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Morning Grain Market Research


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Grain and soy markets caught a little psychological boost overnight apparently due to a couple positive comments in the international trade scene. First, NAFTA negotiators from both Canada and Mexico stated they were cautiously optimistic about the progress for a new agreement being worked out. US trade representative Lighthizer did what he could to throw cold water on the sentiment by stating that were still gaping differences over a number of topics, including agriculture, but by this point we have already factored in the negative implications of dropping the agreement so any positive news is received with welcome arms. The other positive injection came from news that after their investigation, the Chinese Commerce Ministry, is dropping the dumping probe against US Sorghum.

5-18daily

Accordingly, we have witnessed general strength across the markets. If we were to close right now, for the week July corn would be up 2 cents, July wheat up 6 cents but July beans still 2 lower. Do note though that for the month, the combination values for these markets remains lower.

The Buenos Aires Grain Exchange has released their weekly updates and now report that the soy harvest has reached 71.1% complete vs. 66.7 last week and corn harvest stands at 34.1%, only increasing .8% in the past week. They have reduced their estimate for bean production another 2 MMT to 36 MMT. As another confirmation that the old adage When it rains, it pours, workers at crush plants in Argentina have begun a strike to protest early layoffs.

When we looked at where is the future going, the pea is the up-and-coming thing. This according to David Henstrom, who is the VP of starches, sweeteners and texturizers for Cargill, Inc. Obviously, he is not alone in this sentiment as ADM, Richardson International (Canadas largest grain handler) and others are gearing up to handle and process peas and other vegetable crop in the future. According to an article published in Reuters, sales of plant-based food and beverage products increase 14.7% in the year ending July of 2017 and the outlook for more is positive. In peas alone, there were $73.4 million in sales in 2016 and according to Grand View Research, this is projected to grow to $313.5 million by 2025. The rising global demand for protein is the driving force here as a basic pea contains 18 to 22% protein, but processed pea powders that are used in food supplements can be as high as 80% protein. Keep in mind this is not just for the Whole Foods crowd as the explosive demand for protein stems from rising global incomes and as we know there are already a number of firms that are manufacturing meat from vegetable sources or right in a Petri dish with the intention of capitalizing on that growth. Growing up in Northern Illinois it seemed that just about every farm raised a few canner crops are we referred to them, which in this neck of the woods was primarily sweet corn, peas, green beans and possibly a few lima beans. Of course, as the demand for corn and beans expanded through the 70s and beyond, those alternative crops dwindled as mono-culture or maybe better stated, duo-culture became the norm. Granted, the expansion of other crops such as peas will likely be limited to regions where there are handling/processing facilities, but it would appear that diversity in crop production could once again be the norm for the future. I wonder if I need to begin looking into a pea futures contract?

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About the author


Dan Hueber is the General Manager of The Hueber Report.  Mr. Hueber literally grew up in the grain industry, and entered the commodity futures and options business more than 35 years ago.  

Mr. Hueber’s methodology combines his deep understanding of fundamental data, various technical indicators, and his studies of Gann and Elliot Wave Theories.  You can find out more about him and sign up for our newsletter at www.thehueberreport.com.

Dan can be reached at dan.hueber@cgb.com

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