Missed some market news this week? Check out our grain market week in review to catch up.

Morning audio

Wheat led the market higher Friday after the first sale of wheat to Egypt in more than a year showed U.S. prices are competitive. Wheat tried to extend those gains overnight, gapping higher above its two-week downtrend, but started to fade those gains following good rains in Europe. Stronger basis in the export pipelines for corn, soybeans and wheat last week was also a positive sign as markets of all stripes from stocks to soybeans fight to get out of their funk. 

Soybean exporters are scrambling to make up for the loss of the market in China. The U.S. shipped soybeans to 26 different countries last week. The total included 2.5 million bushels to China, but the ship bound for China was diverted to Vietnam.

Soybean harvest is heading down the home stretch but most of the crop this fall is headed into storage rather than being loaded on barges. China’s tariffs on U.S. soybeans is spreading out the U.S. selling season rather than front-loading shipments early in the marketing year. The market provides both a carrot and a stick to move soybeans into storage. The stick is very weak basis, with the carrot being very attractive carries from November to deferred delivery in 2019.

Investors shed dollars purchased as a safe haven from the financial storms, and the weaker greenback gave corn and wheat a lift overnight. Soybeans saw a little selling following heavy deliveries today and more bad news from China. Another cargo shipped out to China was diverted to a new destination and two others have yet to unload, underscoring the need for other buyers to step forward in today’s export sales report.

Feedback From The Field

Corn and soybean harvest passed the halfway point last week of what was an unusual growing season in many areas. While reports to Feedback From The Field noted improved conditions from the prior week, even those with good yields cited highly variable results.

Exports

Weekly export inspections for the week ending Oct. 25 had some bullish news for soybeans, but corn volume last week was less than impressive, while wheat totals firmed slightly from the week prior.

Reminders of Chinese tariffs on U.S. farm exports are rarely far from the mind of the market, and the latest news today underscores that point once again. While weekly data on sales and shipments out today was disappointing, soybean futures surged more than 15 cents after President Trump tweeted he’d had a long discussion with Chinese President Xi on trade.

Crop progress

USDA’s latest crop progress report, covering the week ending Oct. 28, has plenty of harvest updates in store for spring-planted crops, along with an initial round of winter wheat quality ratings as the month of October draws to a close.

Outlooks

Energy/Ethanol Outlook - Strong demand from farmers burning through fuel stocks to power harvest machinery can make diesel more expensive in the fall. But thanks to a pullback in crude oil costs, fuel prices are falling despite inventories that dipped last week to the lowest level of the year.

Fertilizer Outlook - Improved prospects for fall applications muted the impact of the first cracks in what has been a solid rally in fertilizer prices since summer.

Basis Outlook- While average basis levels for most crops is still much weaker than normal due to large supplies, changes in the cash market varied widely across the U.S. this week. Some parts of the country enjoyed strengthening in the face of typical harvest pressure seen elsewhere. 

Soybean Outlook- Soybeans could be on the brink of extending an unusual harvest rally. But while there’s hopes for a modest short-covering push, history says those hoping for more will be disappointed.

Wheat Outlook- After trading in narrowing price ranges for much of September and the first part of October, the wheat market appears to have finally made a decision. Futures in all three markets moved out of trading ranges, raising hopes for another leg higher. 

Corn Outlook- Be ready to sell when you can lock in a profit, regardless of where prices may be headed. Risk remains too high to lose sight of that objective. 

Financial Outlook– If you took Econ 101 in college back in the day, your textbook likely was written by Paul Samuelson. The first American to win the Nobel Prize in economics was famous for his quote about the stock market’s usefulness as a forecasting tool: “The stock market has forecast nine of the last five recessions.” It’s a line worth remembering when trying to decipher what all the gyrations on Wall Street mean for your farm business.