Even a fresh white coating of snow could not put much of a shine on the grain markets this week, as traders reacted to the Nov. 8 USDA World Ag Supply and Demand Estimate (WASDE) report and to continued export issues.
“That really shook the trade up,” AgriVisor grain analyst Karl Setzer said of the WASDE report.
While it said little of impact about corn or wheat, the report did indicate soybean demand is not as good as the market had been expecting. And Setzer said exports are significantly lower than at this point last year — down more than 5%.
Even more troubling is that the reason does not appear to be entirely about the trade war with China. Exports to other countries are down 38%, Setzer said.
He added Argentina presents more challenges to farmers. The country will have a new president in December, and he is expected to change the country’s export taxes.
While all that is happening, the planting conditions in Brazil are good, meaning the harvest there may be on time in a few months, shortening the time-frame for the U.S. to be the top source of beans and corn.
There are also major trade issues bubbling to the surface with the European Union that could hit markets, Setzer said.
“We’ve alienated much of the world,” he said.
What’s more, he adds, traders do not really believe any of the president’s recent announcements regarding trade deals. They have seen too many premature announcements of some kind of deal.
With all that in mind, he said, farmers may need to get creative with their marketing this year, using tools such as basis contracts or hedge-to-arrive (HTA) contracts. They should also keep a close eye on local markets. For example, there are some strong local markets in the eastern Corn Belt where crop yields are low this year.
This looks to be a year where those local markets are more important than the price on the Board of Trade, Setzer said.