Grain Market Recap 9.1.17

Market Snapshot:

Mixed markets to start the new month and new market year.  Corn had a solid performance on Thursday but failed to follow through today.  One year ago yesterday, 8/31/16 was the low for December corn which provided just enough chatter and just enough of a reason for a short-covering rally.  Whether or not the lows from yesterday hold remains to be seen.  There is a long way to go before we get deep into harvest and have a solid feel for production potential.  Beans were able to rally to end the week, closing higher for the third week in a row.  New export sales announced this helped support the market.

Going forward, the market is still trying to estimate production potential in the US for this year.  Some private analysts have started releasing their yield guesses this week, ahead of the USDA on September 12.  If you remember, the USDA last gave us a 169.5 corn yield but the market has generally been trading something closer to 166 to 167.  The first look this week showed a range of 166.7 to 169.2.  Some are starting to think the Feds might not be too far off which could limit the upside potential on corn.  Bean estimates have also slowly increased with some estimates coming in better than 49 bushels per acre.  While this would probably pressure the markets as well, demand has been steady enough to give the market some hope.

Further confounding the grain markets are some very early looks at the acreage mix for 2018.  Here in the US one survey shows intended corn acres to be up something close two million acres while bean acres are projected to drop roughly the same.  The first look at South American acreage shows bean acreage will likely drop as well.  Yes, these are very EARLY estimates and are very likely to change between now and then, but they are factors to keep in mind as we evaluate marketing opportunities for both old and new crop.

Beyond the board, basis values have continued to very slowly improve.  The dramatic drop in futures through the last half of August brought cash selling to a hard stop.  As a result end-users were forced to slowly improve basis to keep grain moving and maintain ownership for production.  Supplies are still are plentiful nearby, keeping a significant carry in the market from old crop to new crop.  This is something to keep in mind for those who still have old crop grain left to unpriced.  With our harvest seemingly two to three weeks behind normal, there could be opportunity to contract old crop grain for early October shipment at new crop prices.  Of course, this opportunity could be short lived, and some nearby bids could even improve enough eliminate that carry.  Be alert and ready to pull the trigger for the right opportunity.

 

Aaron D. Ulland

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