Missed some grain market news this week. From Bryce Knorr's morning audio, to Ben Potter's latest afternoon report, we've got you covered.

Morning audio by Bryce Knorr

Grain markets are mostly a little softer as overnight trading winds down, digesting last week’s rally. While remnants of Tropical Storm Sergio move through the U.S. from the southern Plains to the Ohio River Valley, other areas should begin to dry out from heavy rains that closed traffic on the river system and kept farmers out of the field. Financial markets are still stormy after last week’s volatile trade, as Wall Street tries to provde selling was just a normal correction.

Soybean futures rallied sharply Monday on a strong week of export inspections and news China loaded out two shipments from the U.S., the first in more than a month. But soybeans retreated overnight, giving back some of the advance despite deterioration in crop ratings last week caused by heavy rains that also delayed harvest and halted barge traffic on parts of the Mississippi River. But storms are also returning to Brazil, improving conditions for what could be another record crop.

Grain futures are mixed in quiet overnight trade. Corn and soybeans tried to firm following Tuesday’s pullback, though wheat found a little follow-through selling from bearish reversals on winter wheat charts. While weather remains drier for harvest this week, forecasts are turning wetter next week, which could keep harvest delays and yield losses a concern. Other news is quiet ahead of reports on crude oil and ethanol production out this morning. 

Corn and soybeans are lower again overnight thanks to better weather for harvest after very wet first half of October. But while dust flies in some areas, farmers face higher fuel bills for drying wet crops and running equipment. Another cost is also going up: the cost of money, as the Federal Reserve seems intent on raising interest rates despite no sign of inflation in the economy. 

Markets of all stripes from stocks to soybeans broke sharply on Thursday as traders headed to the exits. So far the angst is easing today, but not before the stock market in China set a new near-four-year-low. Weaker than expected economic growth in China was a reminder of the impact of the trade dispute with the U.S., which also hit soybeans Thursday with a poor export sales report. 

Feedback from the Field

A very wet start to harvest in the first half of October dampened more than fields. Crop ratings by growers reporting Feedback From The Field last week declined significantly, taking yield expectations lower as well.

ARC payments

USDA has released details of payments growers will receive under the ARC-County farm program, and as expected, fewer farmers are getting checks and those that do will be paid less.

Exports

Weekly export inspections for the week ending Oct. 11 were another mixed bag, with wheat slightly exceeding the prior week’s total, soybeans exceeding expectations and corn slumping moderately. Optimistically, China saw some activity last week, according to Farm Futures senior grain market analyst Bryce Knorr.

U.S. grain exports did not impress last week after the latest USDA weekly report showed corn and soybean totals down noticeably from the prior week, with wheat posting moderate gains. “While wheat bookings picked up a bit last week, new business in corn and soybeans was disappointing as buyers waited to see results from USDA October production, supply and demand report,” says Farm Futures senior grain market analyst Bryce Knorr.

Deep Dive

Argentina and Brazil have suffered through their fair share of geopolitical, weather and infrastructure challenges but have nonetheless emerged as two of the largest competitors of U.S. grain in recent years. What are the most critical factors currently in play? What are our South American neighbors doing to move the grain marketing needle? Get answers to these questions and many more in the latest episode of the Deep Dive podcast.

Crop Progress

The latest USDA crop progress report shows relatively slow corn and soybean harvest progress after plentiful rain and snow fell across the central U.S. this past week. Winter wheat planting progress also stalled during the week ending Oct. 14, with another 8% of the 2018/19 crop now in the ground.

Friday’s market reports

Grain futures are cautiously mixed today, reflecting the mood on financial markets that also took a beating this week. The Shanghai Composite Index is once again the barometer of choice, as it is seemingly every time the Chinese market melts down. The index broke to a new near-four-year-low today after the government reported weaker than expected economic growth. The index finally reversed higher after officials stepped in to urge calm.

More technical selling had corn prices down another 1% Friday, with soybeans taking on similar losses after facing two large export cancellations this morning. Wheat bucked the overall trend, fighting for small gains on a technical bounce after dropping three consecutive sessions earlier in the week.

Outlooks

Fertilizer Outlook- The Midwest is finally starting to dry out from heavy rains in the first half of October that have farmers worried about damage to crops still standing in the field. But the deluge also disrupted the fertilizer industry, feeding more gains in prices this week as the rally in nutrient costs continues despite a hiccup or two.

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. 

Energy/Ethanol Outlook- There’s one bright spot to all the equipment parked on Midwest farms after heavy rains. Already high fuel prices would likely be even higher if farmers were running machinery long hours to speed through harvest. Cash wholesale diesel costs are down this week around 13 cents of highs from early in the month. That’s 5%, a modest pullback compared to the 10% slump in crude oil futures. 

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.