By: Dan Hueber –
The July reports are now history and leave more unanswered questions than answered, but if we can use the eventual market action as a guide, it would seem to be telling us that everyone recognizes there is significant risk yet ahead and the final answers that we will need will take months to discover. Indeed, there was the obligatory 30 to 60 seconds of nonsense, particularly in corn, immediately following the release as computer-generated trading does its best to ripe each other apart in the hope of scalping fractions in the process, but the bulls spoke the final word as we pushed higher for the close. If we were to finish right now, December corn would be up 13-cents for the week and 23-cents above the close on the week of the “acreage surprise.” November beans were already enjoying a technical rebound but extended higher as well and are currently sitting 30-cents higher for the week. Wheat does not sounds as impressive, as December futures are 7-cents higher for the week, which is somewhat ironic as it was one commodity that actually witnessed bullish news via world inventories, but that said, it did rally from the lowest point traded in over a month, and after all, it is harvest time anyway. Interestingly enough, the combination corn+wheat+bean chart is currently higher than the June close. While I certainly do not mean to suggest that markets are poised to accelerate wildly higher from here, I suspect that the action this week should come as a warning to any would-be bears that their time is yet to come.
While this comes as a surprise to no one, Chinese soybeans imports continue to trend lower as domestic demand wanes due to the African Swine Fever epidemic. For the month of June, that country imported 6.51 MMT of beans, down 11.5% from the previous month and down just over 25% from the same month a year ago. For the first six months of this year, bean imports are down 14.7% from the previous year. As long as we are talking about ASF, Bulgaria has reported a new case after testing a dead wild boar close to the Romanian border. For those unfamiliar with the spread of this disease, it is often carried by wild or unrestrained animals and is why many in the United States remain concerned about the possibility of it reaching our shores.
Cargill has released quarterly earning numbers and reports a drop of 41% compared with a year ago. Granted, this still an operating profit of $476 million and the same period last year was a record at $809 million but is quite a hit on anyone books. The Chinese trade war, reduced feed demand in China and the adverse weather here in the United States were all cited as reasons for the lower numbers.
France’s AgriMer trimmed the corn ratings in that country another 1% this week but 78% good/excellent still does not sound too alarming. The soft wheat harvest there increased 7% to 8% complete. In Argentina, the Buenos Aires Exchanged estimates that corn harvest in that nation is 53.1% complete, versus 49.3% a week ago.
Look for the weather to return to the center stage in our markets next week. Hurricanes in the south and hot/dry conditions in the north are sure to keep the bears feeling just a bit uncomfortable.