Grain Markets Hold Their Breath for the Trade Verdict

Another slow day of trade saw prices work slightly lower as no confirmation of additional trade progress ahead of eh official meeting today between President Trump and Chairman Xi. After the weekend saw good reports related to expanding US/China agriculture trade, news of any additional progress has been absent allowing for prices to give back all of Monday’s gains and trade at mostly unchanged trade for the week. News from the trade meeting will be closely watched, but a wetter Corn Belt forecast will continue to keep harvest progress slow while also stressing the corn crops with poor stalk quality.

News and Notes:

• The ECB will see a few days of dry weather to advance harvest, but a more active rain pattern is forecast into early October. Temperatures will remain slightly above average to extend the growing season for the latest planted crops. The overly wet outlook for southern Brazil will become a larger market problem if the pattern remains in place for another 10-14-days.
• Although November beans have given back Monday’s gains, the chart on Page 2 shows the flattening of trade and today’s test and hold of the 20-DMA (red line) at $13.10. The weekly close needs to stay above the 20-DMA to keep the technical picture bullish and a potential bullish breakout over the $13.35 ¼ contract high on Sep 11th. The RSI continues to trend slightly lower indicating there is plenty of upside potential if any surprising trade news comes out over the weekend.
• Front month diesel futures remain extremely volatile with a 40-cent daily ranges on back-to-back days. Fortunately, both days ended with modest losses with the chart looking like a potential top may have been formed last week at $5.29 a gallon. The volatility has been driven by bullish news coming from Russia after additional Ukrainian drone attacks on Russian energy infrastructure and bearish news that US/Iran meetings are making progress toward ending the war. With today’s futures prices 50-cents below the recent high, talk to your local supplier about topping off your tanks.  

Futures markets are named that because the trade is always looking ahead for how to price everything based on current news and potential changes. Predicting the future is impossible with any consistent accuracy, and this week highlights that as Monday’s very bullish optimism slowly disappeared as additional news about trade expansion has been absent. Friday’s trade will look very similar without a definitive announcement that China and the US will drop or reduce bi-lateral tariffs with China buying more than the previously agreed upon $30 billion annual purchases from the Phase 1 trade deal. The most bullish outcome for prices is for China to add corn and wheat purchases into the trade deal.