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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 - Feb. 8, 2019

Much-anticipated USDA data dump fails to generate market excitement.

Missed some market news this week? Catch up on what you missed with Bryce Knorr and Ben Potter.

Audio

Markets in China are closed all week for Lunar New Year holidays but the world’s largest soybean importer could still make some news. Traders await confirmation of Friday’s rumored purchases, which could come when USDA puts out notices of large sales on its daily wire at 8 a.m. CST. Otherwise took for markets to mark time until Friday’s big USDA reports.

Another round of storms will bring more heavy rains to the lower Mississippi and Ohio River valleys. Along with snow melt that could snarl transportation next week on the river system. Futures are firm overnight, with traders eyeing more talks between negotiators from the U.S. and China, as the countdown begins ahead of Friday’s big USDA reports.

Grain markets that do nothing are at least not going down. But that’s about the only saving grace of trade that’s treaded water for a month waiting for news out of USDA. The silence on big crop reports ends Friday, not soon enough for futures that are ready for a move.

Traders have been waiting for today for nearly a month, since the government shutdown delayed USDA’s Jan. 11 reports on crop production, grain stocks and winter wheat seedings. While charts suggest markets are ready to move, the data comes out at a time when worries about trade talks between the U.S. and China are also an issue. Markets plummeted Thursday on concerns a deal may not be done by the March 1 deadline to avoid new tariffs.

Exports

Weekly export inspections for the week ending January 31 provided another mixed bag of data, as soybean and wheat inspections ticked slightly higher from the prior week, with corn totals easing slightly. One lingering question in the wake of today’s data is whether USDA will adjust its forecasts in Friday’s supply and demand report, according to Farm Futures senior grain market analyst Bryce Knorr.

After the partial federal government shutdown that lasted more than a month from late December through January, USDA has resumed its weekly export sales report, releasing data that is still several weeks behind. Grain markets largely ignored this morning’s report, but prices shifted slightly lower in its wake.

USDA

Due to a lapse in federal funding last month, USDA did not release its January World Agricultural Supply and Demand Estimates (WASDE) reports. But traders anxiously awaited the agency’s February release, which finally came out Friday morning. The latest supply and demand report had plenty of data for traders to chew on after USDA reports that showed smaller corn and soybean crops but held few big surprises. Markets were mixed immediately following the report.

Deep Dive

For all the hoopla headed into today’s USDA reports, the government’s first reports of 2019 didn’t produce much in the way of excitement. Corn and soybean crops are smaller, but carryout estimates didn’t go down much due to weaker demand. China trade talks and potential for yet another government shutdown still loom over the market, which now tries to pivot towards spring planting intentions.

Market recaps

Grain markets are firm this morning, recovering a little of Thursday’s losses as traders make final position adjustments before USDA releases long-awaited data delayed by the government shutdown. Reports on 2018 corn and soybean production, Dec. 1 grain stocks and winter wheat seedings dump at 11 a.m. CST in addition to the latest World Agricultural Supple and Demand Estimates.

The latest World Agricultural Supply and Demand Estimates report from USDA lacked any market-shaking data today, with traders continuing to dial in small changes after some light technical maneuvering following the report. Corn prices moved moderately lower, soybeans moved moderately higher, and wheat prices turned in mixed results to end the week.

Outlooks

Fertilizer Outlook - Adages from the worlds of finance and real estate are the best way to describe a fertilizer market with wide price disparities: “Time is money” and “Location, location, location.” Where you farm and when you plan to buy products could mean a differential of hundreds of dollars a ton in a market that could see key developments internationally this week.

Basis outlook - Whipsawing temperatures that seesawed from the polar vortex to spring-like made for difficult conditions moving grain last week. While the Arctic blast shut some terminals and elevators completely, good demand in many areas forced end users to strengthen basis to attract supplies they needed to feed livestock and fill barges and rail cars.

Energy/ethanol outlook - While most of the petroleum complex is trading near its highest levels in a couple of months, the part of the industry that matters most to farmers is headed in the other direction. Crude oil, diesel and gasoline all rallied this week, but ethanol lagged after production dropped to match its lowest level in more than two years.

Corn outlook - January’s USDA reports on production, grain stocks and demand are usually key turning points in the marketing year that make the first weeks of the new year a watershed. With this annual data dump postponed by the government shutdown, traders are trying to figure out if they dare risk moving on without the official metrics provided by USDA.

Soybean outlook - Officials from the U.S. and China decided to add a third day of trade negotiations to their meetings this week. But while the two sides are talking, silence from USDA could keep the soybean market on hold.

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