Headlines:

  • Proposed Law Could Reduce Food Deserts, Boost Vegetable Production by Commodity Growers
    The two Illinois representatives in the U.S. House seem far apart in several ways. Mike Bost, a Republican from Murphysboro, represents a district at the southern end of the state. Robin Kelly is a northern Illinois Democrat whose district includes part of Chicago’s south side as well as farms in Kankakee County. Yet the two are teaming up on legislation that could make it easier for farmers to provide fresh produce to food deserts – low-income areas that don’t have grocery stores selling fresh vegetables. Last summer they cosponsored the “Feeding America through Farm Flexibility Act of 2017,” which might be part of the next farm bill. The proposed law would allow farmers to plant an additional 5% of their commodity crop base acres to vegetables if the harvest is sold or donated into a food desert with a poverty rate of at least 20%.
  • Brazil weather worries, US data doubts boost ags
    Prospects did not look strong for agricultural commodity prices, with a rising dollar adding to the US Department of Agriculture’s apparently bearish US crop upgrades as reasons to sell. Looking at corn, for instance, Tregg Cronin at US broker Halo Commodity Company said it was “very difficult to find positives [for prices] with market at the moment, as balance sheets are oversupplied, export cash markets are weak and calendar spreads are trading in excess of 80% of full-financial carry” But upward movement was the trend nonetheless, with many ags outperforming a 0.8% rise in commodities as whole, as measured by the CRB index. The idea, as indicated by FocusEconomics research, of upbeat analyst price estimates was some help, with futures in some contracts seen not far from levels at which many investors would see downside risk as very limited. Still, there was fundamental cause for investors to cling to as well.

Summary:

In a rebuff of yesterday’s USDA report, Soybean closed 11.25 cents higher today. Corn and Wheat also closed in positive territory but largely gave up most of their intraday gains by the time the closing bell rang. Corn was up 1.25 cents and Wheat was up 2 cents. Private exporters reported 167,370 metric tons of Soybean for delivery to Mexico for the 2017-18 marketing year. Perhaps the reason for the rise today was that the bearish news was more expected than the trade may have been letting on and that numbers from the USDA report were perhaps already accounted for Bean prices. Given the huge short positions that we have seen on the part of Investment Funds/Managed Money, a bit of profit taking or even a short squeeze may be the best explanation for the advance today. Support from Chinese demand at these levels may also come into play. We have been looking for Beans to bottom sometime in October and for Corn to perhaps bottom sometime next week. Those lows may occur slightly early then expected if some unforeseen factor lends itself to causing support. The US Dollar and Crude Oil futures were particularly strong today. Both are at critical levels that could be signaling the potential for a move up.