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Ag Marketing IA

Now that we have digested the highly anticipated January USDA report and Phase 1 of the U.S.-China trade agreement has been signed, producers’ attention should focus on the 2020/21 crop year. There are both existing opportunities and challenges lurking ahead; we suggest producers ask themselves five basic questions as they lay the groundwork for their marketing plan.

Worries about the spread of the coronavirus in China are roiling markets around the world. But as so often happens, bad news can perversely be good news, at least for growers needing to lock in market-sensitive inputs for 2020 crops. Most fuel and fertilizer products are good values that may not last once farmers get serious about securing needs for spring.

The government influences price through USDA crop production, planting estimates, and grain stocks reports. I believe the impact to farmers on report days is increasing. Some believe we would be better served if the USDA discontinued reporting crop information. I do not believe this will solve the problem as private firms will fill the void leading to price discovery, disagreement and price volatility.

I have been in this business for 40 years, witnessing export business with the former USSR, Russia and China. I can assure you, it is not at all uncommon for something like Phase One to be followed by a market reaction that traps initial buyers of headline announcements. It is almost as if the post-announcement trade is hand-delivering a buying opportunity to the new large customer, as initial buyers are chased to the exit door during a long liquidation phase.

The month of February is a time when grain futures have a tendency to move higher due to various factors.  2020 looks to be a year with even more twists and turns in regards to pricing opportunities for your grain. Make sure you are confident in your marketing strategy so you can face whatever the month of February brings to the marketplace.

Market reports

Grain prices are mixed following optimistic trade data from China. Strong international demand boosted March corn futures prices Friday morning. Positive trade data released from China ended nearly two straight weeks of price declines for a short time overnight before opening what appears to be a ninth straight session of losses on Friday. Chicago and Kansas City wheat futures traded one to two cents lower overnight amid ongoing coronavirus concerns and lackluster trade data yesterday. The ICE Dollar Index was down 0.10% in overnight trading, helping March Minneapolis futures to gain a cent in afterhours trading.

Grain markets were mixed but mostly lower Friday, with soybean futures landing in the red for a ninth-consecutive session as traders continue to fret over the coronavirus’s possible longer-term impacts on Chinese imports. Wheat futures also sagged today, with some contracts losing as much as 1.25%. Corn futures firmed slightly, in contrast, buoyed by improving export prospects and some bargain buying.

Exports

USDA’s latest grain export inspection data showed mixed but mostly favorable results for the week ending January 23. Corn volume nearly doubled, and soybeans took a modest turn lower, while wheat fell to less than half of last week’s tally.

The latest export sales report from USDA, covering the week ending January 23, offered a mixed bag of results. Corn emerged as the most bullish factor in today’s report, climbing 23% higher week-over-week and topping the prior four-week average by 99%. But wheat sales dipped 7% from a week ago, with soybeans tumbling 41% lower week-over-week.

Four export sales have been reported this week. Japan, Mexico and South Korea bought corn while Egypt bought soybean oil.

CFTC

For nearly a decade, the Commodity Futures Trading Commission has grappled with setting limits on speculative positions in agricultural and energy futures markets. On Thursday, CFTC voted to approve a proposed rule on speculative position limits in futures and derivatives markets.