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

Audio

Markets tried to get a rally going when they reopened Sunday evening, but the effort quickly ran out of gas in everything from soybeans to stocks. While another storm moves through the upper Midwest today, other areas continue to dry out after an Easter weekend that saw temperatures rise into the 80s. Markets in Europe remain closed for Easter Monday, sapping trading of some of the usual suspects as the sun rises in the U.S.

Soybeans garner most of the attention when farmers watch trade negotiations with China. But there at least a few signs corn growers could benefit if a trade deal is ever worked out between the two countries. China’s once massive mountain of corn inventories is steadily shrinking. While African swine fever will reduce demand from livestock feeding, the county’s ethanol industry could be a buyer if weather hurts production this year.

The lull in trade talks between the U.S. and China added pressure to soybean futures this week, breaking prices to a test of fall lows. News negotiators will meet next week and the following week for more discussions in Beijing and Washington helped firm futures overnight. A stronger dollar at the top of its recent range could be bearish for some commodities including wheat, after some stock indexes closed at all-time records Tuesday.

Corn prices slipped to new contract lows overnight as futures fight to find some traction in a tough market. Forecasts for more heavy rain – and even some snow – in the next two weeks still haven’t caught the imagination of traders focused on large global supplies and not planting delays. A U.S. dollar at four-month highs isn’t helping matters, either. China bought more soybeans from the U.S. in March but trade is still far from normal as talks get ready to start up again next week.

Grain markets are mixed this morning, as many contracts try to hold bullish reversals on Thursday. Outside markets are also in play today, with investors eyeing first quarter U.S. GDP data out at 7:30 CST and a dollar pulling back from the top of its recent range. Trade talks with China get going again next week, getting a boost from conciliatory comments by China’s President Xi.

Market recaps

Grain futures are mixed this morning in their bid to hold turn-arounds from bullish reversals in many contracts on Thursday. While yesterday’s gains came from short-covering, and not new buying, the shift provided oversold markets with at least a little relief from the spring’s relentless selling.

Corn ended Friday’s session with gains of about 1% on some short-covering partly spurred by fears that wet, cold weather (on average) so far this spring will cause moderate delays in planting progress. But soybeans and most wheat contracts moved lower to end the week, as concerns persist over large domestic and global stockpiles.

USDA data

For soybean exports, all eyes remain on China. For the week ending April 18, export sales to that country did move higher, notes Farm Futures senior grain market analyst Bryce Knorr. A caveat moving forward – Brazil tends to dominate the export market in April and May. That trend could make it difficult for the U.S. to compete, with or without a resolution in ongoing U.S.-China trade talks.

Outlooks 

Financial outlook - While anxiety is growing in farm country after another year of low farm income, growers surveyed recently by Farm Futures at least don’t think it can get much worse. Only 18% expect income to fall, while 23% look for an increase and 58% see income flat in the year ahead. USDA in March forecast net farm income would be up $6.3 billion this year at $69.4 billion, though that would be 44% below the peak reached in 2013. 

Fertilizer outlook - Farmers still waiting to learn their final fertilizer bill for 2019 should get ready for a surprise. The news could be good, bad or anything else in a crazy year for a market ruled by wild weather and international turbulence. For those without supplies on hand, how much you pay depends on the vagaries of where you farm and how far you can go for products. 

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 - Record inventories and the trade war with China combined to send the cash market for 2018 crop soybeans off the rails. Still, there are finally some glimmers of hope on the horizon. Don’t expect bids to get back anywhere close to normal. But the cash market showed signs of a pulse this week.