Special Market Update
Grain Market Commentary
Tuesday, October 9, 2018
By Louis Kaelin and Joshua Vinzant, Account Representatives, The Andersons
There is an old saying that big crops get bigger and that appears to be the case with the pre-report estimates out ahead of the report. They are looking for an increase to both the corn and bean yields from the September report with corn going from 181.3 bpa to 181.8 bpa and beans going from 52.8 bpa to 53.3 bpa.
The USDA has increased the September to October corn yield higher 10 out of the last 18 years while lowering it only 6 times and keeping it unchanged twice. If these increases are realized, we would be looking at an extremely large carryout for beans at 898 million bushels which would keep soybeans futures in check with no news from tariffs to help drive the market higher. For corn the carryout would still be sub 2 billion bushels at 1.919 which is a reduction from last year at this time. But it feels like in bullish news in corn will be muted by the tariffs and burdensome carryout in beans. Overall the marketing outlook continues to look bleak in the nearby. While there are opportunities to sell grain in the deferred contracts at higher levels with Dec 19 corn futures trading either side of $4 in the last week.
The weather models are still showing large amount of rain in the 10-day forecast which is delaying harvest for much of the Corn Belt. It still appears though that the market is more focused on Thursday’s report more than delays in getting the crops out of the field. With that being said once the report news comes out and it is digested the market will again turn its focus back to the weather and harvest progress and yields.