By Matthew Pierce
The situation coming back from the weekend is rather muted. The
“Frankenstorm” off the East Coast has all markets grinding to a halt
with only commodities actually expected to trade a full session.
Domestic equities are closed, bonds are closing early and all floors in
the east are closed today and likely tomorrow. Transit systems in NY are
shutdown so even electronic participation should be rather low with
many on the East Coast, my friends included, hunkering down with bottled
water and wine waiting out the storm.Looking at the overnight traders saw pressure in beans as demand worries are sneaking into the trade but this is a minor issue in the big picture. Talking to many South American producers over the past week I get a general picture that Brazil may reach, stressing may, 80 MMT with Argentina likely missing their lofty expectations by 2-4 MMT in beans and 1-2 MMT in corn. This makes the current prices far more warranted in my opinion. Stressing a simple point. Remember how lofty our expectations were in March and April and the actual results. South America is likely to trend in only one direction and that is lower so the downside from current levels should be limited as we move into the production cycle.
Another note from the overnight occurred between 4-5 AM CST. A big volume spike in corn and wheat helped these markets recover into positive territory but this did not occur in beans or meal for that matter.
Looking at the day session, it’s going to be interesting to see who’s all involved. Prices are moving wildly into the later hours of the morning with fresh information limited. Governmental reports are all delayed until tomorrow at the earliest so export inspections and harvest progress will not come out. There was a report out from the Chinese AG Minister stating bean imports will reach 57.5 MMT this year showing a 9.2% increase year on year. This is actually less than many are expecting with a number closer to 59 floating around the industry. Looking to wheat, Russian and Ukrainian exports are slowing but India is looking to fill the void. This is unlikely due to a lack of infrastructure and antiquated transit system there but they will continue to push the export situation which will most likely impact demand from SE Asian countries.
Outside of these small factors, look for a rather muted session as the focus of the nation remains on the storm off the East Coast. Good luck to all out there during the storm with the thoughts of Midwesterners with you.
