Special Market Update

Grain Market Commentary

Monday, November 6, 2017

By Mark Rossol, Commodity Merchant, The Andersons

Grain markets continue in the recent ranges even as macro and fundamental factors start to creep into view. USDA releases an updated supply and demand table this Thursday and the analysts believe that corn yield will go higher while bean yields will stay the same to go lower. Anecdotal evidence supports this as corn yields have been very good across the board and bean yields have underperformed in many areas, especially the eastern belt.

The US Dollar has recovered over the last few weeks and that has kept pressure on all commodities, but maybe corn and wheat more so than beans. Corn continues to peg 3.50 in the December contract and our export prospects are still challenged today with plentiful global competition. Even Soybean exports have underperformed so far this crop year.

South American weather started out a bit worrisome, but has turned favorable in almost all growing regions, and despite the uptick in bean acres in Brazil, some are saying up 20%, soybeans continue to channel higher. The never satisfied demand for beans and its products, continue to support beans. Until a major chink in the armor of demand is seen, it appears support in soybean prices will stick around.

Wheat markets have been languishing and the US is starting to see an uptick in export demand, specifically in HRW. SRW export demand continues to be weak with some much low protein wheat available in the world today and large exportable surpluses in EU and Black Sea regions. Wheat is not as cheap as it was last year, but many are questioning if we have not set a floor in wheat for this year with a potential decline in US acres and a much smaller Australian crop than a year ago.

I believe crude oil is also providing some support to our markets with WTI prices not seen since July of 2015. There is major political instability in Saudi Arabia over the weekend as the crowned prince went on what is being called an anti-corruption spree by arresting other high ranking princes and officials in what is seen as a consolidation of power. Some media outlets are even saying Saudi Arabia could be on the brink of civil war.

The only other major piece of recent news is the Commitment of Trader report that was released this past Friday that showed a near record managed money short in corn and a significant short in wheat. This could be providing some of the support in corn and wheat today but does not explain the strength in beans. Stay tuned for the Thursday report from the USDA to set price direction going forward. Volatility can be high in those reports so open orders are a safer bet if you have a price in mind to buy or sell these markets. Have a great day!