You are here

The Grain Market Hits a Lull, Analyst Says

Corn has been the weakest.

The past few weeks have brought a lull to the grain market, with most grains flowing lower since mid-October. 

The weakest of all the major markets is corn, which has lost 25¢ in that time frame.  Soybeans are down 38¢ since 10/14, and Dec. wheat down 17¢ (since 10/21 highs). So, grains have definitely shown weakness in the past month. 

The primary reasons are likely the improving harvest weather during that period, with very cold but dry weather over much of the U.S. that allowed harvest of crops on some very wet, soggy soils. Also during that time, the U.S./China trade agreement has stalled – first from the cancellation of the event in Chile where Trump and Xi were going to sign the first ‘Phase 1’ agreement, and then from disagreement over peeling back existing tariffs.

Rumors abound now on the China-U.S. trade negotiations, with China’s announcement last week that tariffs would be peeled back equally as part of the ‘Phase 1’ trade agreement (which the U.S. did not confirm). However, what does that mean? The U.S. had plans to tariff the full $500 billion of Chinese imports, and China tariffs about all of the $150 billion of U.S. imports. 

So, peeling back tariffs equally means what? Is it a 3-for-1 peelback (likely the China view)?  Or, a 1-for-1 peelback (the U.S. view)?  I guarantee you China wants the U.S. to peel back $15 billion tariffs for every $5 billion China peels back. 

And China wants it on all tariffs.  

But government control of most everything is certainly desired, and a trade deal is perhaps just as important to China as to the U.S. (both for the economy and politically).

In fact, economic studies show a trade deal is three times more valuable to the Chinese economy than in the U.S.   

Harvest Weather

U.S. weather was relatively favorable the past month. Perhaps our luck is ending, though, as forecasts call for another week or so of cold and dry weather for the central and eastern Corn Belt, while the western half of the U.S. enjoys above-normal temps. 

There was a snowstorm that went from the Great Lakes to northern New England yesterday, November 11, with flight delays in Chicago along with record-cold temps.  Chicago got a few inches of snow Monday, with Buffalo 6-10" and Vermont 7-12" – kind of a wakeup call that winter has arrived. 

More precip is falling, today, from Texas to Maine in some very cold conditions for November. More fun for everyone!  Farmers haven’t liked the snow nearly anywhere.  However, the cold weather has allowed farmers to harvest soybeans on soggy soils, allowing more of the crop to be harvested on otherwise unharvestable, wet soils.  

The eight- to 14-day forecast turns warmer and wetter, but warm in November is still cold.  And wet in November when we don’t normally get much precip is still not very wet. But when it comes in snow, .1" becomes 1" or more of snow, and we don’t need any snow right now to slow harvest.   

Crop progress will come out this afternoon, as the Veterans Day holiday was Monday. I was reminded this weekend that no protester gave us freedom – it was a veteran. No preacher gave us religious freedom – it was a veteran. No reporter gave us freedom of speech – it was a veteran. No politician gave us democracy – it was a veteran. So, thank our veterans for what they have done for you.  

----------------

Ray can be reached at raygrabanski@progressiveag.com.  
+++++++++++++++++++++++++++++++++++++++++++++++++++
Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country. 

This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Progressive Ag Marketing believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is
subject to change without notice. There is no guarantee that advice we give will result in profitable trades.

Read more about

Tip of the Day

Funnel Materials From a Truck Bed

Braces form chute for unloading truck When I hauled driveway rock with fines in it or limestone using my tandem truck, most of it would stick in the corners of the bed. It didn’... read more

Talk in Marketing

Most Recent Poll

What was the moisture content of corn you harvested?