GlobalCommBlogosphere Update–Working From Macro-Headwinds…Again

china covid cases rise, adding to fears of hard lock-down: agweb video below

With increased COVID cases, and deaths in Beijing, being reported this weekend, the trade is beginning to price-in another big hard lockdown by Chinese authorities. This is the major thrust for the sharply higher US Dollar today; not only did it make new highs when the crude oil was able to go positive on the session, it made new highs in the middle of the trading day–this likely due to more news coming from the Beijing area about recommending people remain indoors for 5 days. In the video below, I also talk quite a bit about the soy rally being directly related to the continued strong export demand, as shown by the weekly export inspections. I also make mention of my view that the trade is likely associating strong US export demand with more problematic S.A. weather.

So, while the soybeans are finding support from the demand-side, we are also seeing some improvement in parts of Brazil; meanwhile, Argentina remains in a difficult spot. In addition to this, and in the bigger picture and longer-term mindset, the data for China soy imports the 1st 10 months of the calendar year were now positive: for Brazil, the total was down 6.5% at 49.3 MMT, while for the U.S., the total was down 10.9% at 20.1 MMT. These reductions YTD make me really wonder whether USDA is going to have to cut-back on their 98.0 MMT Total Soybean Import figure for China: especially given that in the ’21/22 crop-year, the Chinese imported only 91.6 MMT. This is something that fundamentally coincides with my point about the soy needing corn and wheat to make it to the next level higher.

u.s. hrw wheat weather looking tough for december: CROP CONDITIONS DISAPPOINT

Wheat conditions this afternoon remained unchanged, at 32% Good-Excellent; the trade estimate was an average guess of a 1% improvement. I’d expect that next week’s report–the last one for the season–should show conditions falling to as low as 30%, based upon the weather forecast for this week and weekend: dry and warmer. I’ll also be watching to see if the Kansas wheat conditions move lower toward the 2018 lows…I think this is very likely given where we are now vs. what I remember in the Fall of 2018 for this region. This, along with the Ukrainian update below, as well as the Ukrainian corn story I sent you at midday, are all supporting my mindset that the wheat is “Undervalue”, and that the Grains should find some demand-led short-covering after Thanksgiving. And I am suggesting this even with the disappointing corn weekly export inspections today.

russia’s maximum pressure campaign for ukraine heading into winter has begun and is recognized by the united nations

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