Missed some market news this week? Relax, we’ve put it all in one place for you to review this weekend.

Morning audio by Bryce Knorr

Wheat posted modest gains after frost in Western Australia last week added to the woes caused by El Nino in the eastern part of the continent. Corn and soybeans lost more ground, hovering just above last week’s contract lows as financial markets brace for new tariffs on China.

New U.S. tariffs against Chinese imports are set to go into effect next week but will start at just 10% before ratcheting higher at the end of the year. While China has made no official retaliation yet, stock markets around the world are mostly higher today. Crop markets mostly ignored the new sanctions too. Corn and soybeans focused on big crops despite damage from Hurricane Florence, making new contract lows overnight.

China as expected reacted to new U.S. tariffs with retaliatory measures of its own against U.S. products. But so far markets around the world appear to be taking the ratcheting higher of the trade dispute in stride. Corn and soybeans recovered from Tuesday’s contract lows, boosted by more buying in wheat. 

Normally a weakening dollar tends to be positive for commodity prices, and a slump in the greenback gave crude oil another boost overnight, keeping fall fuels expensive for farmers starting harvest. But the downturn in the currency didn’t help grain futures, which traded steady to lower. A top Chinese official announced plans to lower tariffs on imports – except from the U.S. – a reminder of the trade dispute between the two countries that shows no signs of easing.

A strong export sales report Thursday helped lift grain futures higher on short covering, but more positive price chart patterns were tested overnight. While soybeans continued to see some selling after a downturn in Asia, corn held on to gains. Wheat futures are also beginning to firm after breaking out of the August-September downtrend.

Feedback From The Field

Farmers reporting Feedback From The Field noted improved yields in September, though their assessments aren’t as optimistic as those from the government. While estimates so far remain above average, farmers put corn yields at just under 170 bushels per acre for corn, with soybeans at 51 bpa. USDA raised its average corn yield to 181.3 bpa, while soybeans rose to 52.8 bpa.

Deep Dive

Options are intimidating enough that only a minority of farmers even dabble with them. But what if it didn’t have to be that way? On our tenth episode of the Deep Dive podcast, we explain options and go through some of the basic strategies available to famers. 

USDA data

For the week ending Sept. 13, corn export inspections rebounded from the prior week’s lackluster results, while soybean and wheat export inspections slipped slightly week-over-week.

For the week ending Sept. 16, USDA has elected to keep corn quality steady, while docking soybean quality by a point, as harvest progress begins to accelerate for both crops.

Export sales saw a round of positive results for the week ending September 13, with corn nearly doubling its totals from the prior week, while soybean sales made moderate progress and wheat sales inched forward. 

Three export sales were reported this week. Unknown destinations was the largest buyer, taking 4.8 million bushels of corn, 8.9 million bushels of soybeans and 100,000 metric tons of soybean cake and meal. Mexico purchased 6.3 million bushels of corn.

Friday’s market updates

Grain futures are mixed this morning, digesting gains from Thursday’s rally. Better-looking charts and short covering, along with good export sales helped drive yesterday’s rally, which also found courage from a move to record prices on Wall Street. U.S. stock indexes are firm this morning following gains in Asia and Europe, with strength continuing to lift other commodities as well. Crude oil held its move above $70 despite a move higher by the dollar today. 

Ample export demand kept the corn rally alive Friday, with futures moving nearly 1.5% higher. The same couldn’t be said for soybean and wheat futures, however, which moved lower amid a round of technical selling after big gains were captured earlier in the week.

CFTC

Selling by funds usually isn’t positive for prices. But heavy pressure by big speculators following USDA’s bearish Sept. 12 reports set the market up for a short covering rally to end the week. Here’s what funds were up to through Tuesday, Sept. 18, when the CFTC collected data for its latest Commitment of Traders.

Outlooks

Basis Outlook- With prices well below break-even levels, record corn and soybean yields may be little solace for many farmers as harvest gets underway. Though bumper crops lower the cost of production per bushel, they’ll also challenge storage capacity in many areas, weakening basis in what’s already a depressed cash market.

Soybean Outlook- USDA’s September reports were about as bearish for soybeans as you can get. A bigger than expected increase in yields could more than double the amount of soybeans left over a year from now when harvest 2019 begins. 

Wheat Outlook- The wheat market can point fingers at plenty of reasons why prices struggled over the past month, from seasonal trends to the negative mood in corn and soybeans. But charts and perhaps fundamentals too suggest hopes for a modest rebound. 

Corn Outlook- The first half of September wasn’t good for the corn market, and that’s putting it mildly. After showing signs of life to start the month, futures ran into a bearish USDA report, and the negative news flow hasn’t let up much. While there may be light at the end of the tunnel, for now it’s pretty hard to see.

Energy/Ethanol Outlook- Growers needing fuel to harvest and dry big crops this year face higher costs, and fuel bills likely won’t get any cheaper in 2019. In fact, the only cheap fuel these days is the one farmers produce: ethanol. Prices for the biofuel remain near the lowest level since the corn-into-energy boom began more than a decade ago.

Financial Outlook– Bears may own the grain market right now. But on Wall Street, bulls are running. Both the S&P 500 and Dow Jones indexes soared to record levels on Thursday. Strong corporate profits and a 48-year low in jobless claims propelled Wall Street, despite angst over trade disputes, high energy prices, emerging market troubles and all-but certain interest rate hikes from the Federal Reserve.

Fertilizer Outlook- While fertilizer costs continued to edge mostly higher this week, the strong summer rally showed signs of cooling as fall begins. But growers still trying to book products for fall application – or hoping for a pullback this winter for spring needs – may see limited reductions if recent seasonal patterns prevail. Lower production of corn and wheat over the past year could support demand, even if U.S. crop prices are weak.