The Hueber Report

NAFTA-euphoria, or more correctly now USMCA-euphoria swept across the corn and bean markets yesterday and sent bear traders scampering for the exits.  When you consider that Canada at $20.5 billion and Mexico $18.6 billion were our first and third largest ag export markets last year, reaching a new trade agreement should be cause for celebration.  That said, it really does not shift the currently projected balance sheets, nor despite some wishing thinking, does it seem to have moved us one iota closer to kickstarting negotiations with the number two ag export market, China. When you consider that nearly 60% of the $19.6 billion we sold to China in 2017 was soybeans, it is difficult to think they will maintain the same position in the rankings.  Regardless, the enthusiasm yesterday lifted corn and bean prices back to pre-grain stocks report levels, but overnight harvest and crop size reality set back in.

There were no surprises in the weekly crop updates, but it did remind the trade that this harvest is moving ahead nicely.  Corn harvested moved up 10% to 26% complete, which compares with an average pace of 17%. Bean harvest moved ahead by 9% to 23% complete which is 3% ahead of the average pace.  While being ahead of schedule does not assure large yield, the fact that the corn crop is still rated 69% good/excellent and beans 68% in the same category would make one lean towards that assumption.  FC Stone did publish their estimates for the October report this morning and pushed corn yields up to 182.7 and beans to 54, compared with the USDA last month at 181.3 and 52.8.  The report will be issued next week on the 11^th. 

For anyone who has needed to fill their fuel tank (Tesla owners excluded), it should come as no surprise that crude oil has continued to advance with Brent this week trading above $85 a barrel, the highest mark witnessed since November of 2014.  Providing the fuel (pun intended) are concerns about sanctions in Iran and how that may upset the balance of trade.  This has also helped lift the CRB index to the highest levels traded since early August and has begun to turn longer-term technical indicators sideways to higher.  The weekly MACD has not crossed higher just yet but is beginning to move in that direction.  Once it has, it should bring additional money back into the commodity sector as in the past it has been a reliable indicator for literally months of positive action.  

Grain and soy market turned lower overnight and remain soft yet this morning.  I continue to believe we are poised for a short-term correction lower but expect to encounter good end user and value buying once that has taken place.