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Weekly Grain Market Recap 11/13-11/17

Nov 17, 2017
Grain markets spent a majority of the week consolidating lower in the wake of last week's bearish tone created by the USDA monthly report. Relief finally came on Friday with a decent technical bounce off of the recent lows, but was not enough to really change the overall tone of the markets heading into a short trading week.

The wheat market again tried to carve out new recent lows this week, but was saved on Friday with the strength in corn and soybeans bleeding over. Egypt, the world's largest wheat buyer, purchased more wheat from Russia this week in a further sign that the massive crop there is weighing down the value of wheat in the rest of the world. At home, winter wheat crop conditions rebounded slightly and are now right on the average we would expect at this time of year. However, some growing dryness concerns across the plains are still raising some eyebrows as are the attempts to calculate just how much wheat has been planted.

As mentioned above, the corn market spent much of the week searching for a place to establish a bottom. U.S. production this year will top out near 14.6 billion bushels and our export demand needs to pick up in order to meet our current projections. Most analysts believe that the actual projected carryout number should be higher in reality and push above 2.5 billion bushels. U.S. harvest should be nearly wrapped up when the weekly progress numbers are updated on Monday and the combination of low prices and the holiday season approaching will more than likely keep producer selling limited. Friday's recovery spoke more to a renewed interest in commodities with a 2+% crude oil rally than anything fundamentally or technically changing in the corn market. A growing story to start watching was a report on Friday that expects the largest grain growing state in Brazil to produce 19% less corn this year; more on that later.

Soybeans also found buyers on Friday which helped rebound the market 20 cents and make up for the losses suffered earlier in the week. Harvest is finally drawing to a close in the U.S. and the results are still being debated. Early indications are that the numbers will still be bearish, but the quality as it relates to oil content could be slightly less than desirable. Will that be a positive or negative market mover? It remains to be seen. On one hand, it could drive U.S. futures up as the reliance on a good size and quality South American crop becomes larger. On the other hand, it could drive the market lower if business transitions toward the remaining '16-'17 crop that is left to be sold down there. The same agency that produced the report on Brazilian corn production also estimated their soybean production to drop as a result of delayed plantings and inconsistent weather.

That last point about South American weather has to be the wild card that anyone who is even slightly bullish the U.S. grain markets points to. Weather models from the National Weather Service almost all agree now that a La Nina weather pattern is developing and some interesting results could happen. While weather speculation is always a dangerous game, (see: this summer's U.S. corn market) it is something worth watching and will supply some support at least until more is known. 

-- -- Disclaimer: The data and comments above are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Commodity trading involves risks, and you should fully understand those risks before trading.

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