5/14/18: Mark's "Market Talk" Blog

Last Thursday’s supply and demand report was actually a little friendly to corn and beans. The corn numbers came in close to what was expected and shows both US and the world carry outs declining in the next 2 years. This will have a larger affect should we experience some weather issues this summer. A below trend line yield could put us down to the 1.65 billion carryout area and that should push cash corn above 4.00.

However we learned last year it takes a lot of bad weather to lower yields. A difference this year could be the amount of delayed planting in the upper and eastern Corn Belt. These are high producing areas and with the forecast showing a daily chance of rain this week we will soon be in late May and the yield potential decreases rapidly. Of course in the case of northern Iowa it seems they can dry out overnight and have it planted the next day.

After a short post report rally Thursday we had a big pull back Friday and July corn ended the week almost 10 cents lower. We are in the time frame that we normally see some weakness in the corn market. Cash corn movement has been good the past 6 weeks as producers catch up on some sales.

The next 4 weeks may be filled with ups and downs as everyone watches the weather while sales may be driven by the need for cash to finish paying this year’s input costs. There is still plenty of corn out there to buy but farmers need to watch basis levels as slow movement can make end users offer better bids, but they will only last long enough to get them through the next week as they play the waiting game.

The biggest surprise in Thursday’s report was the estimated bean carryout for the 18/19 crop year. It came in way below the trade estimate. The government predicts a large increase in soybean exports which seems contrary to the current talk of tariffs and trade wars. Maybe they have some insight on these subjects. I do think there will be an agreement reached between the US and China but I don’t think that means they will shun South American grain if it is cheaper. China is also making strides in their own grain production. A lot of this will happen with help from the help US companies are providing them. Sound familiar?

July beans were 18 cents lower at the end of last week. The funds are very long the bean market and they may be running out of gas. Meal had been a big driver but in the past month or 2 it has started to falter. 3 weeks ago it appeared some money was headed into beans from the stock market but now that the Dow has stabilized that flow has dried up.

Planting delays can lead to more bean acres and some of these areas are behind in fertilizer application so it could easily lead to more bean plantings. Short term we seem to be facing lower prices. The long term picture is too cloudy to read at this point.

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