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Rainbows and Unicorns


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China is not self sufficient in the food sector! It needs to get a heck of a lot more efficient with grain/meat production or resolve to having its population on a permanent diet. The recent collapse in grain prices has been influenced by the threat and reality of a trade war yet Brazilian corn production at 100 mmt this year, up 18% from last year and 4.0 mmt from last month might be meaningful to sloppy prices, too! As might Russian wheat production projected to reach a record and the same with India with wheat this year. All of the talking heads pointing to the lack of a Chinese deal as the reason for lower prices might be a disservice or a diversion for all of the other factors and elements which have brought us to this point.

The 2019/2020 crop story is just beginning; Getting in late, too much rain at harvest, who knows what happens during the staggered corn pollination, and how long the growing season lasts are still ahead of us. End users not taking advantage of decade low prices knows more than the average bear and might not need and/or seek out advice.

Wheat is nearing feed value in the Southern Plains and any discounts stemming from too much rain during harvest will just force it into feeding channels. Quality matters and end users typically get more jittery when it appears that it's an issue. This might keep basis levels a little firmer for a little longer as millers like to have quality assurance!

The progress and condition numbers released after the close tonight are important yet they are not Gospel! We've three weeks to plant corn. Beans are a super crop and might withstand nuclear wars. Wheat is sensitive to too much humidity after it turns! There's a long season ahead of us and funds are short with great profits. Farmers are long with no profits. End users need to take this into account and be prudent buyers as things change!

The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.

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Steve Bruce


Walsh Trading
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Steve Bruce comes from the cash grain side of the market working for General Mills at the ChicagoBoard of Trade in the summers in the 1970's calling the country to buy wheat at cheap basis levels and with Illinois Grain learning the barge trade. He then spent the 80's , 90's and 00's servicing commercial clients with Geldermann and Man Financial from the trading floor of the Chicago Board of Trade shared market perception via print and electronic media. Steve takes a fundamental approach to market analysis. He completed his undergrad at Marquette and MBA at De Paul. Steve believes in the free market, Chicago School of monetary policy, and less government involvement and intervention in the grain markets. He is risk adverse but emphasizes spread trades for optimal hedging profitability. Steve can be contacted at 312 985 0156 or 888 391 7894 or email him at sbruce@walshtrading.com.
 
 
Contributing author since 06/14/2018 

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