By: Dan Hueber –
I have often commented that markets can often be like a young puppy whose focus of attention is constantly being distracted by what new pops into the field of view. Oh, look, a squirrel! I need to chase that squirrel! But wait, there is a cat; I must chase that cat instead!!! Oh, my gosh, that bird just flew in front of me… This week the grain and soy markets have been yanked back and forth by competing stories. First jumping a bit higher on weakness in the dollar and the need to build in a touch of weather “risk” premium, only to be pressed lower by rumors that President Trump was going to announce a withdrawal from NAFTA this weekend and finally this morning, relief strength on reports that no, there will not be a withdrawal but rather a re-working of the trade agreement. And through it all, markets have gone absolutely nowhere. I am going to suggest that for the next 30-days or so all we have to look forward to is more of the same kind of action so if you are the type who becomes queasy on rough roads or amusement park rides, you might want to pay attention to something else for a while.
Outside of the report that the NAFTA switch has been turned back to the “on” position, and that we witnessed some rather chilling temperatures in many locations overnight, other news appears to be somewhat sparse this morning. It is Thursday though which means weekly export sales have been released, and numbers for corn and beans were quite solid but not so for wheat. We might as well get the worst one out of the way first, and for the week ending April 20th, we sold just 61,700 MT or 2.27 million bushels of wheat. This set a new marketing year low and was 85% below last week and 87% below the 4-week average. The top sales went to Japan who purchased 82k MT, followed by Yemen at 67.3k and then China with 62.7k. Of course, simple math would suggest there must have been cancellations, the largest being unknown destinations at 310.2k MT. Note that we are at the tail end of the marketing year (6 weeks) and sales for the new crop came in at 305.4k MT, so one has to imagine some of this was rolling ahead old to new. Regardless, we have already reached 99% of the projected sales for the year. We did witness a nice uptick in corn sales coming in at 987,900 MT or 38.9 million bushels. This was 31% higher than last week and 18% above the 4-week average. On the top of the leader board was South Korea buying 291.9k MT, followed by Japan at 204k and then Saudi Arabia with 133.8. Finally, we have beans which were nearly four times greater than the previous week coming in at 808,100 MT or 29.7 million bushels. No wonder we cannot seriously break this bean market lower. This figure was 98% higher than the 4-week average with the top sales going to China with 271.9k MT, Germany at 151.3k and Egypt for 117.6k. It is difficult to imagine that the USDA will not boost the export estimate on the May supply/demand report.
As I commented earlier in this column and it seems too many times to count over the past year, it would appear that we continue to wander in the desert or phrased another way, remain in the winter season of the market cycle. While that metaphorical market spring and summer will eventually arrive, I think we are all becoming a bit anxious for it to get here.