Wednesday was a positive day for our markets. Harvest corn closed up 3/4, harvest soybeans closed up 2 1/4, spot winter wheat closed up 7 and harvest spring wheat closed up 1 1/2. In the overnight trade corn and the wheat sector are positive with soybeans mixed. Oil closed up $0.35 yesterday at $62.71 per barrel. It is stronger in trading again this morning with it now valued at $63.24 per barrel. Our dollar had a high yesterday morning before noon of $0.722 US and with some choppy trading trended lower since then. This morning it is currently valued at $0.720 US.
The hot topic this week seems to be the lack of Chinese purchases of new crop soybeans from the US. Historically they are large purchasers for shipments starting in October of each year. This year they have made sufficient old crop purchases from Brazil for October and have also covered much of their normal demand for November. The current price level has soybeans in Brazil at a premium to US soybeans on the world market however the tariff situation is making US soybeans more expensive into China.
The lack of a trade deal between the US and China is what is missing to drive soybean sales between the two countries. Recent comments out of the Trump administration state that they are happy with the current tariff rates between the two countries. It seems like they do not see any urgency to make a deal and the soybean market will have to suffer. Prices have been fairly strong on the CBOT without a trade deal and many analysts are starting to talk that they can see prices pulling back as trade talks drag on. Remember South America keeps producing more and more soybeans every year and initial projections for next year’s crop is once again at record levels. The requirement for US soybeans into China is decreasing every year.
Bottom line for soybeans is that there is much uncertainty in the marketplace. Without a trade deal being finalized how supplies this fall will be handled by the trade in the US is up in the air. Supplies of soybeans could fill up inventory space and make it hard for the new record corn production to work its way through the system. Supply side domination is most definitely occurring. It is very hard not to think that soybean prices will go lower without a favourable US / China trade deal completed.
If you would like to talk about the markets or price some of your crop for the future or in store, please reach out to us via phone or email to info@northgowergrains.com. Prices quoted herein are for product at our elevator.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Tony Mitchell | 613-227-2525
Office | 613-489-0956
