Grain markets ended mostly lower on Friday and corn and wheat were lower for the week.
Corn and soybean futures saw harvest and hedge pressure, with some farmer selling tied to option expiration.
Jim McCormick with AgMarket.Net, says the pickup in sales is not just on new crop bushels.
“Its also hedge pressure from the old crop as producers continue to empty out what’s left of the bins. It’s a lot later than normal but they are doing it,” he says.
The market is watching to see what producers do with the new crop grain as McCormick says early yields on corn and beans have been at or above expectations, and close to what USDA projected.
“Unfortunately, we’ve only got about 10% of the new crop corn and beans sold. We can only store about half of that crop on farm. So roughly 40% of this corn and bean crop is going to have to be sold right out of the field or commercially stored. So, there’s a lot of decisions to be made,” he says.
He thinks with the on slot of grain hitting the market all at once it could push corn and beans down to retest the recent contract lows.
The row crop markets are also closely watching Brazil weather forecasts, which have turned a little wetter to start October following record drought in some areas.
“Right now I do believe the market is hold quite a bit of weather premium, on the beans specifically due to the dryness. You’re seeing record dryness in parts of Brazil, most of Brazil actually for this time of year,” he explains.
However, he points out that the last two times Brazil was this dry to start the season they ended up with trend line yields or above.
He says if they start receiving rain it could cause corn and especially soybeans to remove weather premium and cause the market to bleed lower.
In that event, McCormick also sees China shifting away from the U.S. market and buying more beans from Brazil.
This comes as trade tensions rise between the U.S. and China and China faces an economic slow down.
Wheat ended mixed Friday but was lower in all three classes for the week removing war and weather premium.
Southern Plains winter wheat areas have received some rain and here is more in the forecast for next week.
Cattle futures rallied back from a lower opening to close mostly higher making new highs for the move on the heels of some higher cash.
The stock market saw some consolidation but McCormick explains where it goes from here could impact ag markets.
