By: Dan Hueber –
While the bean market has enjoyed a little buying over the last 24 hours most likely in the form of spreading versus the grains, overall these markets all remain in a somewhat lackluster sideways trade. This is quite understandable as we really have little fresh news to focus on, and certainly nothing that would be considering out of the ordinary for this time of year. Yes, there will be a report issued on Thursday but the odds of that providing something for bulls or bears to take and run with would seem slim. While it is nice to see export sales announced on a frequent basis, as this morning the USDA posted another 128,000 MT of corn sold to Japan but on the opposing side, macros seem to be creating some resistance. This morning we have the dollar fairly strong and the energies negative.
While I continue to believe that in the longer range picture the dollar has shown signs of a peak, unfortunately so has crude oil and if that is correct, it could be a negative psychological influence on all commodities for the time being. Intensifying this concern is the fact that Hedge funds have continued to increase their bullish positions in crude. In fact, as of last week they were holding long the equivalent of nearly 1 billion barrels of crude versus a short position of 111 million barrels which is now a record long position. One has to suspect much of this is predicated by the belief that OPEC can continue to make good on its commitment to trim production (known fact) and the belief that a growing world economy has to push demand for crude as well as other commodities higher. By no means does a record long position assure that prices have to set back from here but we have seen time and again what can happen when the boat is loaded too heavily to one side. It may not necessarily capsize but you probably need to throw a few people overboard to bring the ship back upright.
While there is rain forecast for Argentina over the next several days, it sounds as if crops conditions have at least stabilized. In his weekly update Dr. Cordonnier is leaving his estimate unchanged at 52 MMT for soybeans and 34 MMT for corn. Further north in Brazil though where more and more bean yield reports continue to filter in, he has raised his estimate by 1 MMT to 104 million. As of last Friday, AgRural estimated that the total bean harvest was 10% complete which would be 4% ahead of average. For now, he left his corn estimate unchanged at 86 MMT.