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Grain market week in review - Oct. 6, 2017

Grain markets have traded in a narrow range this week as the trade waits for next week's WASDE report.

Missed some market news this week? Here’s a look back.

Monday, Oct. 2

Grain futures are starting a new month with selling across the board. Short covering from Friday’s USDA stocks reports for corn and soybeans ended quickly, with commodity prices weakened by a stronger dollar.

Corn and soybeans rallied on Friday following the Grain Stocks report, putting pressure on farmers to sell, Bryce Knorr says in his weekly Monday Morning Market Update

One of the persistent questions about the growing season of 2017 is how highly variable weather will affect yields. Now, even farmers’ opinions are showing the same inconsistencies as they continue to report everything from boom to bust in Feedback from the Field.

Wheat export inspections for the week ending Sept. 28, with 25.4 million bushels, were well ahead of last week’s totals and outflanked the trade estimate of 11 million to 18 million bushels. USDA corn export inspections were more even and in line with expectations. Soybean export inspections were 32.9 million bushels, coming in lower than last week and just below the average trade guess.

According to the latest crop progress report from USDA, U.S. farmers more than doubled their progress for the 2017 corn harvest in the latest week. A total of 23% of the crop is now harvested, up from 11% a week ago. Overall soybean good-to-excellent ratings remained steady at 60%.

Tuesday, Oct. 3

Slow crop development has one saving grace for some producers: Corn and soybeans are still in the field rather than clogging a cash market that’s already a mess due to problems on the river system. Closure of a lock and dam on the Ohio River Monday added to problems from low water that affect everything from fertilizer moving upstream to grain barges trying to head south into export markets.

Wednesday, Oct. 4

Slow development of crops delayed harvest this fall, and now rains in the western part of the growing region are adding to delays. Futures were very quiet overnight, reflecting markets waiting to see just how big 2017 crops are. In the meantime, volatility in the options markets plunged, making puts and calls relatively cheaper.

Thursday, Oct. 5

Trade overnight this week has been fairly quiet due to closure of markets in China for the Golden Week holiday, which also kept export news subdued. That should change quickly next week, with traders also looking forward to new USDA production estimates that could show larger corn and soybean crops.

Following the release of Thursday morning’s latest USDA Weekly Export Sales report, soybean prices found a modest boost of 4 cents. Meantime, corn prices were down less than 1 cent, while winter wheat prices slipped around 3 cents and spring wheat prices gained around 3 cents.

Friday, Oct. 6

Grain futures are drifting lower this morning, with soybeans giving back some of Thursday’s gains. Caution is evident into what for many will be a three-day weekend. Government offices close Monday for Columbus Day, though markets will be open.

Grain futures are mostly drifting a little lower this morning with light profit taking in soybeans spilling over to corn and wheat. Volume is thin ahead of the weekend, when rains could slow typical harvest hedge pressure. Markets are open Monday though some government offices, including USDA, close for Columbus Day, further adding to a light tone.

There were two export sales reported this week, as China took the week off to celebrate holidays. Mexico came through with a big corn purchase on Monday and unknown destinations made a purchase on Friday. A Chinese soybean sale was announced on Monday.

Corn hasn’t traded in this narrow a range since 2003 and soybeans since 2006, Ben Potter says in his weekly Market Update. There were only three export sales reported this week as traders wait for next week’s WASDE report. 

Grain prices caught a light lift on Friday over potentially widespread harvest delays as rain continues through weekend Midwestern forecasts. The latest extended forecasts show plenty of opportunities for additional precipitation between now and Oct. 13.

While harvest kept crop prices mostly in check this week, livestock markets are trying to turn a corner. Big speculators had a lot to say about these turns in the market. See the latest CFTC report gallery

Market outlooks 

Basis Outlook - Rain proved beneficial for basis from a couple respects as a tumultuous week in the cash market came to an end. The slow pace of harvest provided at least a measure of support for basis at a time when new crop supplies can overwhelm bids. More importantly, storms began raising water levels on the river system, cooling off a barge freight market that surged near record levels early in the week.

Fertilizer Outlook – Urea is normally the canary in the coal mine for nitrogen, leading the rest of the complex higher or lower. After a sharp rally from multi-year lows this summer urea is appearing to show signs another such turn may be near, taking prices lower. But growers still needing products now face another hurdle: problems on the river system that threaten shipments moving north. 

Soybean Outlook - The soybean market is known for fast moves. But action in the first full week of October has moved at a snail’s pace, at least for beans. The slow start to harvest is one cause. History is another reason for traders to wait. All this begs the question as to what happens once the market revs up again. 

Corn Outlook - Whether opportunities to hedge 2017 production come sooner or later could be known soon. Bryce Knorr offers a rundown of what to watch – and what to do about it.

Energy/Ethanol Outlook - The cost of harvesting, hauling and drying 2017 crops continues to move higher, driving by bullish factors and supply and demand in the petroleum complex.

Wheat Outlook - There’s no reason to believe the wheat market has potential for big gains into 2018. But it’s not time to throw in the towel yet on either old crop in storage or new crop planned for harvest next year. 

Financial Outlook - The cheap money party isn’t quite over yet, but the Federal Reserve has sounded “last call,” a move that could have significant impacts on agriculture.


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