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Tim Hannagan: Macro markets

This week's USDA Export Sales Report Friday showed neutral figures, highlighting Asia's steady demand interest. 

Wheat exports were 745,000 metric tons down 21% from the previous week but 1% over our four-week average of 736,000 metric tons. It's a neutral number for pricing but key world player or buyer Egypt was in for 181,000 metric tons of the total and that's always a good sign when a key world buyer turns to your port. Corn exports were 823,000 metric tons up 54% from the previous week and 55% over our four-week average of 529,000 metric tons. Key Asian customers were in for 538,000 metric tons of the total versus 506 and 480 t.m.t. the two prior weeks prior.

So, this shows that Asia's returning to do a little shopping with the lower prices that we saw last week. But, we need 1 million metric tons or more to be bullish. So, I see the sales as friendly at best for pricing. 

Soybean sales were 673,000 metric tons down 33% from the week prior and 50% under our four-week average, which is 1.35 7 million metric tons. Key world buyer China was in for 454,000 metric tons of the total versus the two weeks prior of 829 and 620. So, were seeing a little bit of a slowdown in Chinese business near term. 

But, any decrease in corn or been sales will be only temporary. China has been very aggressive selling soybeans out of their reserves and every time they sell soybeans out of their reserves they returned to the US to buy cheaper soybeans to replace it this. The same with corn as talk today has China's corn reserves just about running empty and sets up potential for near term purchases by China. We have said for weeks it's only a matter of time before they come in and buy, their needs are great. It's always just when.

When we return from the holiday, Monday, markets will look to the outside markets for direction. But, largely they'll be looking at the weather reports out of South America. The weather site WXRISK.COM sees another week of dry conditions in Argentina with below normal temperatures and dry conditions in southern Brazil with conditions warming. This forecast is identical to the week prior, but it's a second consecutive week of less than desirable growing conditions. 

In the longer term forecast, 10 to 15 days out, the European model of whether projections starts to build high heat into South American crop fields. If the heat gets intensive, then Argentina's got a problem because of the lack of rain and expanding heat in Brazil could move the dryness into central and northern regions and out of the southern regions. 

Outside market influence from crude, gold, stock indices and the US dollar will be the first thing grains will trade on the opening Sunday night and Monday morning but  quickly turn to the weather and its affect on emerging crops in South America. For now at least the weather should be supportive. 

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