Prices on the Chicago Board of Trade have been volatile, as the market sifts through pieces of news. This piece is bullish, that piece is bearish and, oh yeah, let’s not do too much until after the October reports.
This is the time of year when it feels like any piece of news should move the market, but it actually takes a lot to move the market after the crop seems set in mud, if not stone.
We are still unsure of the size of our corn and soybean crops, but the trade is guessing in small ranges. We will know more when we get the WADSE report from U.S. Department of Agriculture Oct. 12, along with a crop production report. Meanwhile, the crop progress report was delayed from Monday until Tuesday because of the Columbus Day government holiday. I know that is Indigenous Peoples Day, but I am not all that politically correct.
Wars and rumors of wars are bouncing the markets a little. With Hamas’ incursion into Israel and the news media broadcasting pictures of atrocities 24/7, the markets were strong on the open Oct. 6. A war means higher grain prices, but it only seemed to mean higher prices in this case until the middle of the session.
December corn futures were up almost nine cents early, but lost that and actually closed down three cents. The corn lost more ground Oct. 9, closing at $4.88 1/4 after a $4.97 1/2 close Oct. 6. So far on evening trading Oct. 9, we were at $4.86 3/4, a further decline. For perspective, we traded $6.29 3/4 June 21.
The November soybeans closed more than 11 cents off the high Oct. 6 and had a range of 22 cents. They never traded for a gain all session, and closed at $12.66. The downtrend continued Oct. 9 to a close of $12.66, another loss, of almost 15 cents. We were now trading at $12.64-1/4 in the evening session Oct. 9.
The Thursday USDA reports could help or hurt prices. The harvest kept going into the weekend in the Central Corn Belt. Look for the crop progress report to show large gains in harvest progress. We will have enough acres off to make some conclusions about crop sizes.
With guesses of corn yields down another 1.8 bpa to up 1.9 bpa, anything could happen. The yield and new acreage estimates could yield us from a 14.95 billion-bushel crop to a 15.28 billion one. Anything out of that range will excite the market.
There are large areas of the country that were hurt by too little rain for too long. And yet, we always have problems in some areas, and it remains to be seen what the averages are.
Traders expect the USDA reports to show soybeans off just a tenth of a bushel. That would give us 50 bpa, but the trade expectations vary from yields of .6 bpa less to .07 bushels more. That is a narrow range, but any USDA numbers outside those could cause a one-day reaction.
Foreign news
The trade seems to be ignoring the war in Ukraine right now. Wheat prices seem too low for the problems Ukraine is having growing, transporting and elevating into vessels their wheat or corn crops.
We have news that 17 ships have loaded out of Odessa since September. One of the first, the Puma, with a mixed load of metals and rapeseed, sailed in the middle of September, trying out the so-called “Humanitarian Corridor” that Ukraine declared along the coasts of Romania and Bulgaria.
Puma has been stuck in port since the beginning of the war. The Russians backed out of the Black Sea Agreement a couple of months ago and declared the right to treat all shipping as if it were controlled by the Ukraine military.
I hate to think what freight was paid for the vessels currently scurrying for the Mediterranean. Lloyds of London is charging insurance surcharges by the week. What is the demurrage on that Puma for most of a year and a half? The port of Odessa has seen 17 vessels leave, and we have no reports of problems with the vessels, but we have multiple reports of damage to port facilities by Russian missiles.
Other bits of foreign news that we are trying to trade is that Russia has increasing wheat yields. They expect the crop to finish with an extra 1.2 MMT over last year. Also this week, the Egyptians announced more purchases of wheat from Russia. They are picking up some of the Ukrainian business. The Europeans, meanwhile, are seeing a dry year yielding a smaller crop than last year.
I am reading that 10% of Brazil’s soybeans are now reported. This reminds me that the Brazilians plant in a very wide band of latitude, and planting dates vary from now until December. This is in contrast to the U.S., where there is some difference in latitude between the Alabama and the Dakotas, but only six weeks or so difference in planting.
So, there are bits of news here and there, but at this time of year, all the big reactions are over. We are just making corrections. It is hard to imagine any market-shaking news out of USDA, but from these levels surely any news should be at least positive.
