October 7, 2019: Mark's Market Talk

October 7, 2019
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Last week in this column I stated the stocks report due out last Monday wouldn’t be a big market mover. Well I was wrong. I didn’t think the government would admit they had overstated the 2018 harvest. Most of us in the grain business were confident it had been overstated as old crop stocks have been tough to buy. It wasn’t that we were at the bottom of the barrel, it was just hard to get grain away from the producers that still owned it. That was telling end users that the available free stocks were lower than forecasted. This was confirmed last Monday when the USDA lowered the amount of corn and beans in storage. This in turn lowered the carryout numbers for both corn and beans. This Thursday the USDA will release it’s October supply and demand report and the new stock numbers will be used as a starting point. If they reduce the 2019 projected yield numbers as they are expected to, we should be able to say the lows are behind us. On the flip side we know demand has taken a hit due to several factors. This includes trade disputes, ethanol waivers, and large world supplies. However, we may be on the verge of seeing improvements here also. We may not have a trade agreement with China, but they are back buying our beans as South America supplies are running low. We are signing agreements with other countries and building new relationships that will build a larger export basis for us. World supplies are coming down. Total world population continues to grow and everyone needs food. If we start to add up all the positives perhaps, we will begin to see better prices. The local harvest has been slow to get started so yield data is very limited. I have seen reports from several states and the common theme appears to be no one is seeing yields as good as last year and, in most cases, they are saying 10 to 20 percent less. This tells us regardless of what the USDA says Thursday this year’s yields will be well below trend line. This would be another positive to add to the above list.   
 
Posted: 10/7/2019 3:18:10 PM by Rob Matherly | with 0 comments