USDA gifts, basis moves, and the mysteries of Chinese buying — a LIVE! Q&A with Matthew Pot

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Farmers have enjoyed an extremely rare harvest rally in several grain markets. For a discussion for what’s behind the corn, soybean, and wheat market moves, this RealAg LIVE! features Matthew Pot, of Grain Perspectives!

Don’t miss RealAg LIVE! weekdays at 1 pm M/3 pm E on your favourite social media platform!

SUMMARY

  • Corn ending stocks were 3.3 billion, and now we’re talking 2.167 billion now. Yowzers. The USDA gives and takes, right?
  • The report gave us two gifts, Pot says. September numbers were lower than expected. Then, harvested acres decreased by a million.
  • Was the ’19 crop smaller than we first thought?
  • Pot and Haney spoke last fall that we wouldn’t really know until now as to the final size of the ’19 crop
  • Ontario basis at the elevator, in general, is strong for a harvest basis. Futures look decent, too. Lots of good news in the Ontario market, y’all. Which may be is a surprise
  • China demand has probably filled the ethanol pull-back, and there may be more demand coming
  • Ethanol numbers for 20-21? Down from 2019, sure, but possibly the current guess is too lofty
  • Gasoline consumption is going to be down
  • But China buying could make up the difference, easily
  • USDA report overstated ethanol use, probably corn for feed, too.
  • Spring wheat could follow along with winter wheat, stocks have been relatively low
  • Wheat complex in general
  • Funds snap back? Funds aren’t overly long in the wheat market. How much meat is left on this steak?
  • You won’t lose by incrementally selling the news, year over year
  • But yes, you could manage to “hit the highs” this year by being undisciplined. It’s not the norm! And much higher risk.
  • What about the fight for ’21 acres? Too soon?
  • Soybean acres are perhaps most likely to swing way to the top side, but it could be influenced by how corn ending stocks shakes out
  • Will the U.S. election have an impact on market volatility? A landslide would be steady, but it’s the unknown that impacts markets, currency, etc.
  • Does who wins change the Phase 1 deal at all? We don’t know.

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