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MARKET COMMENTARY

Weekly Market Recap August 10, 2018

Friday, August 10, 2018, 12:08 PM
Submitted by: Landus Cooperative


Current Markets:

Corn down 9 cents

Soybeans down 39 to 40 cents

Wheat down 7 cents

 

 

We aren’t staring at a great finish to the week with corn currently down 11 cents from last Friday, soybeans down 39 cents from a week ago, and wheat down 2 cents in the last 7 days. “Consolidation” can best describe the corn trade Mon-Thurs with Dec Corn trading a narrow 5 cent range and soybeans trading a 23 cent range. Among the most notable news this week was continued questions surrounding wheat crops in Europe and Australia. With both quality and yield under scrutiny, many believe U.S. wheat will fill in the gaps. Throw into the mix big U.S. corn export estimates, lower U.S. production, and a potentially big flip from corn acres to bean acres in South America, and it was easy to get bullish corn. The WASDE report today turned that on its head. The average estimate for corn yield today was 175.9 and USDA published 178.4, 2.5 bu more than the average guess. Most of this fell to the bottom line and pushed corn carryout to 1.684 bln bu, 132 mln bu more than last month. August is the first month USDA uses survey results to account for yield (rather than trend line used for previous months). While ears and populations are counted, ear weights are assumed and aren’t measured until the September WASDE report. Given today’s large published number (this late in the growing season), it’s difficult to see a path to USDA ever publishing a yield number lower than 173 or 174. Some notable state-by-state yields include Iowa at 202 (202 LY), IL at 207 (201 LY), NE at 196 (181 LY), MN at 191 (194 LY), and MO at 131 (170 LY).

 

Soybeans were the biggest loser this week, down almost 40 cents from last week. The story remains the same for the world’s favorite oilseed (trade, trade, trade). Exports to China will likely be 1/3 or 1/4 of last year – that’s a lot considering we normally ship 55% to 60% of our exports to China. Soybean yield was published at 51.6, almost 2 bu higher than the average trade guess. This ballooned carryout to 785 mln bu, well above any carryout seen in the last 30 years. Seen in the context of our rocky relationship with China, this carryout number is a big reason why we are finishing the week 40 cents lower. While the world is unlikely to pull the throttle back on soybean consumption, the pieces on the board are moving around and the U.S. will be the one carrying more of the world’s soybean ending stocks. Some notable soybean yields are Iowa at 59 (56.5 LY), IL at 64 (58 LY), NE at 61 (57.5 LY), MN at 49 (47 LY), and MO at 45 (49 LY).

 

With the summer’s biggest report now behind us, we will return our focus to August weather (pod fill), trade relationships abroad (and shifting sources and users of grain), and early yield reports on the U.S. corn and soybean crops.

 

Stay low and keep your feet moving.

 

Have a great weekend!

 

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