GOOD MORNING,

The markets opened on a steady note, but the weight of harvest upon the markets sent prices into the red even though they remain off their Friday lows for now.  The report was neutral to bearish, but the hurricane had factored in much negativity before the data leaving room for a relief rally.  End-users, bargain hunters, and bears took advantage of the price drop in corn Friday to square up, while new sellers could be looking to go short in beans on a rally.  

Here is a further break-down of the report:

Corn:  yield at 176.3 bpa with production at 14,996 mln bu was higher than expected.  Planted acreage waas up .6 mln acres.  Illinois yield was record large at 214 bpa.  Other record yields were noted for Indiana, Ohio, and Kentucky.  NASS ear count data was the second highest on record for Illinois, Indiana, Nebraska, Mo., and Iowa.   China's corn imports were maintained at 26.0 mmt for both 20/21 and 21/22.  21/22 corn carry-out was raised to 13.0 mmt to 297.6 mmt, largely due to an increase in China's carryout and a 4.2 mmt increase in US carryout.  Gist of report was neutral to bearish, but price action before the report may have already priced it in and tech action was more indicative of a trading range moving ahead.

Soybeans:  yield at 50.6 bpa vs. 50.0 bpa, in line with trade expectations, and production at 4,374 mln bh.  Record yields were again in Illinois, Indiana, Kentucky, and MO.  NASS objectives had soybean pod counts below last year level for 9 of the combined 11 producing states.  Most acreage reductions were clustered in the ECB, which was a bit of a surprise.  China's bean imports for 20/21 were raised 2.0 mmt to 99 mmt, with 21/22 unchanged at 101.0 mmt.  Tech action was more positive than negative, and could find traders in a buy beans/sell corn mode moving forward.

Soyoil: carryout was raised 65 mln lbs to 1,858 mln lbs on the decline in soyoil production, which was offset by a 375 mln lbd downward revision in soyoil use for biofuel.  21/22 soyoil carryout was raised 25 mln lbs to 1,478 mln lbs, which is a tightening situation.  Meal production was reduced by lower crush which was offset by a 650 tmt reduction in domestic feed use. 21/22 world bean carryout raised by 2.7 mmt to 98.9 mmt, due to an .8 mmt increase in the US and a 2.0 mmt in China to 35.0 mmt vs. 32.8 mmt year ago.  Gist of report was neutral, with technicals seeming to define a harvest low.  However, there is more harvest to move through, so we could still revisit lower prices again.  Stocks-to-use ratio is tight at 3.9% for 20/21, and 4.2% for 21/22.  

Wheat:  lowered wheat imports by 10 mln bu to 135 mln bu on the 1.0 mmt reduction for Canada to 23.0 mmt, and raised food use to 2 mln bln 964 mln.  Uptick in 21/22 world wheat production by 3.4 mmt to 780.3 mmt was due to the 1.5 mmt in Australian wheat production to 31.5 mmt.  Gist of report was neutral, but technicals should maintain a trading now with tenders active and demand good.  A push for quality wheat and feed demand is an ongoing trend.  

 

--Western Argentina is still in need of rainfall.  Southern Brazil is going to be wet this week.  There are more discussions about the return of La Nina disrupting crop production for SA.  

--Weather this week in the US should remain conducive to harvest.   There was practically no rainfall in the Midwest, the Delta, or the southeastern states this weekend. Weather for the week will be mixed with periods of rain and sunshine, but net drying is expected over the Great Plains.  

REPORTS

Commitment-of-Traders report disaggregated futures / options as of Sep. 7, in contracts:

beans:  net long 57,516

meal:  net short 7,762

soyoil:   net long 53,080

corn:  net long 215,172

wheat:  net long 5,167

Fund liquidation continues, even in corn where funds sold 44K last week.  Gist of COT is bearish, as bullish trends find open interest moving higher, while bear markets invite this type of fund liquidation.  Meal flips from net long to net short for the first time.  Report is still positive for oilshare.  

DELIVERIES

Soyoil:  39

Chi. wheat: 60     JP Morgan put out 60 and Wells Fargo stopped 55

KC wheat:  1

ANNOUNCEMENTS

Russian wheat exports fell 21.6% to 6.7 mmt between July 1 and Sep 9, as reported by the Ag Ministry.    Russian wheat prices were up for the ninth consecutive week as the country's export tax continued to grow, analysts reported.  SovEcon reported, "Russian wheat continues to lose its competitive edge, but the unpredictable export tax dos not allow exporters to lower prices."

CALLS

Calls are as follows:

beans:  3-5 lower

meal:  1.20-1.50 lower

soyoil:  5-8 higher

corn:  5-6 lower

wehat:  6-7 lower

OUTSIDE MARKETS

Stocks 70 pts higher with crude oil back over $70/barrel to $70.78/barrel, and the US dollar trading to 92.61.  Stocks are up 180 pts.

TECH TALK

• November beans continue to rally but prices now have to trade above the peak high last week of $13.05 to rally further.  Price action indicated that the $12.95-$13.00 level may now be taken by some as a selling opportunity in what looks to be a $12.60-$13.00 market over the next several weeks.   Trend is weak with an ADX of 13.  Look for sideways action, but if prices continue to stall at $13.00 the next major direction will be lower.  
• The December meal chart is also showing consolidation trade without much follow-through to the topside over $345.00.  Think the market revealed its trading range to us with the rally to $345.00, and would look for the possibility that we could trend down towards $335.00 again at some point.  If needing to price, could remain patient.  
• December soyoil futures traded to 5536c which could become a low in a 55c -60c market.  Would look for another probe of 55c but think the chart could continue to hold it for now.  
• December corn also could have revealed its range on report day which is currently from $4.97 - $5.30.  Prices are now posting an inside day of trade, and conditions are just slightly oversold at 33%.  Once corn begins to make new lows, it typically walks back to verify them.  Would not be surprised to see Dec. corn test $5.00 once more.  
• December wheat makes good on its lower journey now looking at a head and shoulders top.  One projected low has now been placed at $6.77 which is close to $6.75 place in July.  A cycle low appears to have been completed, and wheat tends to rally back on air after these targets are hit.  Projected lowest low target is $6.65, but think that it will be choppy going to get there.  

DECEMBER CORN

Corn futures traded from $4.97 1/2 to $5.24 Friday which was an outside day closing higher, but not a key reversal or firmer technical signal.  Would look for corn prices to remain rangebound between very good resistance on a bounce from $5.25 - $5.30 from current lows.  The ADX is fairly weak at 18, meaning that a sideways price pattern is now likely to develop.  However, once corn prices make a low, they tend to have to go back and verify again.  Would note that the low was under the May 26, 2021 low of $5.00 1/4.  

TAGS – Feed Grains, North America