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3 Big Things Today, October 4

Grains, Beans Little Changed Overnight; CoBank Says Stocks Burdensome, Demand Still Strong.

1. Grains, Beans Little Changed Overnight as Investors Weigh Rain, Yields

Corn, soybeans, and wheat were all little changed overnight as prices are supported by rainfall that’s delaying the harvest but pressured by strong yields so far.

Rainfall is expected in Iowa and Illinois, the biggest producers of corn and beans, further slowing the harvest that’s already behind the normal pace, according to the National Weather Service.

The precipitation in Iowa is expected to continue tonight, while in Illinois, showers will be isolated to widely scattered, the NWS said.

Still, yields, thus far, have been decently strong, according to scouts, analysts, and news reports. That will likely keep a lid on prices unless severe delays occur.

Prices also may be caught in a technical range, which will keep prices from moving a lot. Allendale said corn has support at the August 31 low of $3.44¼ a bushel, while soybeans are supported at $9.50 a bushel. That should keep prices in a range, the firm said.

Corn futures for December delivery fell ¾¢ to $3.48¾ a bushel overnight on the Chicago Board of Trade.

Soybeans for November delivery rose ¼¢ to $9.55½ a bushel overnight. Soy meal futures declined 40¢ to $311.10 a short ton, and soy oil gained 0.30¢ to 33.05¢ a pound.

Wheat for December delivery fell ¾¢ to $4.47¼ a bushel, and Kansas City futures added ¾¢ to $4.42½ a bushel.

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2. Large Global Inventories Will Keep a Lid on Prices, Demand Expected to Stay Strong

U.S. inventories of corn, bean, and wheat are at the highest in almost 30 years in what CoBank calls “unrelenting abundance.”

CoBank, a cooperative bank that is a member of the Farm Credit System and provides loans, financing, and other financial services to agribusinesses, said in a report yesterday that increasing world production, which is up 30% in the past decade (vs. a 4% gain for U.S. output), will make it difficult for prices to recover.

“Global stocks of grains, oilseeds, and cotton relative to usage have reached levels that will limit price gains in the likelihood that global harvests are reduced,” CoBank said.

It’s not all bad news, however, as demand is expected to stay strong as the global livestock industry expands. That will help keep stockpiles at acceptable levels and likely will underpin prices.

The U.S. dollar has weakened in recent months, which should boost the appeal of U.S. goods to overseas buyers, CoBank said. Still, geopolitical uncertainties at home and abroad will lead to volatile price swings, the bank said.

“Global growth rates are steady, but the spectrum of countries contributing to that growth has broadened, and that should also broaden the demand for agricultural products,” the report said. “While the weaker U.S. dollar will enhance competitiveness, ongoing trade negotiations (such as NAFTA) and trade actions will inject volatility in the year ahead.”

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3. Strong Weather System Brings Rainfall as it Makes Way Through Corn Belt

A strong weather system is making its way across the Plains and Midwest, bringing precipitation to much of the Corn Belt, according to the National Weather Service.

“Across the central U.S., a strong cold front will focus heavy rain and associated potential for flooding in portions of the central and Southern Plains,” the NWS said in a report early on Wednesday. “Ahead of this front, temperatures will be warmer than normal.”

A freeze warning has been issued for several counties in southwestern South Dakota, with a frost advisory issued for several surrounding areas.

Temperatures in the region are expected to fall to the upper 20s and lower 30s, which could potentially kill crops that are still growing and damage sensitive plants, the NWS said.

 

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