Nick Paumen

Oct 13, 2021

Highlights

A risk-off day in the ag markets as the market digested the report and the technical market appeared to want to bail from the markets. Tomorrow we will get the ethanol report for the week and export sales will be out Friday morning.

This morning the USDA announced a flash sale of 161.5k MT of corn sold to unknown, 330k MT of soybeans to China, and 198k MT of soybeans to unknown.

  • Reuters reported this afternoon the John Deere workers are set to go on strike as UAW fails to reach a deal.
  • Energy markets mixed today with crude down .12 at 80.12, USLD up .0141 at 2.5241, and natural gas up .142 at 5.647.
  • U.S. $$ down .504 at 94.015, silver up .546 at 23.060, and gold up 33.75 at 1793.0
  • DJIA down 2.0 at 34258, S&P up 13.50 at 4353, and lumber up 19.20 at 749.80.

Corn

Futures continued to fall today as there wasn’t any support to be find in other markets and the fresh fundamentals from yesterday point to an overall bigger carryout. Volumes and ranges were large today as the funds were heavy sellers. The report yesterday wasn’t as hard on corn as soybeans but still enough to cause funds to sell today. Corn production sits at the second highest on record, yield in the same spot. Going forward it will be a question on if harvest finds even stronger yields, and how demand will look going forward.

  • CIF markets were a penny stronger through November and quiet everywhere else. Barge freight also showed stronger trade.
  • December 21 futures broke its 200-day moving average for the first time since September 8th, after which it was able to rebound back above it so we’ll see if that happens again.
  • Closes: December 21 down 10’2 at 512’2 with a low of 506’6, March 22 down 10’0 at 522’0, and December 22 down 6’2 at 514’6.
  • Spreads: Z/H was weaker today and closed at 9’6 carry, the lowest close since Sept 7th, Z/K was at 15’6 carry, and Z/N closed at 17’6 carry but hit a low of 18’0.

Oilseeds

Soybean futures were under heavy pressure for the majority of the day and then had a bit of recovery to close well off the lows of the day. The rest of the soybean complex enjoyed a stronger close. The WASDE painted a lot nicer outlook for the soybean balance sheet than we had this time last year thanks to record production and second best yields on record. We saw the flash sale to China this morning, and also to unknown, with rumors that China bought another 4-6 cargoes today. Custom reports today showed that Chinese imports for September were at 6.88 MMT, down 30% from last year and the lowest total for September since 2014. U.S. inspections continue to improve as we saw yesterday and domestic crush margins remain strong, just a matter if bushels can be procured.

  • CIF bids stronger today for many slots but weaker for January shipment.
  • November 21 soybeans hit a low of 1184’4, ½ cent above the next support line/low from March 21. It was encouraging to see soybeans close done less than a nickel.
  • Closes: November 21 down 3’0 at 1195’2, January 22 down 4’0 at 1206’0, and November 22 down 7’4 at 1208’6.
  • December product closes: soyoil up .74 at 59.59, meal down 1.3 at 311.7, and board crush up 8.3 at 146.0.
  • Palm oil traded to new contract highs as India cut import taxes by 2.5% to zero on vegetable oils.
  • Spreads: X/F was up 1’4 at 10’2 carry with a low of 12’0 carry, X/H up 2’0 at 20’2, X/K up 1’6 at 30’0 carry, and X/N up 1’6 at 36’6.

Wheat

All three wheat markets saw heavy pressure today with KC seeing the worst damage, Chicago second, and Mpls coming up next. Paris milling wheat futures were also down 6.75 at 264.75 just one day after making contract highs. The balance sheets are supportive to wheat futures so today’s trade seemed to be more of a correction. Total wheat stocks to use sits at 28.8% compared to 40.0% last year in the U.S. and world wheat carryout is at 277.18 MMT compared to 288.36 MMT. HRW continues to get seeded with the case continuing to be built of higher acres as we see moisture and high prices for new crop 2022.

  • December closes: Mpls down 6’2 at 948’6 with a low of 935’0, KC down 18’0 at 721’6 and a low of 716’0, and Chicago down 15’2 at 718’6.
  • New crop 22 closes: Sept Mpls down 7’4 at 812’0, July KC down 16’6 at 728’0, and July Chicago down 14’0 at 726’6.
  • Spreads: Mpls Z/H even at 11’2 inverse, KC Z/H even at 8’0 carry, and Chicago Z/H u p0’2 at 13’0 carry.