Road-Trip Commodity Update: 1/28/19 Free Access Blog Post

A Choppy Start To The Week, As Expected. I can tell you from my trip From NE Kansas to the SE IL, up through Central IN & ending-up in NW OH, the wheat stands are not the best on-average. And even more important, nearly all of the SRW wheat crop in these areas is without snow-cover:  a freeze/burn in the wheat-belt is therefore higher than normal with colder than average temperatures. So, that begs the question: is the arctic cold going to last? Well, the maps below suggest that, overall, yes, the colder and somewhat drier forecast is likely to hold into late-February. I’ll re-post these maps after the current cold-wave goes through and the computer models get updated late in the week.

The US-China Trade Negotiations Highlighted Even More Today. Caterpillar announced their latest result; and even though their China business only makes up around 5-10% of their total, the ripple-effect CAT talked about due to the tariffs re-awakened the market fears…thus, we have moved quickly away from the US Govt. opening back up to the bigger, more important global issue of the US-China trade negotiations. And historically speaking, if these two countries can’t solve their problems within the next month, I am genuinely concerned that the economic repercussions could be with us for another 5 years. It’s truly that critical if history is any indication. And if we do get a resolution, I am optimistic about 2019 profitability for my commodity clients and subscribers. Below is a good representation of some comments put-forth by the Financial Times today, relating to the current state of affairs in China; and quite frankly, I’m glad that the stress and worry is hitting the markets right now–given that the world’s leaders are now meeting, they need to see this.

What Helped The Grains & Livestock Today In Prices Not Falling-Out of Bed? Several things in my view:  the US Dollar didn’t rally; the Brazilian Bean Crop is being estimated lower in Mato Grosso as a crop survey is now underway (in fact, the crop survey so far is estimating yields as much as 50% below last year for Brazil’s largest province); Gold found buying interest–not a lot, but enough to make the market appear to be inflationary. The market on Monday did what it needed to do:  get away from assuming the best, and put pressure on the politicians, while at the same time, not igniting any fund-liquidation pressures/stops by taking prices below key support levels. We’ll see if the market can maintain this equilibrium as more news about the trade negotiations hopefully comes out, and as we get set for a fresh USDA update on agriculture commodities on Feb. 8.  END

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