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Grain prices finish week in the green

Check out the Ag Marketing IQ commentary.

Missed some grain market news this week? Here's a recap.

Ag Marketing IQ

As you progress through a marketing year, it is critically important to ask yourself the hard questions to determine if you are really, truly managing risk to protect your bottom line -- or just wishing and hoping for a certain marketing scenario to come along. What are some of those ‘being honest with yourself’ questions?

Futures markets have yet to provide farmers with many marketing opportunities for 2019 inventory one month into the new year. But as frequently happens, weak prices in Chicago are strengthening corn and soybeans bids in the cash markets for growers ready to separate their basis and futures decisions.

When looking at soybean vs corn inter-market spread charts, soybeans are at the very bottom side of price relationships experienced since early 2007. This not only greatly diminishes producers' desire to expand U.S. soybean acreage, but it also should be a caution about pressing the bearish side of this market. Current historical price relationships make soybeans very vulnerable to a Black Swan event.

Energy prices had a short-term peak just weeks ago after the flare up with Iran. Once the marketplace found relief in news that we were not at an immediate threat of war, crude oil futures, rbob gasoline futures, AND heating oil futures posted a bearish key reversal on daily charts, which was a technical topping action. A quick price sell-off then occurred, with crude oil futures losing over $15 a barrel in the following weeks.

Whether we’re talking about old crop or new crop corn, it’s been disappointing of late for those hoping for a rally. Coming into 2020, there was a fair bit of optimism as producers saw a Phase I trade deal benefitting the corn market as well as the January USDA report possibly having the same effect. With the month of February (crop insurance) seeing mild support the last couple of years, it wouldn’t surprise me to see us trend back closer to $4 this month.

Exports

USDA offered up a mostly positive batch of grain inspection data Monday morning, with soybeans showing the most upside after climbing 28% higher week-over-week and topping all trade estimates. Wheat also moved 83% higher last week, while corn faced a moderate decline.

USDA’s latest grain export sales data showed positive trends emerging for corn and soybeans, while wheat volume struggled to gain momentum from last week’s healthy pace. The agency’s latest report, out Thursday morning, covered the week ending January 30.

Market reviews

March corn futures rose in overnight trading. River locations posted slightly higher basis levels through the Midwest as a result of strong export demand at the Gulf though corn movement through the Corn Belt remained slow. March soybean futures edged lower overnight. Nearby soybean meal futures prices surged due in part to technical buying ahead of the opening bell. Basis weakened at a Des Moines processing facility and Illinois River location but were steady otherwise across the Midwest. Wheat futures posted incremental gains overnight.

Overall optimism that China will soon ramp up imports for U.S. agricultural goods kept grain prices in the green Friday, even amid some concerns that coronavirus-related disruptions will throw a wrench into its ability to do so. Corn led the way, moving nearly 1% higher on some technical buying. Kansas City HRW futures also posted strong gains of 1% or more today. Soybeans and other wheat contracts were more muted but still finished the session with modest gains.

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