Grain Spreads: Turnaround Tuesday

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Commentary

After a sideways to lower open, corn, soybeans, and wheat were all in positive territory by the close. A return of managed money buying was a primary cause of this reversal in my opinion. This came on the heels of cuts to US production forecasts by more private analysts. Bean condition another 2 points to 61% good to excellent last week, 2 points behind last year this point of the season Some yield models are now getting quite close to last year’s, well below what the USDA is currently using in balance sheets, particularly on corn. Pro-Farmer for example lowered their national corn yield yet again to 82 bushels per acre. The USDA in their last WASDE release was at 186.6.  A pause in the equity market rally also pushed buyers to other markets and commodities were potentially seen as undervalued. This comes with Fed Chair Powell saying stocks in his view were overvalued.  Corn had a fourth consecutive day with a flash sale, this one to Mexico for 122,947 metric tons. Today’s gains particularly in soy were limited by news Argentina has made several export sales to China since suspending export taxes. The lack of trade deal negotiation progress also weighed on early trade today, although a group from China did meet with US businesses yesterday to discuss trade needs. Funds today may have started to even up some positions ahead of the quarterly stocks report at month end. In my opinion the USDA’s quarterly Grain Stocks reports are notorious for producing notable market surprises, at times, with the September report holding the additional risk factor of USDA using this report for revisions to the previous year’s crop, if needed, based on reported September 1 U.S. corn and soybean and wheat stocks. Pre report guesstimates released in my next written report and webinar. For now, no new trade recommendations.

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Sean Lusk

Vice President Commercial Hedging Division

Walsh Trading

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