May 19, 2018
Missed some market news this week? Here’s a look back.
Monday, May 14, 2018
Grain futures are looking to weather forecasts and price charts for support this morning as they try to regroup following last week’s downturn. Hints that trade tensions with China may be easing gave a lift to soybeans overnight while corn tries to hold even as more storms move through soggy areas of the Midwest.
For the week ending May 10, corn, soybean and wheat export inspections all landed on the high end or exceeded trade expectations. Even so, the weekly rate needed to meet USDA forecasts is no cakewalk and may already be out of hand for wheat.
The latest USDA Crop Progress report showed corn planting vaulted ahead from the prior week’s total of 39% to reach 62% for the week ending May 13. That puts this spring’s planting pace nearly even with the five-year average of 63%. Trade analysts were expecting USDA to report corn planting at 59% complete.
Tuesday, May 15, 2018
Grain futures firmed quickly overnight following lower opens, extending Monday’s rally with modest gains this morning. While corn and soybean planting progressed rapidly last week, northern states continue to face slow going with more storms due by the end of the week. Hopes for easing trade tensions with China are also in play as high-level officials from the two countries meet in Washington.
Have you ever wanted to learn more about spreads? In this inaugural edition of “Deep Dive With Bryce and Ben,” you’ll get that chance. Each week, we take an in-depth look at important grain market topics that require a little more attention than they typically get.
Wednesday, May 16, 2018
Grain futures are mixed this morning after fairly quiet trade overnight. Corn and wheat tried to break out of downtrends but soybeans struggled as a large Brazilian crop and trade friction with China continue to hang over the market. Wheat’s gains are coming despite rains over hard red winter wheat fields this week and a dollar that surged to new highs for the year.
Thursday, May 17, 2018
Grain futures are higher this morning with news flowing over the wires a bit more positive around the world. Investors breathed a sigh of relief on reports Italy’s new populist leaders won’t try to write down government debt as China and the U.S. try to hammer out differences over trade. Wheat led buying overnight after futures broke out of downtrends amid signs futures are confirming the slump in ag commodities is finally coming to an end.
Export sales for the week ending May 10 found generally favorable results for corn, which landed ahead of trade estimates, while soybean and wheat sales delivered subpar results.
Friday, May 18, 2018
U.S. sorghum growers were caught in the crosshairs of the U.S.-China trade dispute this winter when China imposed severe penalties on imports of the feed grain in retaliation for U.S. tariffs. China had stepped up its purchases of “milo” due to rising corn prices there, but the trade tiff choked off that business. China today announced it was lifting the penalty.fa
Grain futures are higher across the board this morning, getting a lift from news China ended penalties against imports of U.S. sorghum imposed earlier this year when trade friction began to heat up. Though sorghum is a small market the move gave hope sales of other commodities will improve, though it was unclear whether actual progress was being made in the trade talks.
The second and third export sales of the month were reported this week, the first since May 3, but the soybean sales were dwarfed by the cancellation of 35 million bushels of soybeans.
Grain markets finished the week with some newfound optimism after China’s latest move in its trade spat with the U.S. might signal easing tensions between the two countries. Wheat futures found the biggest bounce Friday, trending significantly higher on some weather-related production concerns in the Southern Plains.
Moods change quickly in the commodity market. Last week’s Commitment of Traders showed funds buying ag, even though they were already selling by the time the report came out. Today’s tally from the CFTC showed that sell, even as markets started to turn around today. Here’s what funds were up to through Tuesday, May 15, when the CFTC collected data for its latest Commitment of Traders put out on Friday.
Corn Outlook - USDA’s May 10 report won’t be the last word on the 2018 corn market. But the agency’s first estimates of new crop production, supply and demand should set the stage for rallies to profitable levels in coming months.
Wheat Outlook - USDA’s first estimate of winter wheat production wasn’t that far off the mark of what the market, myself included, expected. But lack of a bullish surprise has put wheat very much on the clock. With rains forecast to return to the central and southern Plains and winter wheat ratings improving, making the bull case will be hard unless problems with spring wheat develop.
Energy/Ethanol Outlook - Low production sometimes is the cause of higher energy prices, but farmers feeling pain at the pump this spring can’t blame supply. U.S. producers continue to push crude oil production to new highs on a weekly basis, and Midwest refineries operated at near-peak capacity last week turning out more ultra low sulfur diesel than ever before.
Basis Outlook — While there were still winners and losers this week as far as cash market basis goes, overall buyers were forced to raise bids as farmers remain busy with fieldwork. With futures prices starting to firm too, farmers should be rewarding a rally to lower risk headed into summer.
Fertilizer Outlook – While a slow start to planting squeezed fertilizer supplies in parts of the upper Midwest recently when farmers rushed to get caught up on fieldwork, spring has so far passed without a huge explosion in prices. Now the question is how low costs will go this summer. International nutrient markets weakened by rising production may find support well above last year’s lows if grain prices continue their pattern of stabilization.
Soybean Outlook - USDA provided the most possible bullish report for soybeans May 10. First the agency cut its forecast of 2017 crop stocks due to stronger crush. Then bean counters in Washington said new crop carryout would drop to 415 million bushels in the year ahead.
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