Free Commentary

It would appear that the Bean Brigade, led by Teddy Tofu, remain energized as they extend the charge up Soy Juan Hill.  While their courage and determination is commendable, it does not appear to be instilling much confidence in the grain troops as they appear to have lost their footing this morning and have even been slipping backward just a bit. There has been additional ammunition delivered this morning as government messengers announced the sale of 264,000 MT of beans, half to China and the other half to unknown destinations, as well as 120,000 MT of corn sold to unknown, but it almost seems as if the troops have begun to take these announcements for granted.  Such attitude risks disappointment.

Crop conditions for both corn and beans slipped just a bit this past week, but as I have commented previously, that should be expected this time of year and is really a moot point.  That said, the report would appear to confirm that we need to be gearing up for harvest. Corn that is dented has reached 89% compared to an average of 82%, and mature stands at 41%, versus 32%.  Nationwide, 5% of the crop has been harvested, weighted by 67% complete in Texas, and 47% in North Carolina.  37% of beans are now dropping leaves compared to an average of 31%.

Soybean planting has technically kicked off in Brazil as in the state of Parana, farmers were allowed to begin on the 10th, and in Mato Grosso, they can begin today.  Some progress has already been made with corn as in Parana, 16% of the full season acreage is in the ground, but the current dry conditions and cool temperatures have left many planters parked.  Further raising concerns are warnings of a possible tight supply of bean seed, which could create issues if there arose a need to replant.  Corn planters have begun to scratch the surface in Argentina as well.

As we are very aware, China has been on a real tear purchasing both beans and corn from the U.S., and while it would still seem debatable as to if they can meet the terms outlined in the Phase 1 agreement, they have made huge steps in the right direction.  It is worth pointing out that since mid-summer, the Chinese Renminbi has also been on a tear and has now advanced against the dollar to the highest levels traded in over a year.  No doubt, some of this strength can be attributed to investors exiting the dollar, but it should be noted that retail sales in China have now registered gains for the first time in a year, and exports jumped 9.5% over the previous year in August, so it would appear their economy is moving back into a growth mode.

Finally, today we have a bit of financial trivia.  It was on this day in 2008 that the largest bankruptcy in the history of the United States was filed; Lehman Brothers.  They were not the first of the big names to fall in 2008 due to the subprime mortgage debacle, as Bear Stearns had toppled earlier in the year but, being one of the most recognizable names in the investment world, it seemed to be one of the final straws that broke the financial camel’s back that year. It is stunning to think this happened just twelve years, and it would seem the lessons of that year have already been lost on many in the financial world.  Of course, lightning never strikes twice in the same place, right?