Weekly Market Wrap-Up
Grain Market Commentary
Friday, September 14, 2018
by Jay Smith, Grain Associate, The Andersons
The biggest news of the week came from the WASDE Report released on Wednesday. The report was bearish as expected with soybeans realizing their expected record yield while corn was the biggest surprise coming in at a record 181.3-bushel/acre yield. Corn was shocking due to the average yield guess coming in at 177.8. Estimates do not usually ‘miss’ this much which sent corn spiraling downward. Additionally, U.S. wheat was dragged down mid-week due to the negativity surrounding corn but moving forward once Russia runs out of wheat to export, the U.S. will be turned to as the only supply to export to the world market, lending some support to prices.
Dec 18 corn opened the week at $3.66 and closed at $3.51, a 15-cent decline. A small decline in yield was anticipated but was not realized in the report. Subsequently, the yield prediction from the WASDE report made Dec 18 corn hit contract lows on Thursday losing 14 cents immediately following its release. A small positive point from corn came from old and new crop getting small export bumps and the carry out is still predicted sub 2 billion bushels. But record implied ear weights and populations paired with state by state yields are keeping any rallies at a minimum. The 181.3 yield prediction will be a record crop and the market is anticipating the adage of “Big crops get bigger”. The market will attempt to find the right price moving forward and establish fund positions and trends moving through harvest.
Nov 18 Soybeans opened the week at $8.41 and closed at $8.30, an 11-cent decline. There was no shock as the record yield was expected but anything over 52 bushels/ acre will remain extremely burdensome on the balance sheet moving forward. The WASDE report put the soybean yield at 52.8. The carry out of 845 million bushels has never been seen before but many believe prices have close to bottomed out. Beans have gained small support from the U.S. and China announcing they will resume trade talks in the “near future”.