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Grain Markets Update Week Ending 12-1-2017
Grain Marketing

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Market Overview:

Corn and wheat had u-shaped patterns to this week’s action as early selling in the week going into First Notice Day became renewed buying interest later in the week. Closing out the week corn and wheat managed a 4-cent advance while beans eked out a 1 cent gain.

With harvest all but done in a few minor areas, traders are turning attention to South America, demand inputs, and next year’s US acreage battle. USDA gave traders a first glimpse of what their economist’s think with the release of USDA’s 10-year baseline. USDA sees a modest uptick in both corn and bean acres with both pegged to be 91 million in 2018, versus 90.4 for corn and 90.2 for beans in 2017. This comes thanks to another year of declining wheat acres which are expected to be off 1 million to 45.0.

Turning internationally, Russia is expected to cut back on grain production in 2018, with wheat next year pegged to be only 77 MMT which would be off from this year’s 83 MMT number. Meanwhile in Australia heavy rains are expected to damage the soon-to-be-harvested wheat crop, which already was suffering from early season dryness. The crop could see as much as a 4 MMT downgrade in production as well as quality issues.

In South America, Argentina is expected to see some favorable rain over the weekend. However, it is not expected to be enough to widely change the dry spring planting environment. The long term outlook for South America still suggest below average precipitation and net drying for eastern Argentina and southern Brazil while rain continues in center west and center south Brazil and occurs periodically in western and northern Argentina.

On the demand front, corn has found a bid on rumors that China has been in the US market for 10 to 12 cargos, although no such deals showed up in Thursday’s export report. The holiday-shortened week did no favors for export demand as corn and wheat sales were well below expectations. Soybeans did manage to hit expectations but still came in less than 1 MMT of fresh business. Overall, export business continues to be light in the face of huge stockpiles which could suggest problems for any rally attempts in the market.

 

National Cash Market:

In the cash markets, FBD for corn brought some strength as grain buyers rolled into March, giving back some of the wide 14-cent carry out to March. On the week corn managed a 3-cent basis gain while beans were up 2.

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The end of harvest has certainly helped give some strength to cash markets of late. However, weak export markets for beans has helped stymie some of the lift in the bean market. At the US Gulf bean basis is tracking 10-cents lower than last year at this time.

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End user markets continue to be bolstered by slow farmer selling but the ability to get substantive gains seems capped as pipeline supplies continue to be flush.

 


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