The Hueber Report

Grain and soy markets generally closed higher yesterday, but it was really more akin to running in place.  After weeks of consistently posting higher highs, not one of these markets extended to higher ground and this morning we have seen red generally across the screen.  Could it be that we have moved close to squeezing just above all we can from the weather/production issues in Argentina? 

By no means have conditions improved in that nation and Dr. Cordonnier lowered his bean estimate another 1 MMT to 45 MMT this week and commented that he still has a lower bias moving forward.  As noted yesterday, the Buenos Aires Grain Exchange is now at 44 MMT.  There is a relatively wide planting window in Argentina, but the exchange currently estimates that 35% of the beans are in the pod filling stage and 5% mature so the next couple weeks still have the potential for deterioration if the weather does not improve.  There have been a few forecasts that suggest that the final crop could end up below 40 million.  All this said Brazil continues to look solid and in fact, Dr. Cordonnier boosted his estimate by 1 MMT this week taking it to 114 MMT, rivaling last year’s record production.  The private consultant AgRural this week boosted its Brazilian crop estimate by 1.7 MMT to a whopping 117.9 MMT.  If we look at South America as a whole, versus last year we could be looking at a shortfall of around 15 MMT or around 7% which is not insignificant but keep it in perspective. We are reducing inventories from record levels, and even with the shortfall, South American production will potentially still be 10 MMT above two years ago.  The world would not appear to be at risk of running out of beans anytime soon.

Bunge news appears to be heating up again, and while there is nothing specific as to whom might ultimately end up with the ownership, the management of the company appears to be positioning itself for a takeover.  Between February 28^th and March 1^st, senior officers were issued around $3.2 million in stock as well as around $18.3 million in exercisable options.  This would appear to be some type of a parachute for those who would lose their positions under new ownership.  The two names that still frequently pop up on the top of the suitor list are Glencore and ADM, and it is well known that ADM would likely confront a number of anti-trust issues.  Over the weekend there were rumors circulating that they were in trying to work with an Asian firm to try and circumvent these issues.

We have more estimates released for the Thursday report, these, courtesy of Thompson Reuters; Argentine beans 48.36 MMT and corn at 36.58.  Brazilian beans 113.82 MMT and corn 92.22.  Estimates for US endings stocks have corn at 2.312 billion, beans at 530 million and wheat at 1.015 billion.  Finally, for the world stocks, we have an average estimate for corn of 199.36 MMT, beans at 95.31 MMT and wheat 265.64 MMT.

At the risk of jinxing the advance, I would like to point out the current position of the CRB index as we have once again approached a very key level of resistance that has been stopping the index since 2015.  The breakdown in the dollar during the past year would seem to have presaged this occurring, but at long last, it would appear that we are set to confirm that commodity markets indeed have turned higher.