On Tuesday, the CME Group’s farm markets attempt to stay in the green.
At midsession, the Dec. corn futures are 1/2¢ higher at $4.18 1/2. March corn futures are 1/4¢ higher at $4.18 1/2.
Nov. soybean futures are 1 1/4¢ lower at $10.86 1/4. January soybean futures are 2 1/2¢ lower at $10.81.
Dec. wheat futures are 2 3/4¢ higher at $6.22 3/4.
Dec. soymeal futures are $3.90 per short ton lower at $385.70. Dec. soy oil futures are 0.04 cent lower at 34.42¢ per pound.
In the outside markets, the NYMEX crude oil market is $0.70 per barrel higher (0.57%) at $39.26. The U.S. dollar is lower, and the Dow Jones Industrials are 104 points (0.35%) lower at 27,587 points.
The USDA Crop Progress report showed corn harvest at 72% complete, soybeans at 83% complete; the first winter wheat crop rating showed winter wheat crop rated 41% good to excellent.
Meanwhile, large export sales of soybeans and soybean meal were announced again on Monday.
Al Kluis, Kluis Advisors, says that investors will be watching the export pace of ag commodities going forward.
“The Chinese government will issue a lot more import tariffs so that they can buy more U.S. corn. The U.S. Trade Representative office said last week that China has reached 71% of the purchases they need to make of ag products to hit the goal of Phase 1 trade agreement. With soybeans over $10, they are likely to get to the $23-billion goal,” Kluis told customers in a daily note.
He added, “Watch the weekly export sales and where the load-out is being made. The Gulf and the Pacific Northwest (PNW) are booked to capacity through January. As new orders come in, soybeans are moving out of Duluth and other Great Lake ports to Europe. Export capacity is being pushed to the max.”
Monday’s Grain Market Review
On Monday, the CME Group’s farm markets close mostly lower.
At the close, the Dec. corn futures finished 1½¢ lower at $4.17½. March corn futures ended 1¾¢ lower at $4.18½.
Nov. soybean futures settled 4¢ higher at $10.87¼. January soybean futures closed 2¼¢ higher at $10.83¼.
Dec. wheat futures closed 12¢ lower at $6.20¾.
Dec. soymeal futures closed $3.20 per short ton lower at $389.60. Dec. soy oil futures ended 0.35¢ higher at 34.46¢ per pound.
In the outside markets, the NYMEX crude oil market is $1.32 per barrel lower (3.31%) at $38.53. The U.S. dollar is higher, and the Dow Jones Industrials are 753 points (2.55%) lower at 27,582 points.
On Monday, private exporters reported to the USDA:
- Export sales of 135,000 metric tons of soybean meal for delivery to the Philippines during the 2020/2021 marketing year.
- Export sales of 120,700 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.
The marketing year for soybeans began Sept. 1; soybean meal began Oct. 1.
Britt O’Connell, cash adviser for Commodity Risk Management Group, says that the commodity complex is carrying a softer tone to kick off the week.
“Overnight markets saw corn and soybeans trading higher and faded into the early morning hours. Soybeans set a new contract high overnight and corn tested Friday’s high. Both of these markets have seen a tremendous push on the long side from the funds, amassing over 200,000 contracts in both corn and soybeans. Both U.S. and South American weather patterns look amicable to field work, harvest here and planting there. That, paired with a slight slowdown in Chinese purchases, has the markets on thin ice,” O’Connell says.
She added, “Without continued bullish news, these markets are vulnerable to a correction lower. We continue to note the slow pace of farmer-selling with both basis and spreads doing a lot of work to get bushels moving. This will be an interesting trend to monitor, as we get into the back half of harvest. Can the market really be calling for all of its corn now? I feel a reckoning coming, something is going to have to give,” O’Connell says.
Al Kluis, Kluis Advisors, says that investors will see a new harvest progress number today from the USDA.
“The USDA Crop Progress report today will show corn harvest at about 75% complete and soybean harvest at 82%. Crop harvest is going to slow down with the last 20% of the corn taking till Thanksgiving to get out,” Kluis told customers in a daily note.
He added, “I am watching the bull spreads in corn. The spread between December 2020 and July 2021 corn has gone from a 14¢ carry three weeks ago to just 1¢ on Friday. If December corn closes above July 21 corn, then it suggests new highs again in the corn market.”
Heading into this week, the funds remain long the ag commodities markets, according to Friday’s Committments of Traders Report.
The CFTC Commitments of Traders report shows that funds are buying.
- Corn = 48,000 contracts were added, making the outside investors now long 218,000 contracts.
- Soybeans = 5,000 contracts added last week, now they are long 231,000 contracts.
- Wheat = When all three exchanges are combined, the funds are long by 95,000 contracts.