Nick Paumen

Oct 12, 2021

Highlights

Overall the market was in selloff mode in both the macro and ag sectors. The WASDE report came out about as expected with only a few surprises depending where you looked. Both corn and soybean markets saw double digit losses as production and carryout numbers increase. Wheat was about the only stronger market on the close today. Oats saw a correction day as well as RSI levels trade in heavily overbought territory.

  • Corn inspections this morning was at 746,200 MT vs. estimated range of 600,000-1,000,000, soybeans were at 1,611,731 MT vs. estimated range of 650,000-1,200,000, and wheat was at 435,173 vs. estimated range of 300,000-625,000.
  • Energy markets are mixed today with October crude up 4 cents at $80.56, USLD down .0132 at 2.5018, and natural gas up .096 at 5.441.
  • US$ down up .184 at 94.510, gold up 5.75 at 1,761, and silver down .075 at 22.590.
  • DJIA down 151 at 34225, S&P down 17.50 at 4,334, and lumber down 37.10 at 723.30.

Corn

The corn market didn’t have a good day prior to the report and it never improved. Corn yield was bumped up to 176.5 vs. and average estimate of 176.0 and 176.3 in September. Right now that puts yield at the second best number on record going back to 1992 and second highest production at 15.0 billion bushels. Carryout now sits at 1.5 billion bushels vs. 1.408 in September and 1.236 in October 2020. Total usage for 2021/22 corn was reduced by 20 million bushels, exports were actually increased by 25 million. World carryout came in larger than the average estimate of 298.76 MMT with the October update at 301.74 MMT, September was 297.63 and last year at 289.99.

  • The USDA announced a sale of 165,000 MT of corn to Mexico for 2021/22
  • Corn is expected come be rated at 59% G/E, same as last week. Harvest is expected to at 42% complete vs. 29% last week.
  • Brazil is estimated to be 44% planted in their first corn crop vs. 37% last week and 41% on average.
  • CIF bids perked up a bit for Oct shipment and quiet the rest of the slots, barge freight mixed but leaned more to the weaker side.
  • December 21 corn hit a low of 519’0 and we’ll look for support at its 200-day moving average of 518’0. The 200-day has not been broken since Sept 10th.
  • Closes: December 21 down 10’4 at 522’4, March 22 down 10’2 at 532’0, and December 22 down 6’2 at 521’0.
  • Spreads: The Z/H closed at 9’0 carry today, touched a low of 9’4 as it also had done yesterday. Z/K was weaker today as well and closed at 15’0 carry, and Z/N at 16’4 carry.

Oilseeds

Soybean futures were under pressure prior to the report and then only got worse once the USDA numbers were released. Not only was carry-in increased, but the increase in yield puts production at a record high level of 4.45 billion bushels. The USDA updated its yield map and the improved yields were heavily concentrated in west of the Mississippi, east of it was steady. Usage in this month’s report was only adjusted higher by 10 million bushels thanks to increased crush, exports held steady. World carryout held steady compared to the September report at 98.89 MMT, the average estimate was 100.72 and last year was 99.16. The USDA also kept Brazil production steady at 144 MMT and they reduced Argentina by 1 MMT to 51 MMT. There continues to be talk that China has been buying cargoes from the U.S. and Brazil.

  • Soybeans are expected to be at 58% G/E, same as last week. Harvest is expected to be at 50% complete vs. 34% last week.
  • Brazil is estimated to be 10% planted with their soybean crop vs. 4% last week and 9% on average.
  • CIF bids saw a similar situation as corn did with Oct shipment trading stronger, the rest of the sheet was steady. The national basis index has been showing signs of stronger basis lately and sits at -45.99 compared to -45.07 a month ago.
  • November futures traded/closed below 1200’0 for the first time since March of this year. We’ll look for futures to rebounded back above that level or next support sits down at 1184’0.
  • Closes: November 21 down 30’0 at 1198’2, January 22 down 29’6 at 1210’0, and November 22 down 21’4 at 1216’2.
  • December product closes: soyoil down 1.66 at 58.85, meal down 4.1 at 313.0, and board crush up 3.3 at 128.5.
  • Spreads (all new crop spreads made contract lows today): X/F closed at 12’0 carry, X/H at 22’2 with the low of the day at 23’0, X/K closed at 31’6 with a low of 32’6, and X/N closed at 38’4 with a low of 39’0.

Wheat

All three wheat futures markets closed higher today on a supportive report. Total wheat carryout for the U.S. now sits at 580 million bushels vs. 615 last month and 845 in Oct 2020. World wheat carryout was also seen as supportive with it at 277.18 MMT vs. an average estimate of 280.82 and 283.22 in September, and 288.36 last year at this time.

  • Winter wheat is expected to come in at 61% complete vs. 47% last week.
  • December closes: Mpls up 9’4 at 955’0, KC up 5’2 at 739’2, and Chicago up 2’2 at 734’0.
  • New crop 22 closes: Sept Mpls up 1’0 at 819’4, July KC up 4’0 at 744’6, and July Chicago up 0’6 at 740’6.
  • Spreads: Mpls Z/H stronger at 11’0 inverse, KC Z/H up 0’2 at 8’0 carry, and Chicago Z/H up 0’2 at 13’4 carry.