Blogging by the Bushel
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Market Report

Wednesday September 5th, 2018

December closed down 3 at $3.65 ¼ and March 19 down 2 ½ at $3.77 ¼.  November beans closed down 6 ¼ at $8.38 and January 19 closed down 6 ¼ at $8.50 ¾. December wheat closed down 9 ¾ at $5.21 ¾ and July 19 closed down 8 ¾ at $5.53 ¼. Crude oil closed down $1.14 at $68.42.

The corn market raised a few eyebrows overnight, testing overhead chart resistance at $3.70. Traders during the day had other ideas, though, and the market spent practically all session trading a little lower. Synthetic “Turnaround Tuesday”, effectively undoing all of the prior day’s gains with a three cent lower finish Wed. Managed Money traders were viewed net sellers of the day and will likely head into tonight net short about 65,000 combined corn futures and options.

Yesterday, there was an over-abundance of news. Today, there was not enough. Early market weakness was likely precipitated by the reduction of rain coverage this week. The remnants of Tropical Storm Gordon are expected to impact fewer areas, though those that receive rain will get a fairly big soaking, still.  Starting Sunday in the west and Monday in the east, a drier weather pattern will occur and conditions for fieldwork should steadily improve. Temps are expected to remain above average for the time of year, with lows not expected to drop below 40 across the broader Midwest. Still some concern that recent storm activity could create some very spotty and very minor yield issues?  USDA publishes their first national harvest progress report next Monday.

Beans were back under pressure in an extremely light volume and light news trading session. An absence of fresh inputs leaves the market to focus on big crops and extremely burdensome supply which is expected to be highlighted and expanded in next week’s crop report. November soybean volume was half of what traded yesterday at just 52k which is the lightest volume for this contract since May the 25th. The light volume as an indicator that the market has checked out, unwilling to trade with too much politics and uncertainty that make it difficult to quantify risk and a farmer looking to store beans rather than sell. At these price levels with basis factored in you have beans that are trading with a $6 in front of the price in some northern cash markets and if we stay here, bean acres are going to take a significant cut in the spring. Even if the US and China come to an agreement, the size of our crop this year has compounded a bearish supply stat market to excessively burdensome that will require some extreme changes to crop rotation to fix, unless mother nature intervenes on the Southern Hemisphere crop this winter.

Weather forecast features rains moving out of the Gulf from Tropical Storm Gordon. The rains are expected to remain further south and east than the initial forecasts which is welcomed from the areas that received too much through last weekend. Next week a warm and dry pattern sets up for most which will allow fields to dry down and early corn harvest to pick up. Trade news was quiet but unlikely to remain that way. The Canadian trade representative is in Washington today to resume talks with the US and hopefully come to a trilateral agreement with the US and Mexico. This morning the US trade deficit reached a five-month high and an all-time high with China due to a combination of increased spending in the US and reduced exports due to tariffs on soybeans and airplanes. Tomorrow is the last day of the comment period for the additional tariffs threatened on $200 billion in Chinese goods so further escalation of the trade war with China appears likely. USDA crop report is next Wednesday and trade estimates are filtering across the wires.  Allendale farmer survey from late Aug pegged corn yield of 177.7 and beans 52.2 bpa. Informa reportedly will be out tomorrow.

The wheat complex was looking to try and rebound from its rough start to the week and enjoyed slightly higher price action throughout most of the night, but the evening ended with a thud and that pessimism resonated into the day. The offers in the GASC tender this morning were not favorable, and with the rest of the grain complex trading lower into the morning break, it made it that much more difficult for the wheat complex to find any footing once the day session began.

Despite what the Russian Ag Minister says, there are still many traders that feel at some point there will be a curb to Russian exports, and with that in mind, this year’s Russian wheat export program has been very front-end loaded. Just Tuesday the Russian Ag Ministry said their wheat exports are 60% higher when compared to this time last year. So, we were looking for Russian offers this morning in the GASC tender to be aggressive, lower than last week and plenty to choose from. They were all three. There were twelve offers this morning, with the lowest eleven all Russian. In fact, the lone offer that was not Russian was around $10 above all the Russian offers. In last week’s GASC tender, US SRW wheat was within $5.00 of what traded, but US HRW wheat was more than $45 out. With today’s purchase more than $6.00 below last week’s purchase, the US is just that much farther out. The positive spin to today’s GASC purchase is that it was only one Russian offer that was so cheap. All others were at least seven dollars higher. Maybe the Stats Can data can spark a rally tomorrow.

Anna Kaverman

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