By: Dan Hueber –
While I am not so sure I would want to attribute the overnight strength in the grain and soy markets to this, but at least markets may have once less thing to worry about. According to the press releases, congressional negotiators have reached “an agreement in principle” to fund border security through September and could avert another partial government shutdown this coming weekend. From what I read though, there is not $5.7 billion in the plan for a wall so, at least as of the time I am writing this, if it will be signed by the President, is still a big question mark.
As far as the overnight strength, I tend to believe that it is more in response to the shellacking that prices took yesterday. Both March corn and beans closed at the lowest point since mid-January, while March wheat managed to snap back from support for a fractionally higher finish. I would suggest that this morning’s action is little more than a Tuesday undo.
CONAB issued updated crop estimates for Brazil which break down as follows; Soybean production of 115.3 MMT, versus their previous estimate of 118.8 and corn production at 91.7 MMT compared with 91.2 before. Dr. Cordonnier left his bean estimate unchanged at 113 MMT and corn at 91.5 MMT. He also kept his Argentine estimate unchanged at 55 MMT for beans and 42 MMT for corn.
More export sales released this morning. 122,376 MT of corn was sold to unknown destinations for this marketing year.
The U.S. Dollar has been on a tear recently, closing higher in each of the last eight sessions and reaching into a gap that was left back in December. While I am not quite prepared to say that the weakness today confirms this advance is complete, both short- and long-term indicators are moving towards the overbought zone so we should be in the final stretches. I will continue to maintain that until we see the dollar press lower, we will have a difficult time sustaining strength in the commodity sector.
