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Mid-Week Grain Comments


Another week into the harvest and this week’s story is almost a mirror image of last weeks’ as elevators across the US are trying to accommodate the record yields. As progress moves through the last 50% of harvest making space will become even more difficult. Clear weather is expected in our area through most of Friday.

The stock market selloff continues to keep traders on edge and confidence is shaky and concerns linger over interest rate hikes.

US soybean ending stocks are currently projected to be 885 million bushels. This is almost a 21% stocks-to-use ratio. The last time we saw the ratio above 20% was in the 1986-87 marketing year. The marketing year average cash price at the farm level that year was $4.68 per bushel. Demand for US soybeans over the past five years has not kept up with the growth in production by 540 million bushels. On the world stage, surplus stocks are expected to reach a modern-day record high 31.2% stocks-to-use ratio as South American production increases. USDA currently projects combined Argentine and Brazilian production to rise 731 million bushels this season. Early planting progress in Brazil means that new-crop supplies should be available at the ports by mid- to late January. All this means the window for the US recapture Chinese business is smaller than normal. From a price standpoint, US beans can work into China today as cheaply as South American beans, but Chinese buyers are fearful of governmental retaliation if they do business with the US. There is talk that Trump and Xi may have a small side meeting during the G-20 meeting in Buenos Aires at the end of November. The trade will be closely watching for signs of US/China progress in the period between the Mid-term US elections and that G-20 meeting. If the trade war does not get resolved or make progress by then and extends for longer the markets job will be to be sure that US farmers plant significant less acres of soybeans in 2019.

November 2019 soybean futures continue to hover above $9.00 and December 2019 corn futures are hovering at $4.00. South American and US weather are always the wildcard but I believe producers should be watching these values closely.