Market Commentary > Weekly Crop Commentary

Weekly Crop Commentary

Dec 06, 2019

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Lou Baughman - Region 1 Grain Merchant

News of China waiving tariffs on a few shipments of soybeans and pork as a goodwill gesture helped the markets early on this morning but lost some of its luster this afternoon. Does this news move us closer to a Phase 1 signing? I doubt it, the US job report this morning shows a decrease in unemployment which strengthens our economy, therefore, gives the President more confidence to push harder in the negotiations.
Export numbers were disappointing but were not surprising because of the short holiday week. Tuesday the USDA will come out with updated supply & demand numbers. Most analysts say the January report will be the one to pay closer attention to.

You have 19 days left, happy shopping!

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Steve Bricher - Region 3 Grain Merchant

We are now in the holiday season, and the grain markets seem to be on holiday also. The corn and soybean markets have been on a sideways to lower path for the last 2 months. We have not had any news to get them to perk up.

Cash corn prices have been in a 20-cent range since early October and it does not seem like they want to move out of this range today. Demand has been reduced and the end-users that need to buy seem to be able to find corn to keep running at this time as the harvest finishes up across the Midwest.

Cash soybeans have taken a 40 to 50 cent hit in the last couple of weeks as the trade issue with China has yet to be resolved and exports have been on the slow side.

We need to start looking at next year’s crop and get offers on the table if and when that market rallies. I believe anything above 3.80 for fall corn and 9.00 for fall soybeans will be good sales come next fall with a normal season. I know we do not have a clue what normal is anymore but trend line yield in corn and soybeans next year will have us with more than adequate stocks.

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Wes Bahan - Region 4 Grain Merchant 

Good afternoon and happy Friday to all. I hope everyone had a great Thanksgiving last week. This week was back to more of the grind in the grain markets. Bean basis continues to improve as better crush margins have processors bidding up to get beans bought. The futures markets have finally bounced a bit as the lows from early September seem to have held for now. The trade talks with China seem to be an ongoing process and this morning they announced they are going to be waiving some import tariffs on both beans and pork from the US. They too are seeing some increased crushing margins and it looks like the hogs numbers have leveled out, so these could be the reasoning for the waiver on the beans. Corn basis continues to be strong, but we have seen some leveling off the last few weeks. We are seeing some movement from the producers as they are checking quality. In this week’s energy report we did see another week of stronger ethanol production. To meet the USDA’s estimate, we need them to continue to ramp up the grind. Funds continue to hold short positions in both the corn and soybean markets and so far there has not been any news to cause alarm and make them cover. Brazil has seen some advantageous rainfall, and production looks to exceed last years at this time. We need to have the January crop report to add some sort of fireworks to this market.

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Ralph Wince - Region 5 Grain Merchandiser

Not available for comments.
 

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Melinda Ledley - Director Origination, Logistics and Risk Compliance

Grain prices continue to live in a fairly tight price range with Soybeans managing a 25 cent comeback this week as current trader sentiment for a China Deal is positive. The encouragement came from China announcing they would waive some tariffs on soybeans and pork. However, that action is self-serving as Brazilian beans are about 6 weeks away from being available for shipment and pork supplies continue to dwindle and prices soar in China.

Both sides of the deal continue to use the media to wage last-minute threats and demands, while it’s believed that real progress is being made behind the scene. Next week’s actions will be especially interesting as we move closer to the December 15 deadline that President Trump has set for initiating additional tariffs against China. Producers appear to be taking advantage of the rally to get some DP beans priced, but forward sales from the farm, bin continue to be scarce.

A very strong jobs report has provided a boost to the stock market to begin today’s trade and the VIX, a measurement of investor fear, has also dropped to below 14. Ten Year Treasury rates are the best they’ve been for about six weeks today as they’ve climbed to 1.862%.

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Ed Nienaber - Vice President, Grain Division

It has been two weeks since our last market newsletter due to the Thanksgiving weekend holiday. The futures market has traded in a very lackluster fashion as trade war tariffs and impeachment talks have kept most traders at bay. Corn is unchanged on the board and beans are off a dime from recent highs. We have found some support today as news that China is considering easing of tariffs on bean products and pork as goodwill and sign of support to reach an agreement on phase one of a trade agreement. While Larry Kudlow is reporting that we are, “working around the clock to reach a trade agreement with China”. Very difficult to tell what’s real and what is “fake news”, you need a scorecard to keep up on the tweets. The basis continues to do the heavy lifting in the market place and keeping bushels moving to meet demand. Corn basis is seventy cents higher and beans fifty cents higher today vs. a year ago. With the large carry-over stocks that are predicted for 2020, the basis levels are very much territorial and have much to do with farmer selling practices. Basis levels in Ohio should remain strong, however, the market is working on and is seeing bushels moving from the west to the east to meet demand. Keep an eye on new crop prices as we move into the winter months, continued talk of +94M corn acres being planted this spring is adding to the pressure in the corn futures market. The southern hemisphere will begin to harvest beans in the next 60 days, and they haven’t experienced any real weather issues and should see a bumper harvest. The next USDA crop report will be Tuesday, December 10th and we may see some adjustments to 2020 carry-over stocks. The first of the BIG3 USDA crop reports will be on Friday, January 10, 2020, and hopefully, we will see production adjustments on this report for harvest 2019.



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