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GRAIN MARKETS: U.S. awaits Hurricane Harvey arrival

Hurricane strengthens to a Category 3.

By Ben Potter

Grain markets saw little movement on Friday, as inquiring minds wait to see whether Hurricane Harvey disrupts more than just Texas cotton acres.

Harvey strengthened to Category 3 storm later Friday, and is expected to make landfall just east of Corpus Christi early Saturday. It would be the first Category 3 storm to strike the U.S. since 2005. At least 17% of the Texas cotton crop is in the extremely vulnerable open-boll stage at this time.  Oil companies have also pulled workers from offshore platforms and onshore drilling this week. Cotton and energy prices are both up this week on the news.

At the Federal Reserve’s annual meeting this week in Jackson Hole, Wyo., chair Janet Yellen reiterated that regulators have learned valuable lessons from the 2008 financial crisis, but that “all too familiar” risks remain. Meantime, speculation has resurfaced over whether President Donald Trump will reappoint Yellen for a second term when it expires February 2018. On Wall Street, stocks finished higher on Friday and for the week overall.

Corn prices fell slightly at the open, settling into a narrow band of trading between $3.55 and $3.56 before falling all the way to $3.53 at close, setting a new contract low.

Some farmers have been selling old crop corn as they anticipate the upcoming 2017 harvest. That, along with ample global stocks and a USDA yield estimate of 169.5 bpa that won’t be revised for another two weeks, has been more than enough bearish news to keep corn prices on a steady downward trend since early August.

Preliminary volume estimates were 320,221 bushels, about in line with yesterday’s total of 315,780.

Soybean prices couldn’t repeat the success story from Thursday, with November 2017 slipping 2 cents to close at $9.45. However, soybean prices have picked up about 20 cents over the last 10 days, despite ample evidence that the U.S. could harvest a near-record crop this fall.

Preliminary volume estimates were 94,339 bushels, a sharp downturn from yesterday’s total of 156,764 bushels.

Friday morning, USDA reported export sales totaling 4.85 million bushels of soybeans for delivery to China during the 2017/18 marketing year, which begins September 1. USDA announced additional export sales of 3.87 million bushels of soybean cake and meal for delivery to Thailand for during the 2017/18 marketing year, which begins October 1.

Wheat prices fought for a 3.5 cent gain in early trading before cooling midday, with December 2017 Chicago SRW futures settling for a $0.075 gain to close at $4.3525. Still, wheat futures dropped another 5 cents for the week, finishing under $4.40 for the first time since May. Dismal U.S. spring wheat conditions (more than 40% is rated poor to very poor) might have had a bigger market impact, but significantly larger global stocks kept the door shut on the potential for any significant price rallies.

Rains in Europe have put a damper on crop progress and quality expectations in Germany, Poland and Britain. But France is looking at a soft wheat crop that could be 33% larger than last year’s harvest, with nearly all of the crop reaching 11.5% protein content. World ending stocks are currently estimated at 258.56 million metric tons and are projected to creep even higher for 2017/18.

Preliminary volume estimates came in at 99,804 bushels, down from yesterday’s total of 133,544 bushels.

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