219k and then Mexico purchasing 78.8k.  By no means were the corn sales poor as we sold another 1,143,700 MT or 45 million bushels.  The only negative that could be implied was this is down 17% from the previous week but it was still 21% higher than the 4-week average.  The top sales went to unknown destinations with 235,600 MT, followed by Colombia with 212.9k and Japan then with 178k.  In the daily reporting system this morning, there was also announced sales of 110k MT of corn to Japan and 140k MT to unknown destinations for the current crop year.  Last we have wheat sales which were down 47% from the previous week but remember, that had set a marketing year high.  We sold 451,200 MT or 16.58 million bushels.  Note that this was still 8% above the 4-week average.  Top purchasers were unknown with 189.7k MT followed by Mexico with 78k and the Philippines taking 43.9k.

Only soybeans have shown us much in the way of follow-through this morning but it is too early yet to determine if the strength has any legs.  Daily indicators would still suggest no but of course nothing demands they are correct all the time either.  Macros are supportive with energies and metals higher and equities and the dollar lower.  Extending strength for the close today could begin to turn the picture positive once again.