grain markets stable after bearish USDA report

The markets are stabilizing after the trade once again was shocked by the USDA production numbers for the second month in a row.  The USDA raised both the corn and the soybean yields slightly when most were expecting a lower number. The corn market is just about where it was before the report and soybeans are trading higher this morning as well.  At some point we have to admit that the news from the report was bearish and the reality is that usually the upcoming reports could show even a larger yield number.

Another issue is that we are battling a large carryover of corn from last year that is buffering the somewhat shorter supply here in the US. The fringe production states on both corn and soybeans have better crops than last year and the early harvest reports are coming out a little better than expected.

Weekly export sales were reported at decent levels this morning. Corn was at 41.21 million bushels and soybeans were reported at 59.24 million bushels. China still needs to buy a bunch more soybeans for October so we will be watching for those sales announcements over the next few weeks as well.

The US weather has been dry for the most part the past few weeks and that trend looks to continue in some areas going towards harvest. The temperatures are also expected to be above normal for most of the corn belt over the next week or so.  This combination might just help the crop that is behind catch up a little bit and the concern over early frost is diminishing some each day that passes.  Still, there are some crops that will need a longer than average growing season to mature completely.

The uncertainty of weather in South America is also offering mild support as they are starting their planting season. It has been too dry in Brazil and some farmers are delaying on planting until they get some rain and it is currently too wet in much of Argentina.  Still very early so not a major concern yet but the market is watching closely.   There is always a weather market to trade somewhere around the World.

In other news China announced that it plans to blend 10% ethanol in all their gasoline by 2020. This news helped support the ethanol market some yesterday.

With old crop grain left to move and new crop harvest fast approaching it is important to have a plan on where the farmer grain is going to go and how much storage will be needed.  Selling cash and re owning with a call may be a strategy to look at this fall if prices stay depressed or trade lower yet.

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