Missed some market news this week? Here’s what Bryce Knorr and Ben Potter have been writing about.
Commodity markets gave back some of Monday’s rally overnight, with concerns over supply easing a little. Crude oil futures dropped a dollar a barrel following a 15% jump on the heels of drone attacks to Saudi Arabian oil fields. Grain futures also retreated, though Monday’s crop progress report showed mixed results for corn and soybeans. Lack of a frost threat over the next two weeks took some of the worry out of the market.
Turbulent markets calmed down a bit overnight in fairly low volume action that kept chart traders in control and maintaining current trends as futures wait for more news about 2019 production. Other markets are also fairly quiet ahead of today’s statement on monetary policy from the Federal Reserve.
Uncertainty is alive and well in markets across the board today, with events in energy and financials making grain trade look like an oasis of stability as farmers wait to see how big their crops are this year. Good weather into early October limited buying overnight ahead of fresh export numbers out this morning. Wall Street meanwhile continues to absorb news from a divided Federal Reserve while the energy market waits for the latest salvo from the Middle East.
News from the wheat market yesterday wasn’t especially bullish. Export sales were well below expectations, but the market was able to rally thanks to gains in Minneapolis. The slow spring wheat harvest on the northern Plains triggered buying helped by weather issues in other growing regions. Wheat continued to lead the market overnight with mixed results in corn and soybeans so far.
Combines aren’t rolling yet to harvest corn and soybeans. But many growers fear the worst as a difficult growing season winds down. While a few parts of the country escaped the ravages of floods, drought, heat and cold, growers posting Feedback From The Field last week remain concerned their crops won’t mature in time before killing frost hits.
Ahead of Monday afternoon’s crop progress report, analysts expected USDA to dock the corn and soybean crops a point each for the week ending September 15. The agency complied with soybean quality ratings but held corn ratings mostly steady this past week.
Farmers don’t build grain storage because they like the look of shiny metal buildings. Storage makes money, sometimes lots of it. Farm Futures long-term study of post-harvest marketing strategies shows clearly that long-term storage of corn and soybeans from harvest to early summer is the most successful way to add value to crops on average.
The latest round of weekly export inspection data, out Monday morning, didn’t have a lot of good news to chew on, according to Farm Futures senior grain analyst Bryce Knorr.
The latest round of grain export data from USDA, out Thursday morning, showed mostly positive results after corn and soybeans logged a solid round of sales. Wheat bucked the trend after slowing by more than 50% from the prior week.
Grain futures are mixed this morning with markets mostly holding gains this week in the wake of the Sept. 12 USDA reports. While export news is improving, lack of a frost threat to immature crops is keeping buying in check.
Grain markets ended a mostly positive week on a sour note today on a round of technical selling and profit-taking that kicked corn, soybean and winter wheat futures moderately lower. Soybeans suffered the steepest loss on news that a Chinese delegation scrapped plans to visit some U.S. farms earlier today. Spring wheat futures bucked the overall trend, moving modestly higher in the session.
Fertilizer outlook - A late harvest last fall and wet, cold conditions this spring disrupted fertilizer applications on 2019 crops. Delayed harvest this year along with potential for rising corn prices could make for another volatile year, especially for nitrogen. Adding further uncertainty is the weekend attack on Saudi oilfields, ratcheting freight costs and tensions higher in a region that produces much of the world’s fertilizer too.
Corn outlook - Most of the discussion about the corn market this year focused on supply. Historic late planting and record prevent plant claims were followed by a mix of summer weather that was too hot, too cold, too wet or too dry depending on where you farm and what month you’re talking about. But barring a significant change to production estimates, the market’s attention should turn to demand.
Soybean outlook - Everything has changed in the soybean market and nothing has changed. Yes, production is smaller, and better old crop demand added to the supply reduction USDA reported Sept. 12. But the bottom line of carryout is still too many soybeans thanks to demand that looks soft with or without a trade deal with China. That doesn’t mean the market can’t rally. And even if the board doesn’t finally produce a move over $10, growers have time to wait, at least for a couple of months.
Wheat outlook - USDA made no changes to its wheat supply and demand balance sheet in the Sept. 12 updates, keeping projected year-end inventories above 1 billion bushels. But wheat is trying to prove otherwise, and it has perhaps a little time on its side.
Energy/Ethanol Outlook - This summer I wrote about how the energy market seemed to be underplaying all the risk it faces from both man and nature. And at farm shows the past few weeks I talked about the wide range of prices depending on war and peace. Peace most certainly hasn’t broken out in the Middle East, and it’s not likely to any time soon. Attacks on Saudi Oil fields were a wake-up call to a market that had become complacent, thinking slowing world growth meant stable or lower prices ahead.