Closing Markets: Corn: +6.25.
Beans: +11.12. Wheat: -0.25.
Good evening!
Market Recap-
Corn and soybean markets finished Thursday on a strong note, with both markets scoring new highs for their respective moves during the day before closing near these highs by the final bell this afternoon. There will likely be a little bit of last minute position squaring tonight and tomorrow morning ahead of the USDA's 11am data dump, but otherwise, with volume being on the heavy end today, it would appear most in the trade have got their bets placed and are now just waiting to see what kind of numbers the USDA will bestow upon us tomorrow morning. In our opinion, due to the sheer breadth of data and the amount of time spent in the proverbial dark the last several weeks, you can pretty well take the trade estimates and throw them out the window; if traders/analysts have accurately pinned down all the adjustments the USDA makes tomorrow then good for them, but we see this as highly unlikely. Buckle up and prepare for surprises.
Corn Summary-
Following what seems like weeks of maybe one or two talking points per day at best in the corn market, headlines were in abundance on Thursday as the return of the federal government late yesterday evening produced a somewhat unexpected and swift return pf regular USDA data, starting with this morning's weekly export sales update. We see the export information as largely a non-factor and would assume the cash market would've led onto any sort of notable business that occurred well before any of the China purchases began to be rumored. That said, whether it be simply the fact that data output has resumed or the fact that traders are bullish tomorrow's report, something brought additional money flow into the buy side of the market throughout the day today. As it pertains to tomorrow, we've long been a proponent of not trying to outguess trade estimates or what the USDA is going to print, but as we've done previous days this week, we would just continue to caution against assuming 100% for a fact that the USDA will make a sizeable yield reduction in the morning.
Soybean Summary-
Soybean futures continue to chug along, as the market seemingly took a week or so breather and has now shot right back out to new highs in anticipation of friendly demand numbers from the USDA tomorrow following what most are still assuming was a singed trade deal with the Chinese a couple weeks ago. This, more so than yield or production figures, is by far the biggest question mark for traders going into Friday. The USDA has long said they make supply and demand estimates based off of "policy in place", but this has become a big question mark with nobody seeming to know for sure what the current "policy" on US-China trade relations is. Furthermore, traders have continued to ask if the USDA's September export figure included any implied demand to China, and if it did, how much and where does that implied level stand now? We would also note that there's a world that probably exists where the USDA punts and says we're going to leave things close to unchanged again because we still don't actually have policy in place and have little other grounds to go off of in order to make an adjustment. How this shakes out is anyone's guess, but this, along with what shows up on the daily sales dump that was announced this morning, likely determines futures price direction into the weekend and next week.
Wheat Summary-
Not a lot to talk about in the wheat market for Thursday, as prices in Chicago closed on either side of unchanged and were not able to come along for the ride to the upside with the other markets as traders expect a bearish outcome out of tomorrow's report despite there not expected to be a lot of note that changes on the balance sheet. If production is adjusted higher, we see the path of least resistance from a price standpoint as likely being down, with there probably not a lot of friendly demand adjustments to offset the bearishness on the supply side if it shows up.
Outside News Headlines-
Crude oil stocks up 6.413 mil bbls to 427.581 mil bbls.
Weather Updates-
Weather forecasts this afternoon have continued to show mostly dry conditions remaining in place across the Midwest through the end of the week and weekend, while regular rainfall continues to fall across the western quarter of the country into next week. The northeast also looks to see rains Saturday into Sunday, while the models don't see precip returning to the Midwest until the middle of next week, with heavier rain chances seen for the region then towards the end of next week.
Longer range precip forecasts into the end of the month still show above average moisture potential across almost all of the US besides just areas along the west and east coasts, with areas along the Gulf and through the Mississippi Delta region still showing the best precip potential in the period.
The mid-day GFS model run has precip for southern Argentina over the weekend having slightly better coverage to the south than the EU model does, but otherwise the two remain in fair agreement on what looks to be another few days of dryness across the bulk of Brazil except for areas in the west and southwest, while heavy rains impact Paraguay/Bolivia and other areas to the west and north into the first part of next week.
Enjoy it!
Noah Richardson
Topflight Grain Seymour
202 N Main Street, Seymour IL 61875
nrichardson@tfgrain.com
www.topflightgrain.com
