Missed some market news this week? Here's what Bryce Knorr and Ben Potter have been writing about.
Global markets are bleeding red ink this morning, beset by worries about violence in Hong Kong and doubts about trade talks between the U.S. and China. Grain futures joined the downdraft after USDA’s monthly crop reports failed to deliver much in the way of bullish surprises. Most markets are open though federal government offices including USDA are closed for Veterans Day.
Sentiment in the market continues to change on almost a daily basis depending on the latest news on trade talks with China. President Trump speaks in New York today and traders are hoping he’ll have soothing words, because his negative comments over the weekend got the market off on the wrong foot Monday. With no news about the size of 2019 corn and soybean crops coming for two months, the market faces a lack of fresh insight that can make rallies difficult.
More tough talk on tariffs yesterday from President Trump bled over into stock market selling overnight as worries about a trade deal resurfaces. Soybeans held on to gains nonetheless, amid market chatter that Chinese buyers are back in the market this week despite ongoing confusion over how the government’s waiver of tariffs on U.S. imports is supposed to work.
Markets from stocks to soybeans are calm this morning. While that’s not necessarily a bad thing, it’s also keeping grain futures from rallying. With little news about supply until Jan. 10 USDA reports, moving markets depends on demand. Corn, soybeans and wheat all face a lot of competition around the world for a pie that isn’t growing.
Positive comments about trade negotiations with China Thursday sent stock index futures to new record highs overnight but the grain market failed to hold on to its gains as sentiment turned sour again on demand questions. Plenty of data will hit the wires on that front today, including reports on exports and crush that could change the market’s dynamic.
Export inspections for the week ending November 7 had more of the same themes running through the sector in recent months. Total soybean export inspections reached 48.9 million bushels last week, which was moderately below the prior week’s tally of 58.0 million bushels but still on the high end of trade estimates. Corn export inspections still failed to impress last week, with 22.1 million bushels.
Soybean export sales continued to outpace corn and wheat for the week ending November 7, as they have done for much of the young 2019/20 marketing year. China remains in the spotlight as the No. 1 destination – but not in the same role as it played prior to its ongoing trade war with the U.S.
USDA made a few adjustments to its estimate of corn and soybean yields in Friday’s monthly report. The agency’s latest take looks fairly close to the mark according to yields posted by farmers on Feedback From The Field. The average corn yield over the past month is right at 167 bushels per acre, the same as USDA. Soybeans are at 48.3 bpa, 1.4 bushels higher than USDA, which made no change for November.
The 2019 corn harvest is now two-thirds complete as of November 10 after making progress totaling 14% this past week, according to the latest report from USDA, out Monday afternoon. And 10% of this year’s soybean crop was harvested last week, bringing the total pace to 85%.
Grain futures are mixed this morning. Traders are focusing on demand data out today because supply news won’t be updated until the Jan. 10 USDA report. Farmers will have mostly dry conditions over the weekend before the next storm moves into the mid- and lower Mississippi River Valley next week.
Grains were mixed but mostly lower Friday, with soybeans finding the most upside on some light trade optimism and another healthy round of export data out this morning. But corn and wheat continued to slump, as lackluster export totals for those grains this past week set off another round of technical selling, dragging prices down another 1% or more in the session.
Basis outlook - Opportunities to sell corn on flat price basis may be on hold now that USDA’s November crop report is in the books. The agency’s production, supply and demand update didn’t provide enough bullish news to justify big gains, and futures could languish until the next and final estimate of the crop’s size comes out in January.
Corn outlook - USDA didn’t have bearish news about corn in its Nov. 8 production, supply and demand report. But the data wasn’t all that positive, either.
Soybean outlook - I wasn’t expecting USDA to give the market bullish news on Nov. 8, and the agency didn’t. By holding its estimate of production unchanged and lowering usage for crush, the government raised carryout 15 million bushels, going against those in the trade looking for tighter supplies. Lack of bullish news puts the onus for rallies squarely on what happens with China. The good news on that front is that the world’s largest soy importer is buying. But how long that continues is the make or break question.
Wheat outlook - On paper, at least, the wheat market looks like it has room to run into 2020. But farmers still holding old crop winter wheat inventory should take a hard look at moving on anyway over the next few weeks, at least with the cash portion of their price. Once-large carries have evaporated as the crop remains mostly in the strong hands of hedgers. Basis has strengthened, especially for soft red winter wheat, where cash remains above option in many areas. Hard red winter wheat is also running at average to better levels despite large inventories of that class following good yields.