Weekly Market Wrap-Up
Grain Market Commentary
Friday, November 2, 2018
by Jay Smith, Grain Associate, The Andersons
This week’s markets were driven primarily by President Donald Trump’s twitter account. Early in the week markets were quiet with little fundamental backing to their movement. Early week harvest progress numbers were released which were in line with expectations, causing little reaction from the markets. The western corn belt caught up with the rest of the corn belt after early harvest lagging due to cold and wet conditions. As for the southeast and eastern corn belt, consistent rain in the 6-10-day forecast has significantly slowed if not stopped harvest all together. Regardless of weather in the corn belt, harvest progress numbers are consistent with the 5-year pace.
The biggest news came Thursday afternoon when President Trump tweeted about trade war progress with China. Short position covering continued through the session Thursday night into Friday morning. As of Friday morning, there were conflicting stories about U.S. officials being asked to draft potential terms for a deal with China. Regardless, the reaction from the tweet showed how little fundamental backing of the markets there is which will keep high volatility in the market until fresh fundamental news unfolds.
Dec corn opened the week at $3.68 and closed at $3.71. A 3 cent increase. Early week corn benefitted from gains in wheat, pushing corn above its 100-day moving average. Export numbers were not favorable though as U.S. corn continues to be lost to Ukraine and South America. Although export sales are disappointing, corn does not look to be reacting negatively as there is an ongoing threat to the U.S. yield being reduced in next week’s USDA WASDE report.
Jan beans opened the week at $8.58 and closed at $8.87. A 29-cent increase.Midweek beans experienced some month end short covering, but the biggest news of the week is President Trump’s tweet. The tweet caused a sharp upturn in the market with beans finishing 30.25 cents higher Thursday at SF9 8.82. The excitement in the market carried into Friday morning with beans remaining up. As mentioned, there are conflicting reports about potential terms for a deal being drafted but news of any speaking at all has been enough for the market. One of the biggest short-term questions remains, is the tweet enough to cover the most likely bearish bean report that will be released next Thursday?