Lunatic Reversals

Today’s grain trade and livestock trade have seen some extreme volatility. Interestingly, today was a full moon, the word lunar is from the moon, and lunatic is trim lunar. And that was pretty much how action certainly played out today. The bearishness of beans has been carrying the weight of over the last few sessions, Sunday night session disappointment from China’s lack of economic boosting, Tuesday the EU delaying their deforestation agenda for a year for buying bean products, and then today the early session was all worried that another finance minister in China was not releasing further stimulus information. This had grains just on a downward spiral into the mid-morning session. Then something funny happened. 

Demand bureaucracy rose as corn dipped its toes under 400, and soybeans had seen spot November, which is being bull spread by the way dip under 970 while deferred contracts were within pennies of contract lows, to see a massive $0.23 reversal off the lows occur into the close. This should not be happening when there is all kinds of rain now falling in Northern Brazil, the Trump Trade that hates beans and corn, and heavy harvest occurring for corn with having seen rain for well over a month, and nothing for another week that will wrap up corn harvest probably within 10 days yet.

Something is afoot; the market is extraordinarily bearish but runs into massive reversals, keeping bears in check and implying that there is still value in these grains that are not beholden to complete Chinese buying. Maybe it’s the reality that other parts of the world need to buy grain, and considering corn from the US is still the cheapest sourcing of grain through the end of the year, buyers, almost it seems announced to bears, can step in and surprise you when they think there is value at below the cost of production. I know it’s a curious thought, but maybe it’s something to consider it.

 

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