Missed some grain market news this week? Here's what Bryce Knorr and Ben Potter were writing about this week.
News from global financial markets quieted a bit overnight, allowing grain futures to focus on weather and trade in the aftermath of a mixed report from USDA Friday. Traffic is moving along the Ohio River again though flooding remains an issue as another storm heads towards the Delta. A drier forecast for the second week of the outlook was balanced by continued cooler than normal temperatures that could keep many fields too wet to work in the Midwest.
Markets are swirling this morning with key themes starting to come to a head. While negotiators from the U.S. and China work to hammer out a trade deal, the British Parliament is ready to vote on the latest Brexit plan as the March 29 deadline looms. That nervousness derailed a rally in Asian stocks overnight when trading got going in Europe, but the grain market is fighting to hold on to a rebound after sinking to new lows for the year Monday. Warmer temperatures threaten to melt a huge snowpack in the upper Midwest that could exacerbate flooding on an already soggy river system where traffic is finally moving again.
A cautious mood prevails across most markets this morning. Grain futures pulled back overnight, digesting some of yesterday’s big rally as traders braced for a wild day of weather that’s featuring everything from blizzards to floods from a hurricane-like storm on the southern Plains. Turbulence in other markets is not quite as severe but is still a factor confronting investors waiting for the latest news from trade talks between China and the U.S. and Brexit deliberations in the U.K.
Soybeans tried to extend their rally overnight, but the effort fizzled quickly when news broke this morning that any meeting between President Trump and President Xi of China to hammer out a trade deal may not take place until April. Soybean futures abruptly reversed lower, with U.S. stock index futures also seeing selling after Wednesday’s move to the best on Wall Street since last fall’s record highs. Worries about Brexit linger as well over a market watching turbulent March weather, including an unusual inland “hurricane.”
Grain markets continue to show signs that winter lows are in, with prices trending higher this week. Overnight trade is choppy in fairly narrow ranges as the first half of March goes into the books. Attention is turning to new crop thanks to flooding not only on the Mississippi River system but in the Dakotas and Nebraska as well following the inland hurricane, with a huge snowpack in the upper Midwest threatening more soggy conditions.
The latest batch of USDA export inspection data didn’t reveal much bullish news, as totals for corn, soybeans and wheat mostly mirrored the prior week’s mediocre results.
U.S. grain exports last week were mixed but mostly disappointing after a review of the latest USDA data.
Grain futures are narrowly mixed as a choppy overnight session heads down the homestretch. Markets moved higher this week trying to break out of recent downtrends with mixed success. Traders are trying to pivot to their annual acreage debate, while farmers in many areas make decisions on crop insurance today.
Spring doesn’t technically arrive for another week, and the 2019 planting season has a few weeks to go before it kicks off in earnest, but traders are closely watching widespread flooding across key production areas in the Midwest and Plains this week, spurring some additional technical buying that pushed grain prices higher Friday.
Basis outlook - The cash market for grain dealt with a lot of adversity this winter, with floods and snow still hampering traffic over weekend. But growers may ultimately have to deal with another type of flood, a surge of corn still in storage that must hit the market at some point in coming months.
Corn outlook - Farmers making final choices on what crops to plant this spring face a classic dilemma of risk vs reward. My analysis of rally potential based on supply and demand suggests corn has better chances than soybeans of offering a profit in 2019. But putting in corn requires far more cash flow in a year of tightening working capital. And when corn losses money it tends to lose a lot.
Soybean outlook - It’s hardly unusual for soybeans to play a waiting game in March. Seasonal trends for both old and new crop futures even in bullish years show the market has a tendency to trade in choppy, sideways ranges.
Wheat outlook - It was high time for the wheat market to move and it finally did on Tuesday. But bearish logic remains unchanged for this market unless fundamentals of supply and demand change radically in coming weeks. Make no mistake: The turnaround from contract lows is driven by short covering from funds that are bearish wheat.
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?
Energy/ethanol outlook - Diesel costs are following their normal seasonal pattern of tightening, extending a rally off December lows. While the cash market is taking a breather at the moment round $2 a gallon at wholesale Midwest benchmarks, don’t plan for any bargains unless crude oil heads south first.
Fertilizer Outlook - Mosaic Company today said it would trim phosphate production at plants in Florida and Louisiana this spring by 300,000 tons, the latest sign of turmoil in a fertilizer market plagued by poor U.S. crop profit margins and lousy weather.