The harvest is here, and that means it is now a harvest season grain market.
While the market was waiting this past week for the Sept. 30 stocks report, is has also been paying attention to harvest progress and to trade news from China. And it is worth noting that this is not only the end of the month but also of the quarter, which likely impacted some trading this past week.
One thing that may mean in the very short term is potential gyrations in the next week or so, according to Don Roose, president of U.S. Commodities in West Des Moines. Roose says there has sometimes been a tendency for the market to put in a harvest low during the first week of October and then see a short-term bounce. Of course, he adds, there is no guarantee of that happening in any given year.
Another bit of news is that China recently showed more buying interest, and that is always a boost to the market, Roose says.
On a practical level, Roose says, the basis is generally tight right now and there is some carry in the futures market. For some farmers, there may be local basis incentives to sell. For others, the situation means it may pay to store grain for a few months, especially if they have on-farm storage.
Roose says farmers may want to consider strategies that allow them to use the futures market or to sell grain and then use market tools to protect themselves on the upside. That may mean using tools such as hedge-to-arrive contracts or synthetic hedges.
Either way, the harvest is now underway in many areas, and the market will be watching early yield numbers, as it always does. Farmers, Roose says, need to continue to pay attention to the markets as well as the yield monitors in the next few weeks.