It took a long time, but harvest is now the dominant topic of discussion in the grain markets, according to Don Roose, president of U.S. Commodities in West Des Moines.
For months, topics such as trade and ethanol rules took center stage in market discussion, and those issues are still important. For example, any announcement regarding trade negotiations with China is liable to push the markets one way or another, Roose said. Farmers and traders are all hoping for an end to the trade war that has rocked the two countries. But no agreement appears to be on the horizon yet.
And ethanol keeps popping up. The large number of small refinery exemptions granted by the Trump administration has hit the ethanol and biodiesel markets hard, he said. A few weeks ago, industry leaders thought they had an agreement to offset the refinery exemptions only to see different language emerge a week or so later.
As a result, a number of biofuel production facilities are closed in the midst of harvest or are not operating at full capacity.
The biofuel industry is now waiting to see whether the final rule differs from the proposed rule that came from the administration in October.
So the conversation has moved to the harvest because it is the one thing that is tangible and not political, Roose said.
Yields appear to be a little better than expected in some areas, Roose said. And the market is still offering a carry, which provides an opportunity for some farmers. At the start of this past week, December corn was at $3.84¼ and July corn was at $4.07½. That offers some incentive for farmers to market some grain now for delivery next summer, especially if they have inexpensive on-farm storage.
Basis levels also appear to be firming, and that means some farmers may be able to take advantage of local basis opportunities, Roose said.
The market will be waiting for the next big USDA report on Nov. 8, and in the meantime it will be keeping an eye on harvest progress and yields.