For farmers, looking at the grain markets in recent years has been all about trying to find silver linings. The overall picture simply isn’t good, but the hope is that some possibilities pop up.
That hasn’t changed in recent weeks as prices remain in their low trading range. Right now the overall outlook remains dismal, but there are some things farmers can check out in hopes of finding opportunities.
One small optimistic item is that the basis remains historically tight, according to Don Roose, president of U.S. Commodities in West Des Moines. That tight basis is good news for farmers as they try to find marketing opportunities.
There is some carry in the market, so farmers can try to squeeze a bit of a profit out of that by marketing into next year’s prices, especially if they have relatively inexpensive on-farm storage, Roose says.
For traders and farmers alike, a couple items were of interest going into this past week.
First of all, traders were waiting for the Dec. 10 USDA report regarding supplies and usage. Secondly, they were watching the weather in South America. At a time when the best hope for reducing large grain supplies is through a weather disaster somewhere in the world, the fact that Argentina has been dry recently and that the Argentine corn crop is nearing pollination is something worth watching.
It is also worth noting that trade and trade wars continue to be important. Traders have been watching to see if China and the United States would back away from the Dec. 15 deadline for more tariffs to go into place.
Long-term, the perfect scenario would be that the U.S. and China reach a trade agreement and that there is a crop failure in South America. That, Roose says, would certainly help farmers in the United States. But so far those scenarios appear distant.
In the meantime, farmers and grain buyers are likely to be looking closely at grain test weights and moisture levels, as well as the fact that as of Dec. 9 only 43% of the corn in North Dakota had been harvested as farmers there make the decision that it doesn’t pay to dry that crop this fall and are instead waiting until spring in hopes of harvesting something.