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Catch up on this week's market news.

Compiled by staff

April 12, 2019

6 Min Read

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

Audio

Corn and soybean futures were little changed overnight after early attempts to rally failed, while wheat succumbed to more selling pressure. More storms headed for the already soggy western Corn Belt should continue to delay fieldwork and planting this week, keeping upper parts of the river system closed as well. Negotiations between the U.S. and China on a trade deal will continue this week by video conference as grain traders wait for Tuesday’s USDA supply and demand report.

USDA’s supply and demand report for April, out at 11 a.m. CDT today, will focus only on old crop, incorporating data from the agency’s March 1 stocks report. The key numbers to watch could come in corn, where the agency found some 300 million bushels more on hand than trade expectations. If most of that winds up on the bottom line of the leftover surplus for the 2018 marketing year, corn could have trouble rallying despite the approach of another “bomb cyclone” in the western Corn Belt.

The big storm stretching from the Bad Lands to Indianapolis this morning promises to keep tractors parked in the Corn Belt, while the Delta braces for more heavy rains over the weekend. Slow planting conditions helped support spring wheat and corn overnight after USDA confirmed large old crop supplies in Wednesday’s monthly supply and demand report.

Wild spring weather isn’t having much impact on grain markets so far this morning, but it is at least providing some support, keeping futures mixed. Export demand takes center stage when USDA updates sales for last week, with traders wondering if China will show up in the totals for soybeans after making any big, public purchases lately as trade talks drag on.

Chinese soybean imports are normally like a relay race this time of year, with the U.S. handing to baton off to Brazil, which floods the market with new crop supply. This year the action is more like a tag team match according to the latest data out overnight from China. Both the U.S. and Brazil exported their crops to the world’s largest customer as China started buying from the U.S. again. That helped offset some of the weakness caused by lack of new sales to China last week.

USDA data

Another round of grain export inspection data is in the books, with the latest num-bers from USDA not offering any real surprises, according to Farm Futures senior grain market analyst Bryce Knorr.

Corn planting progress has reached 2%, according to the latest USDA Crop Progress report released Monday afternoon. That was in line with analyst expectations and the prior five-year average, with Texas accounting for much of the advancement so far, says Farm Futures senior grain market analyst Bryce Knorr.

Grain futures are mixed this morning following USDA reports that didn’t stray too far from trade expectations. Corn and soybeans traded both sides of unchanged after initial selling, trying to firm from lower levels hit before the data was released. Wheat was down, but off session lows as well.

Grain exports hit a definite lull last week according to the latest data from USDA, out Thursday morning. Soybeans, in particular, saw a sharp week-over-week de-cline and came in less than a third of the average trade guess.

Market recaps

Grain futures are trying to hold mostly steady to a little higher this morning, getting a lift along with other markets from the latest news out of China. While trade negotiators were mostly silent this week after videoconferences, China reported upbeat economic data overnight that brightened the mood. Credit growth increased, signaling the government’s attempt to stimulate the economy may be working as exports also increased.

Some technical maneuvering Friday left grain prices little changed in the session, with corn ending with fractional gains and soybeans ending unchanged. Wheat prices saw the biggest movement, with some winter wheat contracts up nearly 1% on a round of technical buying, while spring wheat futures eased slightly.

Outlook

Soybean outlook - With global soybean supplies at record levels and wet weather pushing farmers to add acres this spring, rallies wouldn’t seem likely. Yet seasonal trends point to just that in April and May for both old and new crop contracts, whose charts are on the verge of upside breakouts.

Corn outlook - With temperatures finally start to warm soils in the Corn Belt, tractors should be moving. They aren’t, and planting delays could be the best hope for a rally over the next month or so. Don’t expect much more than short covering, because old crop inventories should top 2 billion bushels at the end of the 2018 crop marketing year Aug. 31. That carryover will be a hangover for the market until and unless a serious weather threat emerges this summer.

Wheat outlook - The wheat market doesn’t have much of a reason to rally right now. Fundamentals are bearish and seasonal trends favor prices moving lower into summer and harvest.

Energy/ethanol outlook - Pain at the pump could mean at least a little gain for corn growers. Demand for ethanol should start to increase soon, with or without final confirmation of year-round E15 usage by the EPA. Credit a surge in gasoline costs that’s making ethanol much more competitive for blending, even before the summer driving season kicks into gear.

Basis outlook - High water on the river system like the flooding seen this spring normally means more expensive barge freight costs. The price to ship corn down river is indeed much higher than normal, and is expected to stay that way through the summer. But freight rates actually fell again this week as the river remains closed north of St. Louis, with closures possible through the end of the month, decreasing demand for empties.

Fertilizer outlook - Retail fertilizer prices stayed stubbornly high through the winter and early spring, reflecting a supply chain disrupted by weather delays and logistical issues. While floodwaters remain, product appears to be moving a few places, with even some bargains surfacing though others terminal are still raising prices.

Financial outlook - Anxieties are growing in financial markets as well, and not only on Wall Street. Nonetheless, stock prices are rallying, getting close to a breakout that could trigger a test of last fall’s all-time highs. So what do investors know that the rest of the world is missing?

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