Market volatility possible following WASDE report
The president of a global brokerage company said she expects to see more volatility in the grain market following USDA’s release of the October WASDE report.
But Virginia McGathy tells Brownfield the market didn’t initially move much following the report.
“I thought it would’ve been a little bit more wild of a market,” McGathy said. “Meaning, that if we rallied up [there] would be big selling and it would push the market down and that we would perhaps have a limit move. We didn’t quite get that.”
She said a sizable range did develop Friday, creating a lot of risk management but also opportunity for traders and farmers. McGathy said if traders participate in follow-through buying, it could reshape the grain market.
“Traders are still looking for China to continue to keep their demand coming for U.S. products,” she said. “If they do, it’s really going to create some tight supply situations which will change the whole tapestry of the market for the rest of the winter.”
But she said if the market starts to turn, it could cause a ‘major correction’ dropping prices back down.
In the report, USDA lowered 2020 its corn production outlook by less than one percent from September and soybeans fell by one percent from last month. McGathy says she thought the drop in production was mostly priced into the market before the report was released.