The Hueber Report

We have been greeted with higher prices again this morning, and if sustained through the close, we could post the third higher close in a row for the grain/soy trade.  It seems that is something we have not been able to accomplish very often since the Trade Tariff Terrors began to seize these markets. While I would not go so far as to say the strength over the past few days confirms the bear has been subdued just yet, but it does appear we have room for at least a technical corrective bounce over the next few weeks.  

As noted yesterday, U.S. crops took a slight dip in the conditions rankings but remain quite solid. The same though cannot be said for crops in many other parts of the world.  This morning Germany cut its forecast for barley another 700,000 MT to 7.3 MMT, due to the ongoing hot and dry weather that has plagued Northern Europe.  This is nearly 20% below last year.  Europe is not the other region suffering though as we have noted previously that the Black Sea region has also struggled with hot/dry conditions and reduction in crop prospects and as it turns out, so has China. The Chinese Stats Bureau now predicts that summer crops in that nation will be 2.2% below last year, with production around 138.72 MMT.  Little by little, we keep chipping away at inventories.

Fed Chairman Jerome Powell was on Capitol Hill yesterday and delivered an optimistic economic outlook to the senators. Things would have to be pretty dire to expect anything less from the head of the Federal Reserve.  He stated that the Fed believes the jobs market will remain solid and that inflation will continue to hover around the 2% mark for the next several years.  I am not too sure that is a positive statement for commodities though.  He did his best to discount any real impact from possible trade wars, but Heidi Heitkamp from North Dakota challenged that

by stating that this whole idea of “short-term pain for long-term” gain was not working too well for the energy and ag sectors of her state.  That does not mean the comments were not appreciated by some as the equity markets pushed up to the highest level traded since February and the U.S. Dollar is up challenging the highs of the calendar year. 

It would appear that we at least have a few bargain hunters showing up in our market as this morning the USDA reports a sale of 199,500 MT of beans to Pakistan.  Weekly export sales will be released tomorrow morning, but outside of that, we have little in the way of upcoming news. Looking at the macros, as I have already commented the dollar is higher and metals and energies are under pressure so do not expect much help in the grain/soy trade from those sectors.  Be that as is may, as I commented yesterday, sitting is as oversold a position as we are, a corrective technical bounce may be just a bit stronger than some may anticipate.  A few more sparks of positive news though would be helpful to get the fuse lit.