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3 Big Things Today, October 17, 2019

Beans, Grains Higher Overnight; Fed’s Beige Books Show ‘Weak’ Rural Economic Conditions.

1. Soybean, Corn Futures Higher in Overnight Trading

Soybeans and corn were higher in overnight trading amid some short covering and on cold weather in parts of the northern Corn Belt.

Investors anticipating lower year-over-year yields for both crops likely are covering their shorts, or buying back their bearish bets, which is giving prices a boost overnight.

The weather also is bullish, as temperatures in parts of the Northern Plains and northern Corn Belt are expected to be near freezing in some areas.

It’s not unusual for temperatures to be in the low-30s or upper-20s this time of year in some regions, but such cold weather could have a negative impact on late-planted crops.

A blizzard at the end of last week and the start of this week likely ended any hope some farmers in North Dakota and South Dakota had of harvesting their crops. Cold weather this early also may stop maturity in the central Midwest where beans and corn have yet to be harvested.                                                                                  

Only 26% of U.S. soybeans had been harvested as of Sunday, which is down from the prior five-year average of 49%, according to the USDA. About 22% of corn had been collected by the start of the week, well behind the average of 36% for this time of year.

Farmers, investors, and analysts also are keeping an eye on the ongoing trade talks between the U.S. and China after Friday’s announcement of a “partial” trade deal was met with skepticism.

Soybean futures for November delivery rose 7½¢ to $9.35½ a bushel overnight on the Chicago Board of Trade. Soy meal gained $1.90 to $306.70 a short ton, while soybean oil added 0.15¢ to 30.55¢ a pound.

Corn futures for December delivery gained 3¾¢ to $3.95½ a bushel.

Wheat for September delivery jumped 6¾¢ to $5.20 a bushel, while Kansas City futures gained 4½¢ to $4.29½ a bushel.

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2. Federal Reserve Beige Book Shows Weak Farm Economy Due to Weather, Trade Concerns

The Federal Reserve published its Beige Book yesterday that covers economic conditions across the U.S., separated by 12 districts, and noted that the farm economy has been hit by several issues that are ongoing.

“Agricultural conditions deteriorated further due to the ongoing impacts of adverse weather, weak commodity prices, and trade disruptions,” the Fed said in its report.

In the Chicago district, which includes all or parts of Iowa, Wisconsin, Illinois, Indiana, and Michigan, the agency reiterated what we already know: Corn and soybean harvest was off to a “slow start” due to rains in the region in both the spring and the fall.

The delayed planting left crops up to a month behind normal maturity. Surveys show yields are expected to be well below recent years, the Fed said.

It wasn’t all bad news, though, as corn and soybean prices have moved higher due to the uncertainty about yields and ultimately production.

In the St. Louis district, which includes most of Missouri and parts of Arkansas, Kentucky, and Tennessee, production and yield for corn and beans likely fell from the August outlook, the agency said.  

Rice production forecasts also declined, while yields ticked up, the Fed said.

Farmers are more pessimistic in the district due to lower commodity prices and ongoing uncertainty about trade. In southern Indiana, producers were worried about the lack of rainfall.

“Relative to 2018, corn, rice, and soybean production levels are projected to decrease sharply, largely due to the unusually wet weather and flooding during the planting season,” Beige Book said. “However, cotton production levels are expected to improve compared with last year.”

In the Minneapolis district, which covers a large chunk of land stretching from Montana to the west to northern Wisconsin to the east, the Fed reported “weak” farm conditions, again citing heavy rains that have hindered the planting season.

Production of corn and beans in the sector likely will be down as much as 20% from 2018, the Fed said.

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3. Red-Flag Warning Issued For Eastern Colorado, Western Kansas, NWS Says

A so-called red-flag warning – when conditions are prime for wildfires – is in effect for much of eastern Colorado and western Kansas this morning, according to the National Weather Service.

Temperatures are expected to be in the 80s, while relative humidity will be as low as 10%, the NWS said in a report early this morning. Wind gusts are forecast at around 30 mph.

“As temperatures rise, relative humidity drops and wind speeds increase through the afternoon,” the agency said.

Farther east in eastern Nebraska, flooding is still a concern along several rivers including the Missouri, which has been over its banks in some areas since spring.

Isolated thunderstorms are in the forecast for southeastern Nebraska and southwestern Iowa starting Friday evening as a cold front moves in, though severe weather isn’t expected, the NWS said. The rain could exacerbate the flooding in the region.

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