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

Morning audio

Markets rallied last week after positive comments by leaders in the U.S. and China buoyed hopes the two countries could find a way out of their trade dispute. But officials walked back those hopes quickly, causing nervous trading overnight ahead of U.S. elections Tuesday. So far losses in the grain market are light but threaten bullish developments on price charts.

Corn futures moved in a range of just a penny overnight, indicative of a market content to tread water– something many farmers are doing while waiting for fields to dry out or freeze over. Today’s mid-term election and the approach of another USDA crop report Thursday are more reasons for traders to stay quiet as well.

Results of Tuesday’s mid-term elections came in pretty much as expected, at least at the national level, returning divided government to Washington. Markets don’t necessarily see that as a bad thing, with the stock market poised for more gains today on Wall Street.

Grain markets are firm this morning on a day when traders have a lot of data to digest. One question mark is what USDA will do with its estimates for supply and demand. Though crops could be a little smaller here in the U.S., the trade dispute with China could cause the agency to lower its forecast of exports, too. China says it imported more soybeans in the first two months of the marketing year, but not from the U.S., of course. 

Red is a popular color on price terminals today. Most markets from stocks to soybeans are lower, with only safe havens like Treasuries and the dollar posting gains. Grain futures moved lower on fallout from yesterday’s bearish USDA report for soybeans, which slashed the agency’s forecast for exports due to China’s tariffs. That trade dispute is also on the mind of investors around the world due to worries about global growth fueled by problems in the world’s largest country.

Exports

Grain export inspections rebounded slightly from the prior week but still have plenty of catching up to do to match USDA forecasts.

USDA cut its forecast of corn and soybean production in Thursday morning’s World Agricultural Supply and Demand Estimates report, which projected tighter corn carryout but rising soybean inventories. Corn posted modest gains while soybeans sold off as a result.

Crop progress

This year’s U.S. corn and soybean harvests move even closer to completion, according to the Nov. 5 USDA Crop Progress report. The 2018/19 winter wheat planting progress is also nearly complete. 

Outlooks

Basis Outlook- To say China’s tariffs on U.S. soybeans haven’t exactly been good news for farmers may be the understatement of the year. But weaker than normal crop shipments this fall may give corn growers a chance to move some of their harvest early this year. With no surge of Chinese soybean buying to dominate export traffic, shipping slots are opening up for other crops. That’s helping to jump-start the seasonal rebound in basis for corn earlier than normal, and also boosting wheat bids in some locations.

Soybean Outlook- Good news for soybean growers was in short supply this summer and fall. But as harvest winds down at least a few glimmers of hope emerged. Don’t fall in love with the idea that the worst is over. Turning the corner on a bad market likely won’t come quickly, nor in time to help 2018 crop prices much. That doesn’t mean you can’t make a profit, strange as it seems.

Corn Outlook- The corn market typically has trouble extending an October bounce much into the November. But charts and fundamentals offer a few bits of hope the rally may have further to go in what’s becoming an unusual year on a couple of fronts. 

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: Growers betting a break in nitrogen prices for fall applications may have rolled snake eyes. Harvest delays could shift demand for ammonia into high gear, just another tender from India hit the market this week to firm costs.

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.

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.