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Grain market week in review - March 9, 2018

WASDE report out this week, export sales on three days and soybean price nosedive. (audio)

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

Monday, March 5

Shifting weather forecasts have the market in a bit of a muddle today, but futures are working off overnight lows. Soybeans couldn’t hold a higher open as rains moved into the central part of Argentina’s growing region. 

President Trump has proposed tariffs on imported steel and aluminum and there's concern other countries will retaliate, either by official or unofficial means. The announcement adds another level of uncertainty to NAFTA talks, which conclude today, Bryce Knorr says in his Monday Farm Futures podcast

Today’s export inspections data from USDA showed why predicting the impact of trade disputes won’t be easy. Soybeans providing a clear example of how murky the possibilities are. Total inspections were better than trade guesses at 36.3 million bushels, a figure that was higher than last week, last year, and the five-year average for the end of February. But China accounted for only 9.4 million bushels of the total, or barely a quarter. Normally the world’s largest importer takes 60% or more of the week’s total.

Wednesday, March 7

Turmoil from President Trump‘s tariffs reverberated through the markets again overnight after White House economic advisor Gary Cohn resigned in the wake of the trade moves. Soybeans, which often follow the whims on Wall Street, are testing a key support level, and corn and wheat are also lower as the trade gears up for Thursday’s USDA report.

Thursday, March 8, 2018

 USDA isn’t expected to make major adjustments to its forecast of 2017 U.S. ending stocks for corn, soybeans or wheat today. But after winter rallies, markets appear to be threatening a break anyway.

Grain markets were preoccupied with the upcoming USDA World Agricultural Supply and Demand Estimates reports, out later Thursday, but the agency’s weekly export sales report snuck in a positive round of data, especially for corn and soybeans. 

Grain futures traded mixed after USDA released mixed results this morning, cutting corn inventories more than expected but raising stocks of wheat and soybeans. Soybean and wheat futures slipped slightly following the report’s release, with corn prices adding more than 1% in late morning trading.

Friday, March 9

Soybeans are leading the market lower this morning on follow-through selling in the wake of a bearish export outlook yesterday from USDA. The government raised its estimate of leftover stocks despite very strong export sales last week. Corn and wheat are also lower.

Grain futures are lower this morning, dragged down by technical selling in wheat and soybeans following bearish reports from USDA Thursday. Crude oil is holding above $60, after easing this week on rising U.S. production and inventories.

Large export sales were reported on three days this week. Japan and unknown destinations took corn and China and unknown destinations took soybeans. 

Soybean prices took a nosedive Friday after news of higher domestic stocks and higher projected yields in Brazil triggered a major selloff, pushing most contracts down about 2.5%. Technical selling also got the best of corn and wheat prices, which also slumped in Friday’s session.

Thursday's World Agriculture Supply and Demand Export report found U.S. corn ending stocks were down while soybean and wheat ending stocks were up. He also watches world ending stocks and size of crops in Argentina and Brazil. 

May soybean futures were down 24 cents today. Wheat prices were down double digits too, Ben Potter said in his weekly audio.

Funds were heavy buyers of crop futures and options this week, a flood of money that kept rallies in place, at least until Thursday’s USDA reports. Here’s what funds were up to through Tuesday, March 6, when the CFTC collected data for its latest Commitment of Traders.

Market outlooks

Fertilizer Outlook – Nitrogen prices showed more signs of weakness on U.S. wholesale markets last week. But whether that move comes soon enough to impact spring retail fertilizer expenses for growers is still in doubt, especially with grain markets rallying.

Basis Outlook - If you ask farmers what price they wanted for soybeans, many likely would point to $10 – cash – as their goal. That price was achieved at many locations around the country last week and some farmers made good on their pledges, moving enough beans to weaken basis in some areas.

Corn Outlook - Corn growers enjoyed an outbreak of optimism last week at Commodity Classic that seemed unimaginable just a few months ago. But while signs are starting to align for the corn market, don’t let your hopes run wild. Continue to move old crop inventory, taking advantage of the rally on the board and firming basis, a combination that doesn’t always happen.

Soybean Outlook - After a $1.25 rally off Jan. 12 USDA report lows, the soybean market could be ready to catch its breath. If history is any guide, the respite could last through March before the bulls start trying to roll again. 

Wheat Outlook - Wheat’s nice rally added more than a $1 a bushel to winter wheat futures, taking prices up to some significant resistance levels on charts. Now the heavy lifting begins to determine whether the market has legs long-term. 

Financial Outlook - Wall Street welcomed Jerome Powell to his new job last month as chairman of the Federal Reserve by knocking 3,000 points off the Dow in just two days. Markets calmed down a little since then, but maybe not by much. 

Energy/Ethanol Outlook - The threat of trade wars provides worrisome headlines for farmers likely to be caught in the crosshairs of any disputes. But that’s the sell side of your business. The buy side needs to put on blinders and look for opportunities to take advantage of the chaos to lock in fuel prices.

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