Weekly Market Summary October 12, 2018
Friday, October 12, 2018, 4:10 PM
Submitted by: Landus Cooperative
We finished the week on a positive note with corn closing up 4c today and 5c higher than last Friday. Soybeans closed up 9c today and finished the week just 1c lower from last Friday. We had a couple of significant news events this week, one of which was an announcement by the Trump administration to lift a ban on year-round sales of E15 ethanol blends in gasoline. The EPA ban on year-round blending (claimed to be an effort to control smog) will be lifted by the president. This garnered the praise of corn and ethanol producers alike. Taking a deeper dive into the details, it’s a bit of a head scratcher as to how much effect this change will have on the consumption of corn. There is certainly a consumer adoption curve that needs to be climbed by the industry. Out of nearly 120,000 gas stations in the U.S., less than 2% of them are capable of blending E15. More investment in pumps needs to occur for widespread consumer adoption to gain a foothold. This new policy is definitely a step forward for the industry, but it is probably just he first step of many.
The second big input this week was on Thursday. The USDA published their monthly supply and demand estimate report. The market average guess for yield was 181.8 bu/acre vs. the 181.3 bu/acre published in September. Today the USDA published 180.7, .6 bu lower than the September report. A surprising thing on the corn side was the fact that production dropped while carryout went higher. USDA dropped Feed/Residual by 148 mln bu from 17/18, effectively increasing the crop size from last harvest. Many in the trade expected this was the case (an underestimated 17/18 crop). USDA pushed corn exports up by 75 mln bu. All-in-all, carryout increased by about 40 mln bu to 1.813 bln bu. Soybeans behaved more in line with predictions. Published yield this month was 53.1 bu/acre vs. average trade guess of 53.3 bu/acre and 52.8 bu/acre last month. USDA did not adjust export estimates. Given our current trade situation, it is hard to believe that our exports will only drop by 70 mln bu vs. last year (like the USDA is currently estimating). Any drop in exports will likely add to an already burdensome carryout number of 885 mln bu.
Outside of the commodity space, the stock market had a tumultuous week. After the DOW dropping 1,100 points between Wednesday and Thursday (led lower by tech stocks), I think the market was happy to see the weekend and closed up just over 100 points today. Rising interest rates have been blamed for this most recent decline. Crude oil has struggled the last 10 trading sessions, dropping about $7/barrel since October 3rd.
All-in-all, we look forward to the weeks to come. We are all anxious to get this harvest rolling, but please put safety first in your harvest efforts.
Be sure to listen to this week’s episode of the Landus Cooperative Experience podcast featuring the Bull Bear Banter. You can listen online at: https://landuscooperativeexperience.podbean.com/ or on your smart phone by going to your podcast app and searching “Landus Cooperative Experience”.
Have a great weekend!