Weather whip-saw is the best description of grain markets this week. Each new forecast model is quickly translated to perceived potential yield loss in both corn and soybeans. Within a matter of minutes futures respond. The most dramatic example took place on Thursday when soybeans were trading higher at 11:00 am and by 11:30 there were down 30 to 40 cents. This trend is likely to continue for the foreseeable future, until a crop is finally considered “made.”
Also this week the USDA gave us a look at the updated Supply & Demand, incorporating the June 30 acreage estimates. Pre-report estimates showed corn carryout increasing 100 million bushels for 2015/16 and nearly 200 million for 2016/17. However, the actual numbers showed a slight decrease for this year and a mild 70 million increase for next year. As for soybeans, USDA figures came very close to analysts’ estimates. In the end, both corn and soybeans shrugged off the report and quickly refocused attention on the weather. Given the consistently strong export sales and shipments, it is plausible to think we will see soy carryout drop in coming reports, which should lead to a recovery in prices. As for corn, demand has been stagnant, potentially increasing carryout. However, there is stuff much skepticism of the current acreage figures leading some to believe carryout could yet slip lower.
Going forward, the day to day trade direction will continue to push fundamentals to the sidelines in favor of hourly weather forecasts and their implied production impacts.
Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity while we all start to focus on better weather and spring planting season.
If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. firstname.lastname@example.org
CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
This Material has been prepared by a sales or trading employee or agent of CHS and should be considered a solicitation. The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only. There is a risk of loss when trading commodity futures and options. CHS bases its recommendations solely on the judgment of CHS personnel.