You are here

Trade, Election, Brazil’s Weather All Eyed, Analyst Says

Brazil’s weather is the most important market factor, analyst says.

It’s election day, and many think the fate of the world lies on this election.  

But the truth is that it doesn’t, and even politicians can’t make too many stupid decisions even if they are elected. A study has shown that no matter what happens in a midterm election, stocks are about 17% higher one year after the election, and the best stock market year is the third year in a president’s term – regardless of the party.  

Crop progress numbers were out yesterday, with harvest of almost every crop now behind normal. Corn is 76% harvested (1% behind normal), soybeans 83% harvested (6% behind), cotton 49% harvested (3% behind), and sorghum 64% harvested (12% behind). 

We have fallen further and further behind in our comparisons to normal for at least the past few months, with cold/wet/snowy days constantly slowing the harvest progress. 

Cotton conditions dropped to 33% G/E, down 2% from last month and well below last year’s 55% rating. Sugar beets are 91% harvested, 1% behind normal and sunflowers are 52% harvested, 9% behind normal.  

Winter wheat is 84% planted, 6% behind normal and it’s likely some winter wheat will be prevent planted this year in areas where rain has just overwhelmed farmers and planters.  Winter wheat conditions are 51% G/E, down 2% from last week and now well below last year’s 55% rating at this time. The season started out great, remained great until about early September – and it’s been all downhill from there! 

The forecast calls for mostly above-normal precip the next week, with temps forecast below normal, which makes for a difficult week to finish harvest in many areas. 

The eight- to 14-day forecast turns to normal/above normal precip for much of the Corn Belt, with below-normal precip in the northwest U.S. Temps remain below normal for the entire 14-day forecast, which doesn’t make it any easier to dry out soggy soils to allow harvest or winter wheat planting. 

Both topsoil and subsoil ratings are extremely high at 88% adequate/surplus topsoil (up 1% from last week and compared with 74% last year) and 83% adequate/surplus subsoil (up 2% from last week and compared with 69% last year). This is ending as an extremely wet fall, and that could mean a late start next year.

South America is also seeing above-normal precip in the next two-week forecast, with temps above normal in Argentina, below normal in southern Brazil, and above normal in northern Brazil. This is an OK forecast, but they would probably like to see it a bit drier to allow planting to accelerate. 

From here on out, South American weather will be the most important market factor, especially to soybeans.

After the election, we can reassess the situation in our government and the outlook of our crops, but perhaps the people most interested in the election outcome are the Chinese. Their strategy has been to try to hurt Trump the most with their tariffs and retaliation, and they were ready to impose tariffs on U.S. soybeans a long time before it actually happened. 

How the Chinese react to the election is important, as they may decide they aren’t going to outlast Mr. Trump and may decide to try to negotiate now and reach some kind of settlement (on ag and the rest later). After all, a 25% stock decline in one year like the Chinese just experienced is more than almost any country’s leaders can stand!  

But more importantly, how do the Chinese approach the U.S. now that the U.S. electorate has spoken? This is an extremely important question to ask, especially for U.S. soybean farmers.


------------------

Ray Grabanski can be reached at raygrabanski@progressiveag.com.  
+++++++++++++++++++++++++++++++++++++++++++++++++++
Ray Grabanski is President of Progressive Ag Marketing, Inc., the top
Ranked marketing firm in the country the past 8 years.  See
http://www.progressiveag.com for rankings and link to data from Top
Producer Magazine and Agweb.com.

This material has been prepared by a sales or trading employee or
agent of Progressive Ag Marketing, Inc. and is, or is in the nature
of, a solicitation. This material is not a research report prepared by
Progressive Ag Marketing's Research Department. By accepting
this communication, you agree that you are an experienced user of the
futures markets, capable of making independent trading decisions, and
agree that you are not, and will not, rely solely on this
communication in making trading decisions.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY
LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD
INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR
RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS
COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR
JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS
COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

The risk of loss in trading futures and/or options is substantial and
each investor and/or trader must consider whether this is a suitable
investment. Past performance, whether actual or indicated by
simulated historical tests of strategies, is not indicative of future
results. Trading advice is based on information taken from trades and
statistical services and other sources that Progressive Ag Marketing
believes are reliable. We do not guarantee that such information is
accurate or complete and it should not be relied upon as such. Trading
advice reflects our good faith judgment at a specific time and is
subject to change without notice. There is no guarantee that advice we
give will result in profitable trades.

Read more about

Talk in Marketing

Most Recent Poll

Will you have enough on-farm storage for harvest?