Possible good news on the trade front was welcomed by grain traders Aug. 27. Now the question is how that news could impact the market over the coming weeks.
“We are welcoming any good news,” said Mick Hoover, risk management team leader with Maxyield Cooperative in West Bend, Iowa. “This could be the best news we’ve really had to work with for a long time.”
Of course, Hoover said, there hasn’t been very much good news on the grain market front for a while.
Monday’s news was that the United States had reached a preliminary agreement resolving some bilateral trade issues with Mexico, and that the agreement could allow the countries to resume trilateral talks with Canada regarding the renegotiation of the North American Free Trade Agreement (NAFTA).
Concern over the various trade disputes initiated by the Trump administration with China, Mexico, Canada and the European Union had hurt grain prices in recent months. Any good news on the trade front is more than welcome, Hoover said.
The announcement followed last week’s word that the ProFarmer tour pointed toward large soybean yields in 2018. The USDA estimated U.S. soybean yields at 51.6 bu. per acre a few weeks ago. The ProFarmer tour put that figure at about 53 bu. per acre. That difference alone would be enough to raise the carryout about 125 million bushels.
Meanwhile, Hoover said the corn market is not offering much of a risk premium to farmers right now. December corn futures sat at $3.62¾ as of Monday morning. That doesn’t offer much incentive to farmers wanting to sell.
The hope is that there is some type of pre-harvest spot market in the coming weeks or that there is enough good news on the trade front to boost grain prices in the coming months, he added.
Soon attention will turn away from harvest predictions and to actual harvest results around the country. That’s when analysts will get a better idea about this year’s crop size.