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Image of grain bins with words Grain market week in review with Bryce Knorr and Ben Potter in white. Entire image has red tint.

Grain market week in review – Nov. 8, 2019

Trade talks, USDA estimates impact the market this week.

Missed some market news this week? Here’s what Bryce Knorr and Ben Potter have been writing about.

Audio

U.S. and Chinese officials over the weekend talked up potential for signing the first phase of a trade deal, optimism that helped stock markets around the world rally today. But while U.S. index futures set new records, grain markets struggled with only soybeans holding above water. Traders may be cautious into Friday’s USDA reports, which feature updated production estimates for corn and soybeans.

After an endless barrage of headlines about the on-again, off-again trade talks with China, the futures market appears to be saying “enough already.” Rather than focus on headlines, traders are trying to hunker down and wait for USDA’s next production estimates due Friday. That crop report should set the state for markets into the end of the year because the government won’t update its crop assessment again until January.

Futures are posting modest gains as the overnight session winds down, with traders starting to focus on Friday’s USDA reports. A wide range of estimates for corn and soybean production creates a lot of uncertainty and potential for surprises after a challenging growing season that’s not over yet. More snow is hitting the Upper Mississippi River Valley today with the early start to winter continuing.

Enthusiasm over a U.S.-China trade deal rallied markets around the world Thursday, but that bloom faded quickly, with everything from stocks to soybeans giving back gains. Grain traders are focused on today’s USDA reports, which will update production, supply and demand as a difficult growing season winds down.

Crop progress

Growers posting Feedback From The Field last week rated corn fields slightly higher but downgraded soybeans as more finished harvesting that crop.  With USDA preparing to update its forecast of yields and production Nov. 8, Feedback results so far suggest both corn and soybean yields could edge lower. USDA put corn yields at 168.2 bushels per acre in October, with soybeans making 47.9 bpa.

The embattled 2019 season draws another step closer to the finish line, as corn and soybean harvest progress each crossed notable milestones this past week, per the latest data from USDA’s weekly crop progress report, out Monday afternoon. Corn harvest finally crossed the halfway point, with 52% complete as of November 3. Soybean harvest is now three-quarters of the way finished, according to USDA. Winter wheat plantings crept forward to 89% last week, up just four points from the prior week’s total of 85%. This year’s pace is slightly ahead of 2018’s 83% and the five-year average of 88%. Another 71% of the crop is emerged, up from 63% a week ago.

Exports

For the week ending October 31, soybean export inspections remain relatively strong as buyers from several countries continue to take delivery. But corn and wheat posted another round of lackluster results last week.

Outlooks

Basis outlook - It’s no secret that corn exports haven’t been very good lately. But that didn’t keep basis down last week as shippers scrambled to obtain supplies after another storm stalled harvested in states feeding the river system.

Fertilizer outlook - Red ink is flowing in most fertilizer markets as farmers begin to think about tax-related purchases. With some nutrients selling at 10-year lows, relative bargains can be had for nutrients you’ll need in 2020.

Financial outlook - It didn’t take Wall Street long to make a new record on the first day of trading in November. The S&P 500 Index gapped to an all-time high on the opening bell after better than expected jobs data cemented optimism voiced by Federal Reserve Chairman Jerome Powell that the economy is in “a good place.”

Energy/Ethanol Outlook - Farmers are used to waiting in line at harvest to dump grain at the elevator. But growers are also facing lines in some areas if they need propane to dry down corn thanks to a perfect storm of cold weather and a wet crop.

Friday's market reports

Grain futures are mostly a little lower today (Friday) after a choppy overnight session as traders get ready for USDA’s production, supply and demand reports. The data, which comes out at 11 a.m. CST, is typically the agency’s last estimate of the crops until its January wrap-up, leaving a lot on the line today.

USDA’s highly anticipated November World Agricultural Supply and Demand Estimates (WASDE) report arrived a few minutes late this morning, but the latest round of data didn’t do much to move grain prices much in either direction. Corn did firm slightly after USDA showed falling production and ending stocks, but soybeans and wheat shifted into the red in a somewhat choppy session.

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