By: Dan Hueber –
Boy, talk about a real-life example of the old saying about taking two steps forward and one step back but in this case, it has turned out to be a BIG step backwards. After scratching and scraping out minor gains over the past couple days, it would appear that the rug was pulled out from under the grain and soy markets overnight as we have witnessed one of the sharpest swings lower, particularly for beans in weeks. I did read in the overnight press where some we are directing a finger at the action in the Brazilian Real and the large supply of beans in that nation as the stimulus for the break, but this is hardly eye-opening news and realistically that currency has gone nowhere in months. I have to suspect that after witnessing a washout in the equity markets around the globe created a risk-off sentiment and at this point all the kids, good and bad, have been taking behind the woodshed for a few lashes. While the week is not finished just yet, note that the S&P 500 has posted an outside lower reversal week and this from a slightly higher record peak. As I have stated many times before, there is no chart pattern or technical signal that can be considered absolute, but this one should not be taken lightly. Keep in mind that if indeed equities have peaked and are ready to witness an exodus of bulls, it should eventually be commodity-positive but when the initial shock occurs, as it did yesterday, everyone tends to pull in their horns just a bit.
Seeing it is Thursday morning we do have the weekly export sales report and we witnessed a nice rebound in for corn and wheat and basically flat numbers for beans versus the previous week. For corn, we sold 705,300 MT or 27.77 million bushels. This number was 2 ½ times greater than last week and is 1% above the 4-week average and brings us up to 93.4% of the USDA target with 16 weeks left in the marketing year. This would mean we need to average a bit over 9 million per week moving forward. Top sales this week were made with Japan purchasing 152.8k MT, followed by Mexico at 113k and the Spain with 96.6k. Soybeans sales were 7% lower than last week coming in at 355,300 MT or 13.06 million bushels. Of course, in the case of beans, we are already above the USDA projected 2.050 billion bushels by nearly 3% with 16 weeks yet to go. The top buyers this week show China returning to the top rung with 124k MT, followed by Bangladesh and Germany each purchasing 57.7k. Percentage-wise, wheat sales had the largest improvement but is due to the fact that the previous week we had posted a marketing year low and negative sales. This week the USDA reports sales of 247,600 MT or 9.1 million bushels. This bring the marketing year tally to 1 million bushels above the targeted 1.035 billion with 4 weeks to go. Top sales this past week were made to China with 69k MT, followed by Nigeria at 51k and Vietnam with 48k.