Grain markets seemed underwhelmed as the much-anticipated Jan. 10 USDA reports came and went.
Despite updated stocks, carryout totals, production numbers and harvested acres, the markets saw some bearish to neutral action, according to many market analysts, but most movement was limited as these marks fell largely within expectations. Now, with a U.S.-China phase one agreement set to be signed this past week, traders will start focusing on 2020.
“Now it’s about what South America grows, what China buys and what our acreage looks like in the 2020 crop year,” said John Payne of Daniels Trading.
Payne added there will be continued acreage debates for corn, with production for 2019 being “far from certain” as farmers in five states (North Dakota, South Dakota, Minnesota, Michigan and Wisconsin) will be resurveyed due to delayed harvests.
However, he said soybean numbers from the report should provide some support to prices going into 2020, as a lower harvested acreage number of 75 million kept final production numbers lower, on an average of 47.4 bushels per acre.
“That got us through this tough year and really set us up with prices as they continue to inch higher as we get into 2020,” Payne said. “It will be interesting to see what gets planted next year.”
While a longer-term look appears supportive, Payne noted that feed grains such as corn and wheat shouldn’t see much change in the near-term. He said the recent trends should keep action neutral to slightly bullish, adding that wheat prices “don’t tend to top out until the spring.”
That leaves the focus on favorable conditions so far in South America, along with all eyes on any U.S. and China trade relations and global markets.
“Now it’s about what happens in the real world — what China buys and how that affects prices globally,” he said. “Currency markets will certainly be important as well for that as we move forward.”