Reasonable Enough

agricultural, Charts, Commentary, News, Technical Analysis

We could not argue much on any of the report numbers and found them expected, maybe boring. The much expected jump in old crop exports came, and no one can say the USDA minds being late. They had ample reason to raise this figure to 16.0 Mb back in March. And that was that for the US report, as the Mb export change rippled through into new crop. The 18/19 production is exactly our figure, and we are watching some tropical storms swelling up from Mexico to see if Texas gets relief. That will mean much. New crop exports are 1.3 Mb above the level reached by taking 60% of total supply. However, this year blew the door off that method, as 17/18 exports are 1.8 Mb above the calculation.

The world lost about Mb due to decreases in Aust, China, and Pak. Consumption was unch at 125.4 Mb. The report looked neutral to us, but about 1.45 minutes before release time, the market jumped 50 ticks. Somebody got a peak at the numbers before the rest of us had a chance.

Weather forecast looks downright promising to give relief to the RGV, with chances of rain tomorrow running all the way to next Wed. Brownsville may get 1.5 total in 6 days if WU gets it right. Lubbock forecast calls for total of 6/10 from Sun to Wed.

Varner View

This years carryout and ratio are above year ago, but price is about a dime higher. Next years carryout and ratio are above each of the previous two years. The current strength is based on the China destock story, the same one that has been around for 2 years, which is about how long this bull has lasted. And so far, 95c has not had an impact on demand. 85c came and went, so now the market perceives a higher level is necessary to whittle away at world use of 125 Mb. It may take time, but that has always worked in the past.

Technicals

Regards Dec, todays low of 9120 is first visible support that if broken would signal a correction. 8940 is strong support that would represent a trend change. The 4 year old double high of 9373 remains a clear barrier for the bull, as the current Dec has yet to close above and break out. For July, each of the last 5 days the low has been higher the next day.


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