August 11, 2018
Missed some market news this week? Here’s a look back.
Monday, Aug. 6, 2018
Soybeans and the rest of the grain market headed in different directions overnight. Wheat saw some follow-through selling after Friday’s weak finish but is trying to reverse higher with forecasts for lower global production keeping the market firm. Corn also steadied, trading in a narrowing range ahead of Friday’s key production estimate from USDA.
While growers providing Feedback From The Field last week reported improving conditions for soybeans, corn ratings declined. Both crops remain average or better headed into USDA’s crucial Aug. 10 production estimates.
For the week ending August 2, grain export inspections yielded mixed results, with corn and wheat inspections sliding lower than the prior week’s results, as soybean activity picked up slightly. All three commodities ended at or above trade expectations for the week.
For a third straight week, analysts anticipated USDA would lower its corn and soybean crop quality ratings in its weekly Crop Progress report. The agency held firm in its ratings for two weeks, however, but finally dropped quality ratings lower for the week ending Aug. 5.
Tuesday, Aug. 7, 2018
Markets around the world are shrugging off a host of news headlines this morning that on other day’s might have rattled traders. But futures are stronger from stocks to soybeans despite tensions with Iran, Turkey and China and worries about Brexit.
Wednesday, Aug. 8, 2018
The Trump administration announced another wave of sanctions on China Tuesday, this one on $16 billion worth of imports. But the news didn’t rattle grain markets much as the trade focuses on USDA’s big report due Friday. More estimates are pointing to the good but not great yields found in our Farm Futures survey, 175.4 bushels per acre for corn and 49.8 bpa for soybeans. Futures posted modest gains across the board in a quiet overnight session.
Thursday, Aug. 9, 2018
News about tariffs again dominates headlines this morning, with U.S. moves against China on trade joined by sanctions motivated by policy concerns in Turkey and Russia. But investors and traders are showing ability to ignore the news flow, mostly. Corn kept steady overnight, while soybeans and wheat saw profit taking ahead of Friday’s big USDA reports.
With less than a month to go in the 2017/18 marketing year for corn and soybeans, those crops continue to post solid results, staying in line or even ahead of USDA forecasts. Wheat has already started its 2018/19 marketing year, meantime, and continues to come in sluggish compared to the prior year.
Friday, Aug. 10, 2018
Grain markets are quiet as traders wait for release of USDA’s August crop reports at 11 a.m. CDT. Soybeans show a tendency to break following these reports but drier August weather could flip the pattern this year. Other markets show more anxiety due to trouble in Turkey that sent the U.S. dollar to its highest level in more than 13 months today.
Grain futures are narrowly mixed this morning on the heels of a choppy session ahead of this morning’s USDA reports. The government provides its first estimates of corn and soybean production based on surveys of farmers and their fields at 11 a.m. CDT, updating global supply and demand as well.
Private exporters reported sales to USDA on three days this week, the most activity in a single week dating back to May 23-25. Unknown was the big buyer, picking up about 12 million bushels of soybeans and 7 million bushels of corn. The Philippines took soybean cake and meal.
Grain futures broke sharply after release of bearish USDA reports, paced by heavy losses in soybeans Friday. Soybeans took the biggest initial hit, trending another 2.5% or more lower in the minutes following the August World Agricultural Supply and Demand Estimates (WASDE) report, with corn and wheat prices also trending lower Friday morning.
Friday morning’s World Agricultural Supply and Demand Estimates report held some bearish data – particularly for corn and soybeans – that triggered a major downward swing in grain prices to end the week. Soybean prices fell the hardest, losing nearly 5% in today’s session, with corn and wheat also losing 3% or more. Click here for a full rundown of the latest WASDE numbers.
More short covering by big speculators lifted ag markets this week – at least until Friday’s bloodbath in crop futures. Here’s what funds were up to through Tuesday, Aug. 7, when the CFTC collected data for its latest Commitment of Traders.
Soybean Outlook- A buck a bushel rally is nothing to sneeze at. But the July bounce in beans is cold comfort for growers still staring at losses of that much or more on their 2018 crop. While there’s upside on the chart if futures can hold the rally, getting prices back to profitable levels looks like a long shot.
Corn Outlook- USDA releases its first estimate of production based on surveys of farmers and their fields Aug. 10. If our latest Farm Futures survey is right, a crop of 14.362 billion bushels would fall nearly 475 million bushels short of demand. Stocks would tighten over the next year, raising average cash prices and creating potential for rallies back to profitable levels for the average grower. This week’s supply and demand model puts the projected selling range at $4.27 to $4.63.
Fertilizer Outlook- Growers didn’t have long this summer to snap up whatever bargains were available on a fertilizer market that appears to be making a seasonal move into fall. A three-year high in wheat prices coupled with stronger markets for soybeans and corn internationally appear to be turning the mood in the nutrient complex around.
Wheat Outlook- For years the wheat market stagnated waiting for a single trigger: A sharp reduction in global production. That worldwide event finally occurred this year, lifting prices to four-year highs.
Energy/Ethanol Outlook- In July I recommended using a dip in the energy market to lock in propane for fall drying and step up diesel coverage to two-thirds of harvest needs. Despite a modest pullback in crude oil Wednesday, those prices look cheap compared to where the petroleum market is at today. For buyers needing fuel, bargains may be hard to come by. And the pain at the pump could continue into 2019.
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