THE OPEN

November beans:  2 higher

December meal:  .40 lower

December soyoil:  37 higher

December corn:  steady

September wheat:  3 lower

Prices opened as expected with a minor bounce in corn met with some early hedge pressure pre-report, as a just-in-case the report was bearish.   Wheat prices languished at trading range lows into the report.  Grains continued to see pressure into the report.   Other key features included a rebound in oilshare off higher palm oil and crude prices.    The August report was neutral to bearish for corn and beans, but short-covering was noted after the numbers were released.  

The August 12 WASDE was as follows:

Corn        15,278    15,163      15,330    14,815    15,000      13,617

Soybeans    4,425     4,278       4,499     4,150     4,135       3,552

All Wheat   1,838     1,832       1,856     1,795     1,824       1,920

Winter      1,304     1,215       1,232     1,193     1,218       1,304

HRW         695       710         720       700       710         833

SRW         277       279         295       270       280         239

White       274       228         235       224       227         232

Durum       62        57          61        55        56          54

Other       577       560         574       550       550         562

            U.S. AVERAGE YIELD (Bushels Per Acre) 2020-21 (WASDE)

            Aug       Avg         High      Low       Jul         2019-20

Corn        181.8     180.3       182.5     177.5     178.5       167.4

Soybeans    53.3      51.4        53.0      50.0      49.8        47.4

            U.S. ENDING STOCKS (Million Bushels) 2019-20

            Aug       Avg         High      Low       Jul

Corn        2,228     2,263       2,388     2,150     2,248

Soybeans    615       615         640       578       620

Wheat       1,044     1,036       1,045     935       1,044

            U.S. ENDING STOCKS (Million Bushels) 2020-21

            Aug       Average     High      Low       Jul

Corn        2,756     2,795       3,206     2,460     2,648

Soybeans    610       527         689       440       425

Wheat       926       946         976       899       942

            WORLD ENDING STOCKS (Million metric tons) 2019-20

            Aug       Avg         High      Low       Jul

Corn        311.3     312.5       314.0     311.0     311.9

Soybeans    95.9      98.6        100.3     94.8      99.7

Wheat       300.9     296.8       299.2     292.0     297.1

          WORLD ENDING STOCKS (million metric tons) 2020-21

            Aug       Avg.        High      Low       Jul

Corn        317.5     320.4       340.1     312.0     315.0

Soybeans    95.4      98.2        111.7     93.0      95.1

Wheat       316.8     313.5       316.6     308.2     314.8

Beans: Production at 4.42 bln bu would be a record.   19/20 crush was raised 5 mln bu, with exports left unchanged.  20/21 exports were raised from 2,050 mln bu to 2,125 mln bu. with crush raised 20 mln bu to 2,180 mln bu.  

Corn:  Production at 15.3 bln bu is 12% higher than year ago, with the yield of 181.8 bpa a record.  20/21 ending stocks at 2.76 bln bu were less than the expected 2.8 bln bu.  Illinois, Iowa, Indiana, Ohio, and Mo. were forecast to have above average yields from year ago and record high forecasts for Minn. and South Dakota.  

Wheat: The more bearish report and reaction as world wheat production was 2 mmt higher than July numbers.  The market reaction was more muted here than in beans/corn.  19/20 exports were left unchanged at 965 mln bu, while 20/21 exports were raised from 950 mln bu to 975 mln bu. 19/20 feed and residual was 73 mln bu, down 1 mln bu.  

SOY

• The main feature in the soy complex was that of higher oilshare, with soyoil prices rebounding vs. steady to slightly weaker meal.  Sep. crush trades to 94.35c/bu while oilshare popped back over 35.0% to trade at 35.33%.   
• November bean trade continued in congestion activity into the report, even though more Chinese business was announced.  There is further trade chatter that China remains around the bean market, with some interest surfacing for Dec or into Jan.    Bean prices continued into the report to remain technically supported above the 100-day moving average of $8.68.  Spreads were narrower with Sep/Nov beans trading into 2 1/2c from 3c.  
• Meal spreads narrowed as well with Sep/Dec trading into $4.70 from $5.40.  The bull feature of the morning was found in Dec soyoil, where prices ran sell-stops under 3050c, but resurrected the upside trend in a well bid market that took prices back over 31c again.  After the report was released, prices traded down again into the 100-day moving average for Nov beans at $8.67 but found pricing interest and short-covering activity which ultimately lifted prices back into the green and over the $8.80 level.  
• December soyoil prices broke down towards 3090c post numbers but also quickly found short-covering and more fund buying as oilshare still remains a strong feature of trade.  Higher oilshare helped to lift bean prices, as traders seemed to be waiting for a bearish report in order to probably price some of the recent business that has been done.  All in all, the price action was net positive, even for Dec. meal, which pulled back to test key support at $288.00.  

GRAINS

• Grains were mostly on the defensive into the report with short fund positions in each market.  KC wheat prices printed double contract lows at $4.10 this week, without much price stabilization.  Chicago wheat attempted to trade back over $5.00, but found little incentives as larger global supplies look ahead.  Corn futures have attempted to stabilize over the $3.20 level, but found pressure before the report as expectations remain for large yields.  
• Bull-spreads remained firm, with Sep/Dec trading into 11 1/2c from 12c lows before the report.  Before the WASDE was released, the EIA report was a bit friendly for the ethanol market, with production down 1.4% this week to 918,000 bbls/day, which would utilize 4.9 bln bu of corn.  
• Stocks were down 2.9% to 830 mln glns.  Although the report was generally bearish in nature, the reaction after the data was released was that of fund short-covering.  Surprisingly December corn held the $3.20 level once again, which may suggest that the trend over the next few weeks is likely to be sideways now to a little better.  
• Buy corn/sell wheat trade continued to dominate after the numbers were released, with wheat the obvious sell leg of inter-market spread activity.  Dec wheat/corn traded from 1.83c down to 1.71 1/2c.

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                     HI                                LO

November beans:  3 higher                     8.82 1/2                       8.67

December meal:  .30 lower                      290.60                         287.00

December soyoil:   72 higher                  3140                            3029

December corn:  2 higher                       3.27                              3.20

September wheat:  5 lower                     498.00                          4.88 

November canola:  .90 lower                 485.90                           481.10                          

OUTSIDE MARKETS

The Dow remained strong, up 220 pts during the trading session, with crude oil prices at midday highs of $42.72/barrel.  Big money continues to love the buy energy/sell US dollar trade.  Gold prices are steady but only after trading down to $1871.60/oz.  

CLOSING COMMENTS

Today was a very interesting technical day of trade with prices holding together better than expected.  It feels like this was a relief rally, from those fearing that the downside of these markets may have been much worse.  There has been a lot of bean business that was transacted, and therefore seems like buyers were willing to get something priced on a break.  Funds also took the chance to cover short corn positions and take a wait and see attitude into the end of August. 

If corn seasonally finds its lows around the August report, the inability of Dec. to break $3.20 could suggest that higher prices are ahead.  At the very least, we now seem to be in the same trading ranges as before the report, setting up an interruption of the down-trend that preceded the report.  A good settlement in corn today will find more shorts electing to get out of the market and take a profit.  And while the yields may have been bumped higher, the damage in Iowa inflicted by the storm this week has not been factored into today's price.  End of August weather still counts as well.   

If short, would probably be heads up and cover something in.  This was a very constructive technical trading day.   There will be more willing sellers in corn and beans based on these bearish stats, but prices may have to improve further before the US producer becomes engaged.  

Have a good evening........

 

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America