Free Commentary

By: Dan Hueber –

Ahh, tis’ report day.  While maybe not one of the more “critical” of the year, no matter as there is always a sense of foreboding and anxiousness that surrounds each USDA release.  I guess you make the analogy that it is somewhat akin to “report card” day when you were back in grade school.  Not for all but many, it was a day of much uncertainty as you knew that if something less than satisfactory had to be brought home to mom and dad, the after-results were not going to be pleasant.  Back in the day when these were filled out by hand from the teacher, I have heard stories of kids trying to rework a D into a B, but I doubt the forgery ever really panned out (not that I would have any first-hand knowledge of this).  Of course, with a computer generated USDA report there is no post-release fudging that can be done and undoubtedly some will be pleased and others yet afraid to go home and face the music as it were.  Regardless, I believe as is the case the majority of the time when there is nothing truly out of the ordinary, we will see an immediate reaction and then markets will quickly refocus on the concern du jour, which currently is the weather outlook. The most recent updates I have seen this morning continue to call for scattered (not widespread) rains across the upper Midwest and Plains through the weekend with heat then predicted to return again next week.

Here is one last look at the trade estimates and these curtesy of DJ Wall Street Journal;  2017/18 Corn production at 14.074 billion bushels using an average yield of 168.9 bpa.  Bean production at 4.241 billion with a yield of 47.8 and All Wheat production at 1.746 billion bushels.  Projected ending stock for next year came in at 2.131 billion corn, 483 million beans and 879 million wheat.

We really have corn, wheat and beans all sitting on the dividing line that separates victory versus defeat for those looking for higher prices and while I remain in the camp that believes they are still in the making we will have to move beyond today to confirm or deny.  In the mean-time we might as well look over at the macros and specifically the US Dollar and see what has been unfolding as we have been keyed in on weather.   The dollar did close higher for the first time in five weeks last Friday but it would appear that was little more than a short-covering bump ahead of the G-20 gathering in Germany.  With that behind us and nothing that would have been considered positive for increased world trade or cooperation, sellers have returned and we have now slipped into lower lows for the year once again.  From a longer-term perspective, the dollar has not done anything that would strike panic into the hearts of the remaining bulls, but compared to the New Year/New Administration euphoria that carried us up to the highest point traded since 2003, this has to be quite a psychological letdown.  From the start of 2015 through November of last year, the dollar remains stuck in a range between 100 and 93 and currently trades just above 95-cents.  While I cannot say that this breakdown has stimulated new interest in US commodities, it certainly cannot hurt.