AM Comments 11/02/16
Wednesday, November 2, 2016, 12:11 PM
Submitted by: Dustin Weiner
After yesterday’s down and dirty price action – our markets have bounced back a bit overnight in a lightly traded, mixed/higher fashion. Yesterday’s sell-off felt like the futures market may be catching up to the cash market and recognizing the weakness that has been shown in basis, particularly in soybeans, both in domestic crush plants and export channels. Simply put, supplies available to the market today are greater than demand that is in front of us today. After harvest winds down, that story could change as grains get put away.
Yesterday also reminded us that volatility, whether it’s in commodities, equities or energies can cause uncertainty and effect money flow in ways that are hard to predict. Some argue that the tight US Presidential Election is a main factor – whether that is true or not, we can see that volatility in the financial markets (chart below) has significantly risen which keeps traders on edge. Also worth noting, the Federal Reserve has concluded their 2-day meeting and while we aren’t hearing many reports out of them (no press conference) – the market feels that a rate hike in the near term is unlikely. With the election coming up and global markets feeling a little jumpy – it probably isn’t too surprising that the Federal Reserve is ok sitting on the sidelines for now.
Noting changing much in South America as Brazilian soybean planting is off to a fast start, ahead of average. Argentina is still dealing with wet weather and they are behind average (actually this is their slowest corn planting progress in the past 12 years). Finishing harvest weather here looks fine and the concern isn’t really about when/how corn harvest will end – the concern is more like: where will it all go?
Soybeans 1 to 2 cents higher
Have a great day!
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