Weekly Market Wrap-Up
Grain Market Commentary
Friday, May 12, 2017
by David Gleason, Associate Merchandiser
Grains had a mixed week after we saw the latest WASDE estimates here earlier in the week. The WASDE was mostly neutral with only minor changes to old crop and new crop tables coming in fairly similar to the AG forum earlier this year. The dollar rallied this week on supportive employment numbers. Oil found a bottom and is rallying back up to resistance around $49.00 a barrel. Going forward we’ll see a new WASDE out on June 9th. The next big report after that from the USDA is going to be the June 30th report where we’ll get a better look at US stocks, acreage, and prevent plant numbers.
December corn opened the week at $3.87 ¼ and closed the week out at $3.88 ¾. Initially after the report on Wednesday the market spiked up 6-7 cents before trading lower and rallied into the close. The week closed out just below the 100 day moving average. Farmers are still steadfast holders of old crop stocks. Basis across the country is responding and will likely keep very similar cash prices to numbers seen in the past few months. The biggest surprise in the WASDE report was a significant reduction in 17/18 world stocks. We saw nearly a 20 mmt reduction in old crop corn stocks year over year. The majority of the reduction is the expectation for China to reduce stocks. China is sitting on massive corn stocks and will need to liquidate as qualities are probably fading. China has added additional processing capacity and plans to add more over the next few years.
November beans opened the week at $9.63 ¼ and closed the week at $9.59 ¾. The WASDE estimated ending stocks at 480 million bushels for 17/18 carryout. This was less than most traders expected. A clarifier on the WASDE estimate is that they used a 48-bushel yield which is more than reasonable compared to trend, but beans yields have exceeded expectations for 3 years straight. Is this a new norm or are we due for a correction? Year over year they increased exports by 100 million bushels and took crush up by 25 million bushels. With the excess stocks in South America it will take a very robust Chinese import number to take exports up for next year. Producers need to look to remain willing sellers on any sign of a weather rally as beans feel slightly toppy, and could turn lower if South American selling picks up or we gain a better idea of what the crop looks like.