Ami Heesch

Sep 28, 2021

Highlights

Grain markets were on the defensive with weakness in outside markets, and strength in the US$. Additional pressure stemmed from harvest pressure and positioning ahead of Thursday’s USDA Small Grains and Sep 1 Grain Stocks reports. US stocks saw a broad-based selloff as the investment community fled the equities markets on rising Treasury yields and inflation concerns. The US$ firms on actions in the Treasury market.

 

  • The energy markets are mostly weaker with crude oil down 39 cents at $75.06/barrel. Natural gas values continue to surge, trading up 0.171 at 5.841.
  • US$ up 0.384 at 93.767 after tickling 93.806 (a level not seen since last November).
  • DJIA down 351 at 34518, S&P down 66 at 4366 and the NASDAQ down 328 at 14640.
  • USDA Small Grains Summary and Sep 1 Grain Stocks reports are scheduled for release on September 30 at 11 AM CDT.

     

     

    Corn

    Corn values were on the defensive from strength in the US$ and falling stocks and crude oil prices.  Additional pressure stemmed from harvest pressure as the corn harvest gets underway. Early reports are that yields are better than expected (similar to that of spring wheat, when its harvest began).

     

  • Closes: December down 7 cents at $5.32 ½, March down 6 ½ cents at $5.40 ½, July down 5 ¾ cents at $5.45 ½, red Dec down 2 ¾ cents at $5.15 ¼.
  • CIF premiums were mostly unchanged for S/O/N. Processor bids in the ECB were steady to 33 cents weaker. ECB ethanol bids were mixed (up 2 cents to down 25 cents).
  • USDA announced the sale of 150k tonnes of corn to Mexico for the 2021/22 marketing year.
  • Weather mostly favorable for harvest activity. Farmers are actively reaping this year’s corn crop as moisture levels continue to drop (hearing moisture levels from 13% to 22% in some areas.
  • The Average trade estimate for Sep 1 Grain Stocks is at 1.155 billion bushels (0.998-1.252), 1.919 billion bushels in Sep 2020 and 4.112 billion bushels in June 2021.
  • Average trade estimate for the 2020 corn crop is at 14.173 billion bushels (14.102-14.207) compared to 14.182 billion bushels in August 2021.
  • Spreads: Z/H 8 carry, H/K 5 ¼ carry, N2/Z2 29 ½ inverse.

     

     

    Oilseeds

    Soybean prices were pressured from harvest activity as well as  a broad-based selloff in the US stock market and a stronger US$. Early harvest reports in North Dakota are coming in anywhere from 3 bushels per acre to 45 bushels per acre.

     

  • Closes: November down 10 ½ cents at $12.77, January down 10 ½ cents at $12.87, July down 10 ¼ cents at $13.00 ½, and Red Nov down 9 ½ cents at $12.51 ¼.
  • The products were weaker with soymeal down 30 cents at soyoil down 60 points.
  • CIF premiums were mostly unchanged for S/O/N. Processor bids were mixed (up 5 cents to unchanged to down 25 cents.
  • Farmers have been getting after this year’s soybean crop as weather continues to be mostly favorable and the crop continues to dry down to seriously low levels (hearing 8-8.5 moisture in some areas).
  • Farmers in Argentina were said to have sold nearly 30.5 mmt of their 43.1 mmt 2020/21 crop. The BA Grain Exchange estimates their 2021/22 crop near 44.0 mmt with planting to begin in October.
  • The canola market was mixed with the November contract 1-2 bucks firmer and the Jan contract 1-2 bucks weaker.
  • The average trade estimate for Sep 1 Grain Stocks is at 0.174 million bushels (0.145-0.202), 0.525 million bushels in Sep 2020 and 0.767 million bushels in June 2021.
  • Average trade estimate for the 2020 soybean crop is at 4.136 billion bushels (4.119-4.155), compared to 4.135 billion bushels in August 2021.
  • Spreads: X/F 9 ¾ carry, X/H 15 ¼ carry, X/N 23 ¼ carry, F/H 5 ½ carry, N2/X2 49 ½ inverse.

     

     

    Wheat

    The wheat market was a follower of the weakness in the row crops. Pressure also stemmed from strength in the US$. Algeria bought nearly 500k tonnes of optional origin wheat at $364/tonne for November shipment.

     

  • December closes: Mpls down 14 ¾ cents at $9.07 ¼, KC down 15 ¾ cents at $7.05, and Chicago down 15 ¾ cents at $7.06 ½.
  • EU wheat prices closed higher on hopes of France being awarded business in Algerian tender because of rising Russian wheat prices. Prices drew additional support from weakness in the Euro.
  • Winter wheat seeding advances on favorable weather conditions and harvesting of row crops.
  • The BA Grain exchange estimates the 2021/22 wheat crop at 19.2 mmt with harvest expected to begin in November. Farmers are said to have sold nearly 7.0 mmt of their new crop production.
  • The average trade estimate for Sep 1 Grain Stocks is at 1.852 billion bushels (1.775-1.998), compared to 2.158 billion bushels last September and 0.844 million bushels in June of 2021.
  • Spreads: Mpls Z/H 12 ¾-14 ½ inverse, KC Z/H 8 ½ carry, Chicago Z/H 12 ¼ carry. Mpls Dec sits at a $2 premium to the KC and Chicago Dec. Chicago Dec sits at a half-cent premium to the KC Dec.