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Soybeans close week with double-digit losses

Market week in review: Wheat prices emerge with moderate gains for the week.

Missed some market news this week? Here's the news you need to catch up.

Ag Marketing IQ

The last two months are a reminder of the uncertainty that must be managed in your marketing plan. The price levels achieved this fall are a welcomed “care” package for balance sheets. When we consider the surprises USDA reports offer, the unpredictable weather impacts on crops in both hemispheres, and the uncertainty of world politics, marketing can start to seem like an insurmountable task. Producers need to develop a disciplined and defendable plan that combines marketing hope with marketing control. 

The 2020-21 marketing year is little more than a month old, so the optimistic world outlook has a long time to be proven right or wrong. Harvest is still underway in the northern hemisphere and won’t get going in South America for many months. USDA increased its estimate of non-U.S. corn production a little bit in last week’s report, though its forecast for demand also improved slightly. Basing price expectations on world, rather than U.S. metrics, is also not without risk. Both methods can miss the mark considerably. That’s a caution not to get too bullish.

The delayed start to the rainy season in the Center West region of Brazil has many wondering if it will be enough to send grain prices higher. Brazil as a whole has planted less than 3% of its expected soybean acreage. Mato Grosso has planted roughly 5% of its crop, but some of that may have to be replanted as most was seeded in hot, dry conditions while hoping for big rains that have not yet materialized. Further planting at this point without rain, could end up being counterproductive. 

A small bullish key reversal has occurred on the continuous monthly chart for the Minneapolis wheat futures. This bullish technical signal actually occurred during the month of August. Yet prices have not gained much value. This makes sense as the current fundamental factors for Minneapolis wheat are not bullish, yet that may change in the coming months.

Exports

USDA’s latest batch of grain export inspection report, out Monday morning and covering the week through October 8, once again held a mixed bag of data. Soybeans once again turned in a strong performance, moving moderately higher week-over-week and landing on the higher end of trade estimates. Wheat volume took a moderate step back, meantime, as did corn, which fell below all trade guesses.

It's been another busy week for exports. Mexico has been buying corn this week, with sales reported Tuesday and Friday for a total of 9.3 million bushels. China was also active in the market this week, taking both corn and soybeans. Last year at this time, Mexico was also buying corn.

In USDA’s latest weekly export sales report, soybean sales saw a moderate drop from a week ago but are still very robust. Wheat sales saw little change from a week ago. Corn sales were relatively disappointing after spilling 47% below last week’s tally.

Crops

The difference between the 2019 and 2020 crop seasons could not be more apparent now that combines are rolling through the fields. Last year’s rampant spring flooding left fields planted late and struggling throughout the season. This year’s crops were planted relatively early, in contrast, and despite a few rounds of severe weather, are being harvested more quickly than normal.

The U.S. soybean crop reach its final stages of maturity last week due in large part to warm and dry weather. As of October 11, 93% of the crop was dropping leaves, up 8% from the previous week and 3% ahead of the five-year average. Dry weather continues to plague growers with an Iowa farmer noting, “no rain in July and August. Less than four inches since planting,” in Feedback from the Field. An Ohio farmer observed yields that were “down 20 bpa from last year,” due largely to the lack of rainfall in the past couple months. Want to see your harvest progress stacks up against other growers in the country? Click here to share your crop updates via a short survey.

Recaps

Corn futures rose this morning on increasing export optimism to China, flirting with a 14-month high in overnight trading. Strong export loading paces to China boosted prices in the soy complex higher this morning. Wheat futures rallied this morning as dry weather across the globe reduced yield prospects in key wheat-growing regions, namely Argentina.

Corn prices tested modest gains Friday but faded as the session wore on, with spillover weakness from soybeans and harvest pressure setting the table for some technical selling. Soybean prices eroded steadily throughout Friday’s session, closing with double-digit losses after a round of technical selling and profit-taking. Wheat prices emerged from a choppy session Friday with small to moderate gains, as dry weather concerns triggered more technical buying.

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