Weekly Market Wrap-Up
Grain Market Commentary
Friday, July 5, 2019
by Jay Smith, Grain Associate, The Andersons
This week’s market wrap up was written until the close of the markets on Wednesday July 3rd. The markets will be closed for the Independence Day holiday on the 4th. Any noteworthy news upon reopen on Friday the 5th will be included in next weeks wrap up.
The markets finally showed some life again, albeit a short amount of time, pertaining to trade talks. A deal was not completed but the two sides drew a temporary truce and said talks will continue in hopes a deal may get done by the end of the year. China does look like they want to stall as much as possible as the presidential election talk really begins to heat up moving forward. Upon the release of the June stocks and acreage report last week shock and disbelief flooded the markets. The USDA quickly said they will resurvey 14 of the largest corn and soybean producing states, highlighted on the graph below from the USDA, and rerelease data on August 12th. The weather and the yield debate look to be the main topic of conversation until the August report is released. But, with so much time between then and now expect trade to remain volatile. The crop progress report numbers were slightly disappointing but largely unchanged week over week. There were condition declines in the east that were offset but gains in the west. Overall, weather looks favorable for most of the corn belt over the next 7 days. Most of the belt looks to return to normal temperatures and above average rainfall returning next week. This is generally pointed to as beneficial for early crop development. The week (Wednesday) ended higher on repositioning going into the Independence Day holiday.
September corn opened the week at $4.29 and closed Wednesday at $4.36. A 7-cent increase. Upon the release of the COT report last Friday, money managers were shown holding their largest long position in 13 months at roughly ~179,000 contracts. Skepticism surrounded the corn market as the USDA pegged corn acres at 91.7 million, well above market expectations. The crop progress report had corn at 94% emerged compared to 89% last year and a 100% five-year average. The condition is unchanged week over week at 56% G/E compared to 76% at this point last year.
August soybeans opened the week at $9.15 and closed Wednesday at $8.89. A 26-cent decrease. Early week bean futures hit a one-year high climbing to $9.3425 on the back of rekindled U.S. Chinese trade talks and the bullish acreage numbers for soybeans. Soybeans came in at 92% planted compared to 85% last week and a five-year average of 99%. Soybean condition was unchanged week over week at 54% compared to 71% at this time last year.
September wheat opened the week at $5.30 and closed Wednesday at $5.13. A 17-cent decrease. Wheat was feeling early week pressure from the corn market as well as harvest kicking into full swing in the largest wheat producing states. Russian farmers are facing unfavorable weather which may lead to cuts in their output. This should theoretically increase demand for the U.S. crop, but this will remain to be seen. The crop progress report had winter wheat at 30% harvested compared to 15% last week and a five-year average of 48%. The crop condition was at 63% G/E compared to 61% last week and 37% last year at this time.