The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.
In my opinion the grain markets are on hold waiting for political news on Chinese tariffs and trade war and on news and statements from the Federal Reserve Chairman from the Symposium in Wyoming.The weather may still have the chance to impact the crop as Mother Nature has the final say as per whether this corn and bean crop reaches its potential,fresh USDA figures on September 12.Open interest in grains is noticeably smaller than in recent years past and some attribute this to quantitative tightening,and this path may be changed hence, the focus on what occurs in Jackson Hole.
We are looking for farmers and end users to think about using the market as a hedge tool when potential circumstances and situations arise. In my view, Chicago wheat vs corn near $2 is considered expensive and sometimes generates increased seeding interest if the difference holds through October when seeding traditionally ends in the Midwestern US. Conversely wheat is considered to be cheap at 40 cents or less difference to corn given that there are 60 pounds of wheat per bushel and only 56 pounds of corn. There are other considerations to consider such as protein levels but if we look for this spread to potentially tighten to a difference of 80 cents to $1.20 wheat over corn. At present levels, historically, we should see interest in Missouri, Illinois, Indiana, Kentucky, Tennessee, Ohio and Arkansas to double crop wheat and beans at the expense of corn acres….We may see the interest yet,Mother Nature determines if it occurs!
We saw increased end user buying interest back in June/July when CZ slipped to sub $3.60 and WZ sub $5.25.Barring an economic breakdown a re-test of the levels during corn and bean harvest should rekindle that interest.Storage may be an issue again this year given the potential crop sizes for corn and beans and we may see corn on the ground again which suggests widening spreads as elevators and warehousemen lower basis levels to incorporate the risk involved and costs incurred.