Grain market still looking for direction

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field corn nearing harvest
(Farm and Dairy file photo)

It is September now, and what will happen in grain markets has happened. Now comes the time of year when it is hard to imagine any real change in prices as we finish the crop year.

There has been no talk recently of any real stress on the corn crop, for example. We had no extended heat period, no dry talk in the markets. The corn crop chugged on, and early ideas are for the crop yield to be even better than expected.

Locally, the soybeans look the best they have ever been, based on my nonscientific, roadside surveys.

For example, the field across from my house, on unimproved, untiled, thin Ashtabula County clay loam, is headed toward the best crop of beans I have seen in the 44 years I have been watching it. The parts the deer have not harvested will probably crank out 70 bpa.

The market mover this Tuesday morning, after the long weekend, is actually wheat. December Chicago wheat futures are now down 15 cents. The only real news is that the Russians have decided to not limit exports. Their exports set a record pace for the month of August. I am not impressed that this is all the reason for the drop, but maybe we are just looking for news, and this fit the bill.

No weather news

Certainly there is no weather news, and there has not been all summer. Well, no negative news, at least. The summer has been nearly ideal for most of the Midwest. Every week we hear of forecast rain and comfortable moisture levels. We never had any extended hot and dry period like sometimes stresses the crops. August has seen us with perfect rain and temperatures for filling the soybeans.

The good weather has extended the “bad” price picture. Big crops are getting bigger in forecast, and this is the third big crop in a row. The only difference between this year and last is that there are more acres of soybeans and fewer of corn.

The record corn yield will still make up the difference in the crop, so our carryout continues to grow. I don’t think the E-15 promotion is going to bail us out of this one.

Global news

With no weather worries, the market focuses on foreign trade news. For example, it was reported this morning that the Argentine government is planning a 10 percent export tax on wheat and corn, simply to recover some of the losses from the recent Peso meltdown. This is an attempt to counteract the effective cheaper price as expressed in dollars.

Soybean news has focused on American and Chinese difference that have resulted in lower soybean prices. Again this week there were losses in soybean prices. Those losses were blamed on disappointing progress in trade talks.

According to CHS Hedging this morning, our 2018-2019 soybean exports to China will drop to 84.67 mmt, down 10 mmt from last year. This is not actually as big as one would think, from the disastrous price changes. The biggest problem is not the volume, but the resulting price.

Compare this to the estimate that Brazil will send 71.06 mmt to China, and Argentina will send 7.5 mmt.

Last week our government announced the first round of compensatory payments to American soybean farmers in the hope that rural America will not pay for foreign trade decisions as they have in the past. (Review last week’s column for details.)

Looking at prices, this Tuesday morning we have December corn futures down a penny at 3.64. The recent high was at 3.88 1/2 the last day of July, so we have lost almost a quarter in a month.

November soybeans are now 8.40 1/2, down three cents. We were 9.22 1/4 for a high the end of July, and we had a low of 8.28 3/4 the end of August.

I guess the good news is we are 12 cents up from the end of August. The bad news is, we have seen a range of nearly a dollar in one month.

As I mentioned, this Tuesday morning sees us down 15 cents on December wheat futures, at 5.30 1/2. We had a high a month ago at 6.13 and a low of 4.90 in between. That pretty much defines volatility, and that much price change is unusual for this time of year.

 

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