Closing Markets: Corn: -11.25.
Beans: -22.50. Wheat: -8.50.
Good evening!
Market Recap-
Happy Friday. Ag markets ended the week on a negative note this week in what seemed to be a bit of exhaustion selling, as the USDA's reports weren't friendly but also weren't necessarily as negative as price action into the close would've led one to believe. With the US crop now more or less or known and sales data from China over the last few weeks now mostly out in the open, traders this afternoon are asking 'what now?' Did rallies over the past month+ possibly go too far, too fast, or will funds look to continue adding to the long side of the market amid a return to inflationary fears? Today's update helped answer some of the questions pertaining to the supply side of the balance sheet, but gave little in the way of insight into how demand will shake out over the course of the next 6-8 months.
Corn Summary-
Corn futures wiped out most of the week's gains made in the last few sessions on Friday, as traders hit the sell button in abundance following the USDA's 11am data dump. All things considered, a 186 yield and 2.2 bil bu carry out could've pushed prices to a lot worse than 10 or 11 cent losses, as both were closer to the upper end of trade guess ranges than not. We would also mention that there was quite a bit of chatter going into the report surrounding cuts in both ethanol demand and export demand, and neither of these ended up occurring; if the USDA makes these adjustments later down the road, ending stocks would seemingly have room to swell further with there likely to not be a lot of production loss seen between now and January. Looking at the big picture from a price standpoint, even after today's sell-off the market is still trading in the same range it’s been in for the last two weeks, meaning we really haven't changed a whole lot. The highs made the last two days represent a new top end number, but otherwise, we see the 4.25-4.35 area likely to again contain the bulk of the market's action into next week.
Soybean Summary-
The soy complex sold off into the weekend on Friday, though the numbers seen in the USDA's report really weren't all that overly bearish. Ending stocks went down, the average farm price went up 50 cents, and exports were trimmed but not by as much as some feared, yet prices still tanked perhaps on the news that wasn't seen. One possible explanation for the sell-off could be that traders were disappointed in the quantity of sales that showed up to China on the daily catch-up list, but we would argue that if you thought China bought much more than what was announced you were blatantly ignoring hints and signals from the cash market that indicated all along that the market was perhaps getting ahead of its skis. Otherwise, we see little else to point to out of the data that came out today that would justify the market reaction. Like in corn, the big question here is what happens now, and at this point we would say this depends on what China's demand looks like over the next 6-8 months, which is much the same answer as it was coming into today.
Wheat Summary-
Wheat futures sold off to end the week in sympathy with the rest of the space and as global production figures ticked up in a number of areas around the world. The US side of this morning's WASDE update had little to offer either side of the proverbial aisle, but here too, we see the selling as also possibly related to what data the market didn't end up seeing, as we assume traders see the one singular wheat flash sale to a destination not named China during the government shutdown as disappointing. That said, also like the other two markets, the sell-off this afternoon still didn't do a lot of damage to the charts, leaving direction into next week up in the air a bit; if today was a profit taking clear out, uptrends could easily resume next week.
Outside News Headlines-
Crude oil futures up $1.10+/bbl.
Weather Updates-
The next couple days of weather across the Midwest will likely stay warm/day, before temperatures cool back off again a bit Sunday and then into the week next week though still look to stay slightly above normal throughout most of the eastern half of the US. The west, meanwhile, will stay on the cooler side of normal through next week.
Rains will continue impacting the West Coast through the day on Friday and into the weekend, but moisture doesn't look to return to the Corn Belt or broader Midwest until a small system works through Monday/Tuesday, and then a bigger system impacts more of the area Wednesday/Thursday/Friday and into the end of next week.
Precip maps in the week two period are much like prior runs this afternoon, and continue to show most all of the US besides the far northwest and the East Coast holding in a wetter-than-normal bias into the end of November, as the progressive pattern in the upper atmosphere looks to continue parading low pressure systems through the country that allow Gulf moisture to regularly impact the central part of the US. Soil moisture improvement appears likely in these places, which are some of the driest across the country, into the end of the year.
Extended range temperature guidance into the end of the month remains in good agreement for the western part of North America, as both models show cooler air stretching from far northwest Canada all the way down into the southwestern US into the end of the month, but there continues to be disagreement on the other side of the continent, where the EU model is continuing to keep eastern Canada and the northeastern US warmer than normal, while the GFS is seeing these areas turning cooler in the period, with warmth more confined to the southeastern US.
Weekend weather across South America looks to feature a rain event through the bulk of Argentina's growing regions beginning Saturday and running into Sunday before this moisture expands northward into southern Brazil and then west into Paraguay. Most of the central and northern regions in Brazil though, especially to the east, will be on the drier side the next couple days, before better rains are expected to fill back in here towards the middle of next week.
Week two precip forecasts then show Brazil continuing to receive normal rains through the northern and central parts of the country into the end of the month, while Argentina looks to stay wet through the western part of the country but dry in the east.
Enjoy it!
Bailey Runyen
Grain Originator | Topflight Grain Coop.
101 N. Main St. | Cisco, IL 61830
Phone :: 217-669-2141
Email :: brunyen@tfgrain.com
