Ami Heesch

Sep 14, 2020

Kevin Stockard

Highlights                                           

  • The U.S. ambassador to China, Terry Branstad, is retiring, a move China was unaware of until it was announced by Secretary Mike Pompeo on twitter.
  • The DOW is up 250 this morning, as several big deals were announced including Oracle taking over social media platform TikTok in the U.S., in what Reuters calls, “a partnership rather than an outright sale.” TikTok drew the ire of President Trump last month over data security, and the deal will need his approval.
  • Pfizer’s CEO says he estimates a more than 60% chance we will know if their Covid-19 vaccine works by the end of October. Storage of the vaccine may be an issue for distribution as it needs freezers that can reach 94 degrees below zero.
  • According to TomTom, traffic congestion in Europe and Asia is down just 15% from a year ago, while U.S., Canada, and Latin America are still down about 50%.
  • Funds were big sellers of crude oil and crude products in the week ending Sep 8, most in over two years, including 57,391 crude oil contracts, although they are still net long 269,488 crude contracts.
  • As of 6:55 am CT, crude oil is up 1 cents at $37.34/barrel, gold is up 4.20 at $1,952.10, DOW up 236 to 27,848, dollar index is down 300, and Euro is up 380 pts.

Corn 

  • China’s corn import forecast was raised by 2 MMT to 7 MMT, as they noted a “significant increase” in U.S. purchases.
  • Ukraine has exported 9.2 MMT of grain this marking year compared to 10.3 MMT the previous season.
  • Some oil refiners may receive government aid, after the EPA denied their appeals for waivers on biofuel blending requirements.
  • Weekly Commitments of Traders data through 9/8/20 showed funds were net buyers of 14,835 corn contracts and are now net long 33,494. 

Outlook:  Dec futures flat to up 2 ½ overnight.. Dec corn is impressively holding around 3.70 as demand remains strong. Trade may also start taking a look at the South American moisture deficits.

Oilseeds 

  • China is believed to be interested in buying more U.S. beans, as their crush margins are at $38/ton.
  • China’s Dalian no1 beans were up 23 ¼ overnight, soymeal up 10.20, and soyoil up 93. Malaysian palm futures were up 86 ringgits.
  • Canola futures rallied to contract highs on Friday as frost risk in Canada drew headlines. Funds are long a record 48,103 canola contracts.
  • Weekly COT data showed funds were net buyers of 11,300 soybean contracts, now net long 173,907. They were also buyers of 16,248 soymeal and 3,742 soybean oil, now net long 32,119 and 85,299 contracts respectively.

Outlook

Nov beans flat to up 12 ¾ overnight..  the rally continues to be supported by strong buying interest from China, with frost concern in the Dakotas and Canada added to the mix. However, futures have backed well off their overnight highs.

Wheat

  • ABARES estimates 2020/21 winter crop production at 47.9 MMT, second largest on record. They raised their wheat estimate by 2.2 MMT to 28.9 MMT
  • Stats Canada will release production estimates this morning.
  • Saudi Arabia bought 685,000 MT of 12.5 pro hard wheat at $251.13 C&F for Nov-Jan shipment and 60,000 MT of 11 pro milling wheat at $245.37 C&F for Nov shipment.
  • Weekly COT data showed funds were net sellers of 9,294 Chicago wheat contracts and are now net long 23,175 contracts. They were net buyers of 5,763 KC wheat and 5,131 Minneapolis wheat, now net long 8,923 and net short 4,921 contracts respectively. 

Outlook:  Dec KC wheat down 2 to up 4 ¼ overnight..  Saudi tender may be a little cheaper than expected. Futures are being supported by corn and beans.