Corn and soybeans end slightly higher Friday, with wheat and livestock lower.
Alan Brugler, A and N Economics says USDA provided mildly friendly numbers in the WASDE for row crops.
The biggest was the cut in soybean yields by 1.4 bu., tied to dryness late in the growing season and harves, plus hurricane damage.
He says, “There was some pretty good data out there that said that the August and September dryness resulted in some lighter test weights and some two -bean pods and some aborted pods, that type of thing.”
That resulted in a production drop of 121 million bu. and a cut to ending stocks of 80 million.
Corn yield was lowered .7 bu. with ending stocks and production down 60 million bu.
Brugler says those cuts were more than anticipated but are not likely to move the needle on prices and that it part of the reason the response on Friday was muted in the corn and soybean markets.
“Yeah, we’re still setting on fairly comfortable stocks. You know, to get beans really excited, you got to get down to about 350 on ending stocks for corn. 1 .4, 1 .5 would get us to five bucks, I think that we don’t have that yet.,”
So, Brugler says the key moving forward is whether or not the U.S. can continue to see strong demand in the face of possible tariffs under the Trump Administration.
“You know, the smoking gun or the 800 pound gorilla in the room is what happens after the new administration comes in in January,” he says.
However, he thinks tariffs or a trade war will be different than in 2018.
“The tariffs are bargaining chip to a degree. Some of that may be modified if there are concessions made by other parties,” he adds.
Brugler says the industry also diversified it’s export portfolio after 2018, especially for soybeans, and so the impact will not be as dramatic.
Wheat balance sheets were nearly unchanged in the WASDE with U.S. ending stock were up 3 million bu. to 815 million and global stocks down 0.1 million metric tons.
Cotton ending stocks were raised in the WASDE by 200,000 bales but Brugler says cotton prices have also been struggling with possible Chinese tariffs as the market is so export dependent.
Cattle prices fell on Friday and for the week with lower cash and sharply lower cutouts and he says there was chart damage.
The key will be Monday and if there is any follow through selling.
The stock market had a huge week and closed into record highs and he says managed money will keep going that direction as long as the trend is up.
That could keep money away from the commodity sector.
