Nick Paumen

Aug 2, 2021

Highlights

  • Mixed grain markets this morning with wheat leading the way, mixed futures in corn, and lower in soybeans. Macro markets are also mixed.
  • Oil prices are under pressure this morning as surveys showed slow factory growth in the world’s second-largest oil consumer, and also pressure comes from concerns over higher crude output from OPEC+ producers.
  • The 6-10 and 8-14 day forecasts continue to call for hot and dry conditions as moisture continues to lack in the western corn belt.
  • There were 95 soymeal deliveries and 1 soyoil.
  • The next WASDE report is scheduled for August 12th.
  • Outside markets as of 7:00: DOW up 118 at 34979, S&P up 19.50 at 4408, crude down $1.10 at $72.85, and mini gold down 7.00 at 1810.

Corn

  • Futures are in a tug-o-war this morning between the higher wheat market and lower soybeans.
  • The debate on harvested acres will continue this week as talk of silage being chopped 6-8 weeks early starts up.
  • Friday’s CFTC report showing non-commercial funds buying 2860 contracts to put them net long 154422.
  • Early safrinha yields in western Parana continue to disappoint with yields this year around 47.7 bu/ac, normally they are in the range of 95-105 bu/ac.
  • Open Interest was up 2,064 contracts with Z down 2,061, K down 1,239, and Z22 up 1,352.
  • Spreads: U/Z at 0’2 carry, Z/H at 8’0 carry, and Z/K at 12/4 carry.

 Outlook: Mixed futures as traders continue to look at forecasts and debate if the eastern corn belt production will make up for the losses in the west.

Oilseeds      

  • Soybeans are feeling pressure this morning as the forecasts call for rain in many of the soybean growing areas as we enter the critical month of August.
  • Soyoil futures are under pressure this morning, along with palm oil. Palm oil is under pressure as July data shows 1.42-1.44 million tonnes were shipped vs. 1.51-1.54 in June.
  • The USDA will release their crush data for June this afternoon with an average 162.1 million bushels crushed during June. That would be a drop from May when 173.5 were crushed, and down from 177.3 in June of 2020.
  • Friday’s CFTC report showed soybean funds sold 6,134 contracts to sit long 29,256 contracts, soyoil sold 1,108 contracts to go long 27,640, and meal sold 1,617 to sit long 6,179.
  • Open interest up only 796 contracts with Q down 1,585.
  • Spreads: Q/X at 67’4 inverse, X/F at 5’0 carry, and X/H at 1’6 inverse.

 Outlook: Trading down 10+ cents as weather models call for rains across the midwest, despite amounts not adding up to much and hot temperatures set in.

Wheat

  • Strong markets this morning as there is strong buying interest to start the week.
  • Strength also stems from Russia’s state weather forecaster cut their crop estimate to 81 MMT, last week IKAR dropped their estimate to 78.5 MMT, the USDA sits at 85 MMT.
  • Russian wheat with 12.5% protein loading out of Black Sea ports traded $254 FOB at the end of last week, up $6 from the previous week.
  • Wheat tender news this morning appears to be routine business.
  • CFTC report showed Mpls funds sold 534 contracts to sit long 8326, KC bought 3885 to go long 13707, and Chi bought 3463 to be short 29255.
  • Spreads: Chicago U/Z at 9’2 carry, KC U/Z at 11’0 carry, and Mpls U/Z at 13’6 inverse.

 Outlook: Double digit gains in KC and Chi market and Mpls bringing up the rear as we trade Russian news this morning and look at yield reports coming from the northern plains.