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Well, here we are – right back at square #1 – after the slowest planting pace in recent memory! So what happened to “yield drag” & “prevent acres”! Conventional wisdom says that production & yield loss have been offset by “demand destruction” from the trade war- negating any positive effect the planting issues would have had on corn prices!
FACTORS IMPACTING THE MKT
We’re too cheap – harvest will show very disappointing yields – a trade deal may become a political necessity – and remember LOW PRICES CURE LOW PRICES!!
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Today the mkt is capitulating – reacting to diminishing hopes of a US/China trade resolution & higher yield estimates from private forecasters – in front of the USDA Sept Crop Report due out next Thur 9/12 at 11am! As well, temps thru the end of Sept are forecast to be higher than normal – reducing the “early frost potential”! Strangely, the Macro Mkts are reacting more strongly to the overnite news that October face-to-face talks between US & China are scheduled – with the DJI up 400 & Gold down $34 & silver down 72 cents! Traders are justifiably wary of the Sept Report – given the bearish bombshell issued in August!
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The normal “weak-sister” Wht Mkt has stepped to the front of the class – rallying some 20 cents off its Tues lows – the welcome beneficiary of an active international export Mkt involving Turkey, Jordan, Japan & Saudi Arabia – as well as a falling US Dollar (200 points In 3 days)! However, any sustained rally will probably need a “big assist” from Corn & Beans!
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The Oct Cat contract was struggling any way – amidst the best demand period of the year – before the packing plant fire – just about a month ago – decimated the mkt for a sudden $7.00 drop! The huge downside gap (104.50 – 101.50) that was left is a bearish technical signal! Today, weak cash has forced the mkt to new lows! The mkt could really use some solid export demand – that would accompany any trade deal!
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Oct Hogs have managed to rally $9.00 (59-68) just on the prospect of improved export business from China off a “done trade deal”! Of course, that deal seems to be a long way away – but nonetheless – the mkt feels it will become a reality. With China’s hog herd getting decimated by the ASF & with our surplus of pork, it seems to be a natural fit for the US & China to collaborate on a deal! The other positive is the sheer cheapness of the price level to which Oct Hogs have dropped – a fact not lost on value-conscious consumers!
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