This is the SFN Market Report with Brooks Schaffer of Palmetto Grain. Reach him at [email protected] or 843-540-4540.

Markets are already positioning ahead of the USDA report that will be released this Friday, Nov. 14, at noon. It was supposed to be released Monday, Nov. 10, but the government shutdown threw a wrench in that. On Monday, enough Democrats voted with the Republicans in the Senate to move toward opening the government. The House is expected to return and vote by Wednesday to get the government back open, but the timeline is still unknown. The November USDA report was announced even before there was progress on reopening the government, so there were at least some employees at USDA that were working. It is not exactly clear what all will go into this report and how accurate it will be, but it will give us an updated picture of yield and carryout now that the bulk of harvest is behind us. Market is expecting corn and bean yield to both be reduced modestly, but there is enough of a buffer in corn demand no one is expecting much of a change in carryouts. There is enough risk that we saw shorts covering early in the week ahead of the report.

Nov. 10 is when the U.S.-Chinese agreement on rare-earth minerals and magnets was supposed to go into effect. There are reports that China does not have enough rare-earth production for its own domestic needs, so it will have to curtail some domestic demand to export more. That is a possible stumbling block for the two sides if the U.S. believes China is dragging their feet too much. The market will be watching closely. China has been buying beans from the U.S. since the deal was reached, but we do not have a full count of how many. With an additional 10% tariff subjected on U.S. beans that is not charged on Brazilian beans, Brazilian beans have to be at least that much higher than U.S. ones to be competitive. China still has not publicly acknowledged the quantity targets the U.S. released, and the text is not available for the public to scrutinize. Most believe there is probably language that China will not buy U.S. beans at a higher price than offered by other suppliers. That is a pretty big loophole and was probably the reason that China claims it complied with the Phase 1 trade deal even though they did not purchase near the top-line quantities touted by the U.S. side. With the rally in the U.S. market, Brazilian beans are cheaper than U.S. beans again, and we have seen a lot of commercial Chinese buyers making deals for Brazilian beans. Getting the government back open will give us a better picture of how many beans they have actually bought so far.

The market is going to continue to trade with a lot of headline risk. We have shifted the range up higher and added a good bit of volatility, but will probably still trade rangebound. The USDA report on Friday could be a market mover in either direction.