Daily US grain report: political developments squash buying interest in grain futures

US grain futures prices were steady to weaker in overnight trading. Corn was near steady, soybeans down around 2 cents and wheat about 3 cents down.
calendar icon 25 September 2019
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Some keener risk aversion in the world marketplace at mid-week is a bearish weight on the grain markets. Trader and investor risk sentiment has up-ticked at mid-week, mainly because of two developments on Tuesday. The first is the harsh rhetoric coming from President Trump in a speech to the United Nations assembly in New York Tuesday morning. Trump slammed China for its unfair trade practices and said the world is no longer embracing "globalisation." Trump said "nationalism" is the new bent among the major countries of the world. Trump's strong words against China seemingly can't help but decrease the odds of a substantial US-China trade agreement anytime soon.

Bears have overall chart advantage but market low likely in place and bulls working on price uptrend now
Bears have overall chart advantage but market low likely in place and bulls working on price uptrend now

© Jim Wyckoff

The second development on Tuesday was that the US House of Representatives is now considering impeaching Trump over what the House says are improper and illegal comments Trump made to a Ukrainian official. Trump responded that he will release the transcript of his comments to the official. Whether Trump actually gets impeached seems unlikely, at this time. However, the inquiry by the House is likely to bog down the US government and could hamstring Trump's foreign policy agenda, including trade negotiations with China.

Focus of grain traders is still on any fresh purchases of US grains by China, as seen in the daily or weekly export sales reports from USDA.

Recent price action and the technical charts still suggest "harvest lows" are in place for grain futures prices.

Bulls and bears on level overall near-term technical playing field amid recent choppy trading
Bulls and bears on level overall near-term technical playing field amid recent choppy trading

© Jim Wyckoff

Weather in the US Corn Belt has been too wet in many areas and too dry in a few areas, which is prompting some concerns about crop quality as harvest begins. The northern US plains and the Canadian prairies have also been too wet for ideal crop conditions. There is now talk in the grain markets of a killing frost in the northern Corn Belt later next week. This could limit the selling pressure in the grain futures in the near term.

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