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Market week in review: Uncertainty surrounding U.S.-China relations continues to weigh on market.

Compiled by staff

September 25, 2020

4 Min Read
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Missed some market news this week? We've got you covered. It's all here. Check out what our writers and bloggers had to say about grain markets this week.

Ag Marketing IQ

A price rally going into harvest! Some producers are looking at above average yields while asking, “what is driving this market?” The trade negotiating of the past few years is being realized along with a few other fundamental factors. I hope you are enjoying the higher prices and taking full advantage. How high is too high? No one knows. But for now, enjoy the ride!

Don’t look a gift horse in the mouth – especially one that could turn around and kick you in the head. A big late summer rally in the soybean market gives the typical grower a chance to lock in some much-welcomed profits, gains that looked impossible just a few short months ago. Thanks to a combination of lower yields and strong demand, the soybean outlook turned from red to black – at least for now.

Life is often about timing, and call options are no different.  With the power of hindsight, we know that If you sold part of your soybean crop ahead this year, this was the year to re-own those sold bushels on paper. If the best time to buy calls is when futures prices are at the bottom of the range, then the best time to buy put options are when prices are at the top part of their range.

Cattle futures have been trading in a very cautious uptrend since April. For the past month, prices have traded up this trending channeling line like a rock climber slowly scaling a mountain face; aware that at any moment the grip could be lost and the fall occurs. With the exceptional export demand and news of African swine fever being found in a wild boar in Germany, hog futures have been in an uptrend since August. Production is strong, well over year ago values, but because U.S. exports are also strong, the market can easily absorb the extra production levels due to the swift export pace.

These markets have been even tougher to figure out than normal. Fortunately, for all of us, we received a rally at a time when most of us didn’t expect it. A USDA report in August that most of us called bearish caused a $1.80 rally in soybeans and 60 cent rally in corn…heading into harvest…with rather large carry-out levels projected in that report of 2.756 billion bushels for corn and 610 million bushels for beans. Again…we rallied after that. Is that crazy or what? What can we learn from how this has played out?

Crops

USDA reports that 8% of the corn crop nationwide has been harvested through September 20 in its latest weekly crop progress report, out Monday afternoon. Texas (69%) and North Carolina (63%) are over the halfway mark. USDA’s soybean quality ratings held steady at 63% rated in good-to-excellent condition. The spring wheat harvest is nearly complete, moving from 92% a week ago up to 96%, which is right in line with the prior five-year average and moderately ahead of 2019’s pace of 84%.

Exports

The latest batch of grain export inspection data from USDA show a second week of declines for corn, soybean and wheat volume, although each crop stayed within the range of trade estimates.

USDA’s latest batch of export sales data, covering the week through September 17, showed mixed but mostly bullish results. Corn and soybean sales jumped higher week-over-week and exceeded analyst expectations, while wheat turned in much less impressive results.

It was another busy week for export sales, with China taking both corn and soybeans. Pakistan took soybeans and unknown was in the market for soybeans, corn and soymeal. Last year at this time was also in export sales, with China and Mexico in the market.

Recaps

Strong exports underpinned slightly higher corn prices this morning as traders take a break from the week’s sell off. Prices in the soybean complex wobbled this morning as Chinese demand fought to overpower steady harvest paces. Rains replenishing soil moisture levels in Ukraine and Argentina largely offset higher Russian export prices in the wheat complex this morning.

Grains were mixed but mostly higher on an uneven round of technical maneuvering. Corn and soybeans finally overcame four consecutive sessions of losses, tacking on small gains in a choppy session Friday. Some bearish fundamentals are still in place, including harvest pressure and uncertainty surrounding the state of U.S.-China trade relations. Most wheat contracts dropped 1% to 1.5%, in contrast, on lingering concerns about U.S. export competitiveness (or lack thereof) on the world market.

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