Nov beans: 4 higher
Dec meal: 1.60 lower
Dec soyoil: 90 higher
Dec corn: 4 higher
Dec wheat: 9 higher
The markets opened as called but once again put in a good rally as this is month's end/quarter, first notice day for October, and position-squaring in front of the Sep. 1 Quarterly Stocks report. Corn once again led the trade higher, with wheat futures also well bid. Oilshare worked higher as soyoil futures traded towards new highs for the move up.
At 11:00 central time, here is what the report said:
9/1 average 9/1/20
corn 1.236 bln bu 1.167 1.919
beans: 256 mln bu 172 525
SMALL GRAINS SUMMARY
9/30 average 2020
all wheat 1.646 1.681 1.826
winter 1.278 1.321 1.171
HRW 749 778 659
SRW 361 366 266
white 167 174 246
spring 331 329 586
durum 37 34 69
Reaction to the report was bearish corn and (very bearish) beans, friendly wheat.
beans: ending stocks higher than expected, but 51% lower than year ago, and still the lowest in five yrs. USDA reports that 68.1 mln bu were on -farm, while 188 mln b were in off-farm locations. Disappearance, or usage, from June to Aug was 513 mln bu, 40% lower than yr ago. USDA revision of production upwards of 80.8 bearish. Planted area is 83.4 mln acres and harvested at 82.6 mln.
corn: stocks came in at 1.238 bln bu, the lowest in seven years and down 36% from year ago. On farm stocks were 394.9 mb, down 47% from year ago. Off-farm stocks were 841.58 mb, down 28% from year ago. June-Aug 2021 disappearance was 2.87 bln bu, vs. 3.08 bln bu from year ago. 2020 grain production was revised lower by 71 mln b from the prev. estimate.
wheat: all wheat at 1.65 is down 10% from 2020 and a large drop from Aug. WASDE at 1.697 bln bu. 419 mb were stored on farm, while 1.36 bb were off-farm. Usage for June to August 2021 was 711 mb, 2% higher than prev. year.
- The soy complex opened as called but soyoil futures rose sharply taking beans along for the ride. Dec. oilshare trades up to 46.70% and becomes the main feature of the morning. Traders buying soyoil/selling meal results in Dec. meal testing lower support at $338.00, later breaking it after the relase of the report. Crush trades to 1.00c/bu. The strong pace of bean export sales put a bid to opening values as bears sought coverage. Prices in November beans stabilize above the 200-day moving average as new buying flows into the market before the USDA report but is followed by a quick downside reaction post report.
- The lack of export sales was interesting, since China was on the balance sheet for 419 kmt. USDA does not have to report any sale less than 100,000, so it seems that business is getting done anyway. Bean export sales now stand at 23.225 mmt vs. 33.448 mmt year ago, with China taking 11.270 mmt of it. We will get US crush data on Friday, but as far as Chinese crushings, it is reported that as many as half of the crushers in the north and northeast have been closed since a week ago, and will remain so until Oct. 2.
- In deliveries, there were 89 soyoil receipts, with zero meal. The report resulted in a large bean break to new lows while soyoil held its ground against a meal market which finally triggered sell-stops to new lows as well. At midday, beans/meal continue sharply lower, trying to digest the USDA numbers, which they will have to do.
- Prices rallied smartly into the USDA number with ideas that the report today could be friendly corn and wheat, more bearish beans. The report set that into play, but was more bearish corn than some had expected. The Dec wheat/corn spread traded from 1.69c up to 1.94c after the report. Dec. corn was able to generate a new trading range high at $5.48 1/2 before succumbing to sharp sell-off post numbers.
- Spreads were firmer with Dec/March corn narrowing into 7 1/4c from 8 1/4c, while Dec 21/22 inverse traded lower to 12c from 24c post USDA numbers. December wheat successfully tests lower key support at $7.01 with a run to new highs at $7.32 3/4. However, weakness on the board may pressure wheat into the close, keeping the rally in check. Dec /March wheat carty narrows into 10 1/2c from 12 1/4c.
- At the noon hour, corn is lower against higher wheat, trying to hold on to key support in Dec at $5.25-$5.30.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
Nov beans: 33 lower 12.95 12.49
Dec meal: 12.00 lower 341.30 328.50
Dec soyoil: 6 lower 59.50 57.25
Dec corn: 7 lower 5.48 1/2 5.27 1/4
Dec wheat: 14 higher 7.32 3/4 7.01 1/4
Nov canola: 5.40 lower 909.20 885.30
Stocks are 170 pts lower at midday as worries continue over a potential gov. shutdown. Crude oil trades to $75.91/barrel with the US dollar at 94.10.
The report was simply bearish beans, as a 250 mln bu ending stocks number is now considered comfortable. Corn ending stocks are still tighter, while wheat is thrown into new highs on a friendly report.
At the end of the day, charts are now bearish beans with an outside day likely closing lower. Target low is $12.40 for now, as this was the low in June before the rally for Nov. Corn will also feature an outside day closing lower, suggesting that at some point we could revisit the 200-day moving average at $5.13. At this point, seems like Dec. corn will walk it back to see if $5.25 is the lower end of a trading range or not. Wheat charts are sideways to higher, but higher prices will price wheat out of the market.
Would look for today to set off the following trends based on number:
buy wheat/sell corn
buy corn/sell beans
buy soyoil/sell meal
When China gets back from holiday, they will certainly like the prices they see. If they were waiting for a big break before stepping in, they got it. Even with today's break, think we could be close to harvest lows, perhaps more for corn than beans. Beans will have to now throw off a good tech signal to indicate the lows are in, however, which is not going to happen today.