Free Commentary

By: Dan Hueber –

While it would be great if there were actually something else to provide direction in the grain and soy markets, but as it is we await the “word of gov” to be released in just a few hours for our illumination.  As I have commented previously, outside of a few changes in South American production estimates, it would seem very unlikely that anything of real substance will be decreed but this is part of the reality of market influences today.  We have grown so accustomed to trying to micro manage every piece of information minutia, every report seems like it will be critical news even though it may have little to no bearing on the broader picture.  Kind of brings to mind political pundits being fixated on the latest poll numbers instead of paying attention to a more global viewpoint.  Regardless, markets are soft once again this morning, which may be a good thing in the respect that having trended lower into the report, the odds of a negative surprise should be somewhat discounted.

Falling under the fundamental category this morning we do have export sales, which unfortunately are not going to instill any passion from the bulls.   For the week ending March 2nd we sold 741,100 MT or 29.2 million bushels of corn.  This was 7% higher than last week but 7% below the 4-week average.  Top sales went to Japan with 318.8k MT, followed by South Korea at 175.8k and Mexico purchasing another 165k.  Marketing year to date we have now sold 78% of the USDA estimate of 2.225 billion and with 26-weeks left in the marketing year will need to average 18.7 million bushels per week to hit the target. Soybean sales jumped 14% over last week coming in at 485,500 MT or 17.8 million bushels but even then we were still 8% below the 4-week average.  Mexico was on the top of the list this week with purchases of 151.5k MT followed by China at 84.3k and then Japan at 77.8.  Recognize that we have already sold 95% of the projected 2.05 billion which means we only need to average additional sales of 4 million per week but regardless, bulls need to be fed on a regular basis and front loaded sales will often not provide that. Wheat sales came through at 391,600 MT or 14.4 million bushels.  Similar story here in that these we 21% higher than the previous week but 14% below the 4-week average. The top purchaser was Japan taking 56.4k MT followed by Bangladesh at 55k and then Yemen with 50k.  For the marketing year, we have now sold 90% of the USDA projection and with 13-weeks left in the marketing year, we need to average 7.9 million additional sales per week to hit the mark.

I came across a short historical piece this morning that I thought was worth sharing, which is Fully-Verified. Some might call this historical trivia but I would suggest that if you stop and think about the long-term implications, it is anything but trivial.  It turns out that it was on this date in 1933, only five days after being sworn into office President Franklin D. Roosevelt signed the Emergency Banking Relief Act.  Of course, the country was already in the death grip of a depression and banks were closed in all 48 states leaving people with little recourse with what to do with the money they had and certainly no faith in the security of the financial system.  The emergency act closed all banks for four days and during his first fireside chat given just three day later, Roosevelt announced that the 12-Federal Reserve Banks would be issuing additional currency when they reopened would be able to meet all legitimate calls.  It was solid enough reassurance for many as by the end of March, 2/3rds of all the money that had been withdrawn during “bank-runs” had been redeposited, which in-turn began to restore faith not only in the banking system but markets as well.  Ultimately the emergency order was replaced by the 1933 Banking Act, which among other things established the FDIC and I cannot imagine many of us today that can envision a banking system sans the FDIC.  While I am often a critic of overzealous government regulations, and many parts of the Dodd-Frank financial reform bill fell into that category but not all. This story should be a reminder that there are many regulations that truly make our lives better and more secure.