The National Retail Federation and other U.S. trade groups are urging the Commerce Department to work with the South Korean government to resolve the Hanjin Shipping Co. crisis, which stranded an estimated $14 billion of goods at sea. Last month’s bankruptcy of Hanjin, which moves huge containers of products to the U.S. from Asia, has roiled supply chains and delayed shipments of everything from T-shirts to televisions. Much of the cargo is what retailers are counting on to stock their shelves for the holiday season, by far the most important time of year for consumer spending. Companies also are concerned about cargo stranded at overseas ports, according to the letter. And they’re facing increasing freight charges as they seek alternative transportation options. The Hanjin Group seems to be hoping the South Korean government and/or banks will come to its rescue. Other than their initial announcement to put US $ 90 million into getting their ships and their clients containers released, the Group continues to offer the same financial packages the creditors that has already been rejected twice. Overall, Hanjin has 81 vessels arrested, detained or embargoed worldwide. Both the Suez and Panama Canals have refused transit to Hanjin vessels and fears are growing that these cargoes will remain stranded for an extended period of time. Exactly what the U.S. commerce Department can do to help the situation is not entirely clear, however. They don’t have the power to mandate shipping rates and they it is highly unlikely they are in a position to guarantee payment to Hanjin’s creditors. As one industry newsletter put it, Hanjin may end up being the Grinch that steals Christmas from U.S. retailers this year.
I continue to hear talk that the U.S. soybean yield could ultimately work its way north of 51 bushels per acre. From a technical standpoint this market still remains range-bound between $9.20 and $10.00 per bushel. The Chinese crush margins are strong and demand remains large, but I just don’t see the current headlines being enough to take us aggressively higher. Keep in mind many inside the trade are thinking last years soybean crop could soon be revised higher by the USDA, as well as new-crop yield and total soybean acres. Hence U.S. ending soybean stocks could eventually push north of 400 million bushels???
The USDA reported yesterday that the US. harvest is currently about 4% complete vs. 6% last year vs. 5% on average. Interesting to note, back in 2012 we had over 20% harvested by this date. Bottom-line, all of the major producing states are running behind their traditional average historical pace. Crop conditions were left “unchanged” at a record 73% reported “Good-to-Excellent”. Keep in mind Illinois conditions are now 80% and Iowa 81% “Good-To-Excellent”. As a producer I continue to like the thought of making sales into the rally, especially on all the “overage” that will be harvested. I personally don’t want to be holding or taking risk on any more than 20% of my production post-harvest. I’m also keeping an extremely close eye on the NOV17 contract in hopes of getting an opportunity to reduce some longer-term price risk on another leg higher.
The USDA estimated corn harvest is currently 9% complete vs. the 5-year average of 12%. Most all major producing states are running behind their traditional pace. Despite the USDA electing to leave crop conditions “unchanged” at 74% rated “Good-to-Excellent”, I continue to hear more talk of Diplodia, Gross’s Wilt and lower test weights. Meaning I’m still not sold on the “quality” and “size” currently being forecast for this years crop.
There’s a lot of talk that investors have been reversing their wagers on the Brazilian real. Bloomberg recently reported, “Bears are reemerging as a fractured congress, feuding politicians and a stew of corruption dims hopes President Michel Temer will succeed in pushing through reforms to shore up the budget, restore business confidence and pull the country out of its deepest recession in a century.” Keep in mind the currency soared 23% in the first half of the year on bets then-President Dilma Rousseff would be ousted and a new administration would get the country back on track. But as impeachment turned from wishful thinking into reality — with Rousseff officially thrown out last month — early hiccups in the new government and a dim outlook for legislative measures sent the real lower, making it the second-worst performer in Latin America since it reached a 13-month high on Aug. 10th. You can read more at “Brazil’s Currency Bulls Now Getting Burned by Political Mess“.