Missed some market news this week? Here’s what Bryce Knorr and Ben Potter have been writing about.
One of the biggest grain market days of the year is off to an inauspicious start, with corn, soybeans and wheat all moving lower overnight. Rain moving through the Plains and a cooler forecast this week is one factor keeping traders cautious ahead of USDA reports that drop at 11 a.m. CDT. More protests in Hong Kong also rattled financial markets, sending stocks lower as investors turned to gold for safe haven protection.
Different markets headed in different directions overnight. Corn finally found relief after heavy selling in the wake of Monday’s USDA report, with wheat also rising following new contract lows in hard wheat futures. But after a bounce yesterday on encouraging trade news, financial markets and soybeans are struggling.
Traders and farmers likely will be talking about Monday’s USDA for quite some time, in part because there won’t be much else to discuss. The government’s confusing acreage data for corn won’t be changed quickly, leaving the focus on yields. Corn dropped overnight after limit-down trade Monday but appeared to find some chart support after double-digit losses. Soybeans reversed higher with lower production helping limit losses.
Grain markets are trying to move a little higher this morning after a bumpy ride Wednesday, when a rally appeared to be stopped by massive selling on Wall Street. Fears about a reliable recession signal sent investors to the sidelines as the trade war with China showed no signs of cooling. In fact, China plans retaliatory tariffs for the measures set to go into effect Sept. 1 despite a delay on some goods.
A volatile week of trading in many markets appears to be ending on a brighter note than it began, with everything from stocks to soybeans rallying overnight. The bounce in beans came despite news of aggressive Chinese buying from Brazil after cancelling some purchases from the U.S. last week Weather forecasts don’t look threatening, either, as growers wait to see how crops finish out.
The 2019 growing season started out challenging, to say the least. Reports from growers last week on Feedback From The Field suggest conditions aren’t getting any easier. Fields that flooded in the spring and early summer now are dry in parts of the growing region. Late-planted crops that had lower yield potential to begin with now face production losses from heat as they struggle to reproduce.
USDA released its monthly WASDE and crop production report on Monday. For corn, the agency dropped its planted acre estimates by 1.7 million acres from July, now at 90.000 million acres. For soybeans, the agency’s assessment for August was for 76.700 million planted acres and 75.900 million harvested acres. Unlike corn and soybeans, U.S. all-wheat production estimates moved moderately higher in August, with USDA now estimating a 1.980-billion-bushel production potential, up from 1.921 billion bushels in July.
USDA held its corn and soybean quality ratings mostly steady from a week ago in its Monday Crop Progress report. For the week ending Aug. 11, USDA marked 57% of the U.S. corn crop in good-to-excellent condition. Soybean crop quality also held mostly steady this past week, with 54% of the crop rated good-to-excellent.
It may not be worthy of Agatha Christie or Sherlock Holmes, but the case of the missing corn acres is a mystery that rattled the market in the wake of USDA’s Aug. 12 reports. Unlike fictional detective stories, this is one puzzle that may never be solved.
China continued to draw down its large book of outstanding soybean sales last week, according to the latest export inspection data from USDA, out Monday morning. But the country still has a long way to go.
Even though soybean exports lost 4 million bushels in old crop sales last week, total volume was up significantly week-over-week, thanks to an additional 30.0 million bushels in new crop sales for the week ending August 8.
Grain futures are a little stronger this morning, benefiting from a bright mood in financial markets that were just as volatile as the grain trade this week. Fears about trade wars and risk of a global recession appear to be easing.
Although corn futures slumped more than 12% lower earlier this week, at least Friday’s prices finally moved higher after a healthy round of bargain buying. Wheat and soybeans also enjoyed a modest technical reversal today.
Basis outlook - The looming end of the old crop marketing years for corn and soybeans sometimes brings a fire sale of exports as farmers and elevators sweep bins clear to make way for the coming harvest. But like most aspects of the market this year, this unusual pattern was swept away by floods and trade wars.
Corn outlook - The headline of my last outlook was simple: It’s time for answers. USDA provided them and they weren’t what farmers wanted to hear for sure. I’ve written about the confusing data on acreage and what may have happened. Eventually the agency’s estimated harvested acreage could come down. But’s time to make plans for both contingencies.