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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 prices rally to end the week

Grain market week in review: Trade optimism, crop-damaging storms send corn, soybeans and wheat higher

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

Audio

After a mild start to fall, cold weather moves into the Midwest this week, bringing threat of freezing temperatures over much of the western Corn Belt later this week. Grain markets don’t appear concerned despite late-maturing maturing crops, instead focusing on USDA’s updated production estimate due Thursday and trade talks with China set to resume this week as well.

Soybeans continued their rally overnight, getting a lift from a more optimistic tone as negotiators sit down for two days of trade talks in Washington. Reports China may be willing to make a small deal now that includes buying farm products helped soybeans add to gains from Tuesday’s weather rally. A hard freeze is expected Friday morning as far south as the Texas Panhandle with potential for damage in Iowa and Minnesota Saturday morning.

Grain markets were sleepy earlier this week but that’s definitely not the mood this morning as traders baton down the hatches for what’s likely to be a big storm – literally. With an unusually heavy October snow moving through the Dakotas and a hard freeze already as far south as western Nebraska, the growing season will end in the western Corn Belt this week, just as USDA releases updated production estimates at 11 a.m. And, while there’s potential for a small deal with China that could boost soybean exports, there’s also a chance the trade talks starting today could again fall apart, sending both sides back to their bunkers.

If you like to trade headlines there are plenty to choose from this morning, helping to firm markets overnight. An early blast of winter is ending the growing season in the western half of the Midwest, with heavy snow in North Dakota flattening crops. Trade talks in Washington could be headed to a small deal to boost buying of ag products and create a tariff truce as the second day of negotiations get underway. Grains markets continue to digest USDA’s surprising reports while crude oil eyes an attack on an Iranian tanker as Turkish troops advance in Syria.

Crop progress

Many growers suffered through a growing season that was anything but a fairy tale this year. But as harvest slowly advances farmers reporting Feedback From The Field last week described conditions right out of Goldilocks: Too dry and too wet for many, but for some just about right.

This year’s corn crop will go down in the record books as being notably late from planting through harvest. The latest crop progress report from USDA, out Monday afternoon, showed a slower-than-expected harvest progress of 15% as of October 6, up just four points from a week ago. Soybean harvest is faring somewhat better after moving from 7% complete a week ago up to 14%.

Market recaps

Grain futures are higher across the board this morning, led by follow-through buying in soybeans on the heels of Thursday’s surprising USDA reports. Traders are already moving past those numbers on what could be a crucial day for markets getting ready for a barrage of new headlines.

U.S.-China trade optimism, along with a round of crop-damaging storms raking across the upper Midwest, helped ignite a rally for grain prices Friday, with corn, soybeans and wheat all trending significantly higher. Corn and some wheat contracts led the way, rising more than 4%. Soybean gains were more modest percentage-wise, but prices still rose double digits.

Exports

The latest round of grain export inspection data from USDA, out Monday morning, showcased another decent round of soybean numbers, but didn’t otherwise have a lot of bullish news for traders to chew on.

The latest round of export sales data from USDA, out Thursday morning and cover-ing the week ending October 3, showed another strong round of sales for soy-beans, with wheat also climbing higher from a week ago. Corn, meantime, slumped to less than half of the prior week’s tally and analyst estimates.

Special reports

Thursday’s World Agricultural Supply and Demand Estimates report pushed soybeans higher, but corn and wheat prices dropped. The primary surprise was the agency’s soybean yield forecasts, according to Farm Futures senior grain market analyst Bryce Knorr.

Outlooks

Basis outlook - Soybean exports were missing in action a year ago as Chinese tariffs hammered shipments. But with Chinese buyers booking new cargoes and taking delivery on previous purchases, beans are again flowing in the export pipeline.

Energy/ethanol outlook - The energy market remains a ship navigating a sea of uncertainty. The only solid trend comes from agriculture, as farmers burn through more diesel to bring in 2019 crops. Otherwise, crude oil’s attempt to put in a bottom continues haltingly, in part due to uncertainty about where the global economy is headed.

Corn outlook - If you caught my presentations on the farm show circuit this year, you heard me pound home the point that I also wrote about over the summer in Farm Futures: Markets in years with late planting may need time to rally, waiting until the size of damage becomes clear with results off the combine.

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