Free Commentary

By: Dan Hueber –

Grain and soy markets have begun in the week on a positive note and while we have not actually made any headway versus last week, with little that you would deem positive in the overall news, it is interesting to see the buyers return.  The only thing on the schedule of note this week will be the February World supply/demand estimates to be issued on Thursday and it would seem unlikely that we would uncover any major shifts within those numbers.  Be that as it may, here are some of the survey estimates that have been released; Bloomberg News comes up with domestic ending stocks estimates of 2.334 billion for corn, 412 million for soybeans and 1.176 billion for wheat.  For these same three categories Reuters found a corn estimate of 2.335 billion, beans at 410 million and wheat at 1.180 billion.  For South American crops, Bloomberg has Argentine corn at 35.8 MMT and beans at 54.4 MMT and Reuters 35.78 and 54.54.  For Brazil Bloomberg came up with a corn crop of 87.1 MMT and beans at 104.1 with Reuters at 87.05 and 104.08.  Last but not least, world ending stocks should be around 220.4 MMT for corn, 80.92 for beans and 253.1 for wheat.  As with any report, where we sit at the close on Thursday will be the true reflection of market sentiment.

As you might suspect, there are other nations and ag interests around the globe who would like nothing better than to seize on the less than amicable relationship between the US and Mexico right now.  $17.7 billion of US agricultural products moved south of the border last year, at least partially made possible or affordable through NAFTA, so it would be little wonder that others would like to capture a piece of that pie.  One such company is Adecoagro, which is headquartered in Buenos Aires.  The firm operates around 1.1 million acres in Argentina, Brazil and Uruguay as well as rice and sugar mills and dairies.  Chief executive Mariano Bosch has revealed that the firm is currently working on deals for rice, corn and diary products into Mexico and they view the current US/Mexican relationship or lack thereof as a potential opportunity they need to seize upon.  Note that 9.5% of this company is owned by the George Soros family and there are also sizable holdings by Qatar Investment Authority as well as PGGM a Dutch pension fund. It is listed on the NYSE.  By no means has NAFTA been killed at this point and the US and Mexico could certainly mend fences (I could not resist that one) but never lose sight of the fact that there are a number of countries out there who would love to begin chipping away at the business we conduct there.  It was barely 44 years ago that President Nixon embargoed soybeans from leaving the US and number of counties decided it was time to begin investing in agriculture in South America.  While that has certainly presented its own challenges along the way, I doubt you would have been able to find many voices in 1973 predicting they would produce more soybeans than North America.