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Archive for the ‘Grain Comments’ Category

Market Report

Wednesday November 22nd, 2017

December 17 corn closed up ¼ at $3.45 ¼ and March 18 closed up ¾ at $3.57. January 18 closed up 8 ¼ at $9.97 ¼ and March 18 closed up 8 ¼ at $10.08 ½. December wheat closed down 2 at $4.22 ¾ and July 18 closed up 1 ¼ at $4.67 ½. Crude oil closed up $1.06 at $57.98.

Happy Thanksgiving!  We have so much to be thankful for, and you as a customer and friend are a part of that.  Thank you!

Grain markets don’t reopen until Friday morning at 9:30 AM.  Friday will also see early closes: Grains 1:05 PM.

Weekly export sales will be released on Friday this week due to the Thanksgiving holiday.  COT report won’t be released until next Monday.

Today’s ethanol report showed the highest ever weekly production at 1.074 million barrels per day!  This was a weekly increase of 20,000 bpd.   Ethanol stocks also were up with an increase of 400,000 barrels to 21.9 million barrels.  Stocks were the highest sin 14 weeks and record large for this time of year.  Net margins were down a penny at 8 cents per gallon.  Corn didn’t get any extra support from the report.

With options expiring on Friday, corn is stuck around $3.45.  December corn only traded a 3 cent range today.  It has closed at $3.45 – $3.45 ¼ every day this week.

Beans, on the other hand, garnered support from fund buying, a sharply lower dollar, concerns about La Nina inspired dryness in Argentina, and a seasonal tendency to be up this week.  Brazilian weather doesn’t seem to be an issue.  There looked to be some buy beans/sell corn spreading also.  January soybeans, however, were unable to clear the $10 hurdle.

Price action the day after Thanksgiving:

Corn has closed lower the day after Thanksgiving in 7 out of the last 10 years and it has closed lower in 4 out of the last 5 years.

Soybeans have closed lower in 6 out of the last 10 years and has closed higher in 3 out of the last 5 years.

Chicago wheat has closed higher in 6 out of the last 10 years and higher in 3 out of the last 5 years.

The 1-5 day map for Argentina has rain coverage at just 25%, but the 11-15 map is wetter.

The USDA is expected to release their long term 10-year projections on November 28th.  This report gives some insight to what the USDA is thinking ahead of their February Outlook Conference.

The funds today were even on corn, bought 7,000 contracts beans and were even on wheat.

December corn:  short term support at $3.41 ¾ – $3.42, then at the contract low $3.36 ¼, then $3.28 ½.  The 20-day MA resistance at $3.45 ¼ was broken (just barely) on today’s close.  The 50-day MA at $3.48 ½ would be next resistance.

January soybeans: The 20-day MA is first support at $9.86 ¾, then $9.82 ½.  Last week’s high at $9.92 was punched through overnight, leaving next resistance at $10.00.  Today’s high was $9.99 ½.

Anna Kaverman

Market Report

Tuesday November 21st, 2017

December 17 corn closed unchanged at $3.45 and March 18 closed down ¼ at $3.56 ¼. January 18 closed down 1 at $9.89 and March 18 closed down 1 at $10.00 ¼. December wheat closed up 2 ¾ at $4.24 ¾ and July 18 closed up 4 at $4.66 ¼. Crude oil closed up $.39 at $56.92.

Corn trade could only be described as sleepy today, finishing near unchanged in a tight range. Bulls can maybe claim a small moral victory today, in that the markets did not retrace its steps on “Turnaround Tuesday”, despite some opportunities to do so. The funds were viewed small net sellers of the day, and they are heading into tonight short an estimated 255,000 futures and options. All in all, it was a very quiet news day. Traders are broadly awaiting confirmation of Chinese corn business, as well as keeping one eye on South American planting prospects and La Nina odds. Brazil weather is expected to remain good over the next two weeks, though some drying is expected in NE growing areas, as well as RGDS province. Argentina weather will be more of a concern with expanding dryness possible in the far south and ongoing dryness in some west-central locations during the two week forecast period. Increased rain odds for Argentina discussed over the weekend did not make it into many conversations today.

The soybean market drifted around in a light volume, two-sided, uninspired trade. Many participants either away from the trade for the holiday this week or keeping new positions to a minimum leaving us with a very thin market. The soybean oil market managed to regain its footing and show some stability following yesterday’s break to a new low. The USDA flashed a 130 mt of beans sold to China. This is the first sale reported for beans since 10/27.

The wheat complex battled both sides of unchanged overnight, with trade staying in a very narrow range and market participants lacking. Holiday markets are upon us, and sometimes during these times rallies extend a little farther than they would normally go, and the same can be said for setbacks, and that is what we may have seen over the past few days. Flat price trade might be lackluster as we move through the balance of the week, but trade in the Dec/March spread in Chicago should remain active. Ukraine winter wheat crop is in better condition than last year, thanks to elevated topsoil moisture levels. An Australia meteorologist put out a forecast for a 70% chance of La Nina, but also says it will be weak and short lived. So it may not turn out to mean very much, but quality concerns have been growing over there. USDA weekly export sales will be delayed until 7:30 Friday morning due to the Thanksgiving holiday this week. A full day tomorrow, but there will be no night trade either on Wednesday or Thursday.

Anna Kaverman

Market Report

Monday November 20th, 2017

December 17 corn closed up 2 at $3.45 and March 18 closed up 1 ½ at $3.56 ½. January 18 closed down ½ at $9.90 and March 18 closed down ¼ at $10.01 ¼. December wheat closed down 5 ¼ at $4.22 and July 18 closed down 4 ½ at $4.62 ¼. Crude oil closed down $.28 at $56.53.

Corn extended the short-covering for a second day. Futures were able to fight off pressure in a number of related markets today.  Managed Money funds were believed net buyers of 10,000 corn today, which would leave them net short close to 245,000 futures and options tonight. At least for corn, there was not a lot of fresh news to start the day. It is a short week, with the markets closed Thursday, folding into a “hard” 9:30 AM open Friday along with an early close. A few extra showers in the forecast for dry Argentina sent a few bearish vibes to start, but increasing odds of La Nina (75%) will keep South American traders on edge looking forward. Southern and eastern Mato Grosso benefitted from moderate to heavy rain during the weekend with another area of moderate to heavy rain occurring from central and southern Paraguay into parts of southern Brazil.  This is expected to sustain a trend of improving conditions for Brazil for at least the next two weeks. Crop Progress data after the close confirmed U.S. harvest progress at 90% complete, which was close to expected. This would imply there are still 7.8 million acres left to collect, including just over 1 mil in Iowa, and over 0.5 mil in a handful of states:  WI, OH, NE, MN, IN, and IL.

The soybean market failed to sustain the rally momentum from Friday’s $.20 move and gave back some of those gains as we start our holiday shortened trading week. It wasn’t a wipeout however as meal rallied late in the session – as the beneficiary of an active oil share spread trade – and this helped beans close near the top of the day’s range. Forecasts show rains bringing some partial relief to Argentina this week while conditions in Brazil continue to improve with a more regular rainfall patter that has developed in the Center to North in that country.

The wheat complex started the night a couple ticks better. When the day session started, the defensive price action continued with futures mostly staying between $.04-$.06 lower. There was not a whole lot in the way of fresh news around this morning. There probably will not be a lot of export business this week. It is a shortened week with the Thanksgiving Holiday on Thursday and no overnight trade on either Wednesday or Thursday. Russian wheat prices were basically unchanged from a week ago despite another Egyptian tender that saw the GASC purchase four more cargoes of Russian wheat. US prices are not very competitive, which is one factor behind the markets inability to sustain any upward momentum. Export inspections this morning were light, but that is not a very influential report. Winter wheat conditions this afternoon were down 2%, however, it is still too early in the season to get too excited about conditions. Crop progress Monday afternoon showed winter wheat emergence at 88% vs 84% last week, 88% this time last year and 88% normal. Winter wheat conditions were down 2% overall to 52% G&E. Expectations were for conditions to be unchanged.

Anna Kaverman

Market Report

Thursday November 16th, 2017

December 17 corn closed down 1 ¾ at $3.36 ½ and March 18 closed down 2 at $3.49. January 18 closed down 4 ¼ at $9.72 and March 18 closed down 4 at $9.83 ¼. December wheat closed up 1 ½ at $4.21 ½ and July 18 closed down ¾ at $4.62 ¾. Crude oil closed down $.17 at $55.35.

The corn market returned to ‘bear business’ Thursday, pressing another two cents lower to new contract lows. Heading into “Big Friday”, the corn market is sporting $.07 losses, and is less than a dime away from the Sept lows on the weekly chart.  The funds viewed net sellers of about 15,000 corn today, which in our view would raise their new record high short to 275,000 futures and options. Most of the news today tended to focus on exports. As broadly expected, corn sales in the weekly report were less-than-half of the MT. The lion’s share was booked to Japan, while the remainder was to Latin destinations and “unknown”. Total sales + ship now stands at 20.35 mmt, which is not all that far off from 27.65 mmt on the books at this time last year. Unfortunately, sales could dip again next week, given less daily sales activity announced of late. South Korea was in overnight for another cargo of corn. Other than exports, it was a very, very quiet day. Despite a better-than-expected EIA report yesterday, the ethanol market did not betray any hint of excitement, tending to downtick along with corn.

The soybean market was unable to hold small overnight strength and reversed back to the downside after the morning break.  During the break, the USDA weekly export sale report was released. Bean sales were within trade expectations but the reality is those expectations are well below the level of sales that we should and need to be executing in order to come close to current USDA balance sheet expectations. Granted last year’s export program was very front end loaded so the gap may not be as large as it appears today but we have stiff competition from Brazil and soon Argentina will re-emerge as their tax structure changes to the exporter’s benefit beginning in January – so the competition isn’t going away. The best way to stimulate more trade is through lower prices so for now, as long as there is no weather threat to Southern Hemisphere crops, the path of least resistance is lower. Trade volume remains light overall with January futures only trading 85,000 times compared to 218,000 on the big report day reversal last week which was a contract high for volume. Since that report day reversal a week ago soybeans priced in Brazilian reals are 1.9% lower while US values are 3.5% lower the currency play is making us more competitive but the slowing pace of sales suggests we still have work to do.

The wheat complex saw slightly higher price action overnight. As we moved into the day session those gains initially disappeared. USDA weekly export sales this morning were at the high end of expectations, coming in at 489 MT with an additional 30 MT of new crop for a combined sales total of 519 MT. Total sales to date are 617 MB vs 649 MB last year. Following Egypt’s court ruling re-instating its zero level ban of the common grain fungus ergot, the GASC looked to test the waters announcing after the close yesterday they were in for wheat for Jan 1 thru Jan 10 shipment. The thinking was it was going to be interesting to see how many or how much risk premium any offers will have. Traders selling to Egypt seemed to have grown accustomed to the country’s fickle import rules and irregular inspection procedures. The last time Egypt tried to do business with as much uncertainty around, the risk premium in the offers were between 8 and 10 dollars. Egypt ended up buying four cargoes of Russian wheat.

Anna Kaverman

Market Report

Monday November 13th, 2017

December 17 corn closed down 1 ¼ at $3.42 ¼ and March 18 closed down 1 ¾ at $3.55. January 18 closed down 12 ¾ at $9.74 ¼ and March 18 closed down 12 ½ at $9.85 ½. December wheat closed down 7 ¼ at $4.24 ¼ and July 18 closed down 4 ½ at $4.68 ½. Crude oil closed down $.01 at $56.97.

The grain markets finished the day negative across the board today. Funds were sellers of 10,000 contracts today, bringing their estimated position to net short 250,000 contracts with options and futures. The weekly CFTC report was delayed from Friday to today and they could just wait until next Friday, as the reporting period (up through Tues 11/7) does not include any of the pre/post report activity. Regardless the commitment of traders report showed the large specs were short 237k contracts as of last Tuesday. Weekly USDA crop progress report was released this afternoon and estimated Corn harvest progress at 83% complete (last week 70%), compared to the year ago week 92%. Looks like significant progress was made in the Dakotas, Nebraska, and Colorado last week meanwhile, Wisconsin continues to lag behind the rest of the country as it still sits at just 56% complete vs 81% last year. In the weather, the 6-10 Day Forecast for Temps is shown to be below normal for much of the northern and eastern corn belt, while the southwest US is warmer than normal. Dry weather across most of the corn belt is allowing for fieldwork to move along, especially in the upper Midwest.

The soybean chart broke down key near term support and ran some sell stops as the charts deteriorate and are showing signs of capitulation. Jan beans violated key near term support at $9.81 and closed below the 100 and 200 day moving averages. A trigger for the selling today was the broad coverage of rains over the weekend in Brazil across the states of Mato Grosso where 1-3 inch totals were reported in major soybean production areas.   These are the areas that have been dealing with a moisture deficit but the return of rains in recent weeks have been helpful and over the weekend we went much further in erasing that deficit as conditions continue to improve. Harvest progress this afternoon shows beans 93% harvested vs. 90% last week and 95% 5 yr avg. The states with the most bean acres left to harvest are MO (826k), NC (768k), IN (648k), KY (586k) and IL (517k).

The start of the overnight session was the only time you had a chance to sell unchanged or better as trade quickly broke down and remained on the defensive throughout the night. That trend continued throughout the day. Today’s losses not only wiped away all of Friday’s gains, for Chicago, it also erased last week’s entire gains. However, trade was never in any danger of taking out last week’s lows at $4.19, but we never really saw a bounce either. The active export lineup last week, along with the continued strength in the cash markets and the subsequent strength in Spring wheat was able to help the SRW and HRW wheat markets eke out some minor weekly gains last week. This afternoon the COT report showed the funds increased their short position more than most anticipated. A little supportive maybe. It is hard to think that the condition reports in wheat during this time of year holds any water, but if they did, at least on paper they would look to be a little supportive to trade as well. Their net short position through Nov 7 increased to just over 144,800 contracts

Anna Kaverman

Market Report

Friday November 10th, 2017

December 17 corn closed up 2 at $3.43 ½ and March 18 closed up 2 at $3.56 ¾. January 18 closed up 2 at $9.87 and March 18 closed up 2 at $9.98. December wheat closed up 2 ½ at $4.31 ½ and July 18 closed up 4 at $4.73. Crude oil closed down $.41 at $56.98.

Weekly Market Re-cap


China is planning to remove a value added tax on DDGs.  China was our main export customer for several years but tariffs have reduced exports to China to basically zero for the past year.  This is great news for the DDG market.  US corn inspections were terrible with the 2nd lowest total of the year.  Inspections are well behind the USDA pace and have fallen behind the 5 yr average.  Corn export sales were a different story posting an enormous number.  Sales of 2.4 million tons were almost double expectations.  Mexico was a huge buying taking 1.2 million tons this week.  The WASDE report was a surprise for the corn market.  The USDA raised yields way above expectations to 175.4 bpa.  This is a new all-time high record yield.  Big jumps were seen in every Corn Belt state except Nebraska between the October and November reports.


Soybean planting in Brazil is now right about average, but behind the pace of last year. Seasonal rains are forecasted for the main growing areas in the next couple of weeks but a return to a dryer pattern is seen longer term.  The US has finalized duties on imported bio-diesel from Argentina and Indonesia.  The duty on Argentine biodiesel jump up sharply from those originally proposed to roughly 72%. US soybean inspections were very strong at nearly 2.5 million tons.  This is the third straight week of inspections over 2 million tons.   Soybean export sales dropped off sharply this week to register the 2nd lowest total of the year.  The WASDE report was very uneventful for soybeans as the government left everything unchanged except a minor 6 million bushel cut to total production.  The market was looking for a slight cut to bean yields so an unchanged numbers was looked at negatively by traders.


Egypt bought more Russian wheat in their latest tender with the US not even submitting an offer.  However, there have been strong rumors of increased high protein wheat business done elsewhere which has helped support the Mpls. wheat market.  US wheat export sales showed up in force with the highest sales total of the year at almost 800,000 tons.  The WASDE report was uneventful for wheat as the focus was on the row crops.  The USDA did raise exports by 25 million bushels from 975 million to 1 billion bushels.

Anna Kaverman

Market Report

Thursday November 9th, 2017

December 17 corn closed down 6 ¾ at $3.41 ½ and March 18 closed down 6 ½ at $3.54 ¾. January 18 closed down 13 ½ at $9.85 and March 18 closed down 13 ½ at $9.96. December wheat closed up 2 ¼ at $4.29 and July 18 closed down ½ at $4.69. Crude oil closed up $.34 at $57.39.

The corn market was bracing for bad news in today’s report, and the USDA gave it to them in spades. An already-heavily-short corn market sank another 6-7 cents, reeling from another larger-than-expected uptick in USDA yield projections. The funds continue to pile in, and were believed to have sold another decent chunk of corn today. They could be very close to a record-high short position. CFTC data tomorrow will not be particularly helpful, as it does not encompass any of the report day action. The feature of trade today was no doubt U.S. crop production. Heading into the report, analysts were expecting a small 1 bpa uptick in yield relative to October. The USDA exceeded even the most bearish expectations, raising it 2.6 bpa from October to 175.4 bpa – a new record high. The highest guess on the range of analyst estimates was 174. With harvested acres unchanged at 83.1, the USDA “found” almost 300 MB, though that mercifully fell shy of last year’s record high production tally.  The USDA managed to throw chastened bulls a few bones, raising US export forecasts 75 MB, and feed/residual 75 MB as well. On the world scene, they left most estimates unchanged with the exception of Ukraine, which they trimmed back 2 mmt from prior to 25 mmt. As broadly expected, the USDA produced a monster export sales week for corn. Net sales of 2,364,500 MT for 2017/2018 were easily a marketing year high and nearly double the four week average of sales. Note, nearly half was the Mexican business announced last week, so this should not be a surprise.

The soybean market spent the morning trading higher, enjoying support from the Chinese soybean headlines (12 mmt in frame contracts for future business) as well as the anticipated reduction in US yield in the crop report. The USDA did not deliver for the bull and the market reversed sharply lower on an outside day that has the soybean chart breaking down its uptrend and threatening to further deteriorate. US soybean yields were left unchanged at 49.5 bpa while the trade on average was looking for a reduction to 49.3 bpa. Production came in at a record 4.425 bb which was about 17 mb above the average trade estimate. Carryout tightened by 5 mb to 425 mb while the trade was expecting a 420 mb carryout. Hardly a shocking report but the spec soybean market was positioned too heavily for another yield reduction and when the USDA didn’t deliver the longs headed for the exits which can get pretty tight in these situations. The demand side of the balance sheet was left untouched. In the world numbers, the soybean carryout increased by 1.85 mmt to 97.90 while the trade was looking for a reduction to 95.5 mmt on average. They increased Brazilian soy production by 1 mmt to 108 mmt while leaving Argentina steady at 54 mmt.

Overnight price action saw much of the same type of trade as Wednesday. As trade drew closer to report time, prices in Chicago and KC started to slip a bit, and the knee-jerk reaction to the crop report data was additional pressure. But with the data rather benign for wheat, those markets gradually recovered, eventually moving back higher on the day and settling slightly better. There were not a lot of surprises in today’s crop report for wheat. Traders were anticipating both US carryout and World stocks to be lowered slightly from last month’s estimates, and the USDA obliged. The USDA lowered 2017/18 US ending stocks 25 mil down to 935 MB. The only change in the S&D’s was an increase of 25 mil in exports, which gave us the 25 mil reduction in ending stocks. After the ebb and flow of the summertime growing season and harvest, this is not too far off from what the USDA first pegged US ending stocks back in the May report of 914 MB. The USDA lowered 2017/18 World wheat ending stocks less than 1 MMT to 267.53 MMT, with only marginal changes to Brazil, Russia, the EU and the FSU.

Anna Kaverman

Market Report

Wednesday November 8th, 2017

December 17 corn closed up ½ at $3.48 ¼ and March 18 closed up ¼ at $3.61 ¼. January 18 closed up 2 ½ at $9.98 ½ and March 18 closed up 3 at $10.09 ½. December wheat closed down ½ at $4.26 ¾ and July 18 closed down 1 ½ at $4.69 ½. Crude oil closed down $.38 at $57.05.

Another day, another fractional gain or loss for corn this week.  This time, the market ended up in the “plus” column, gaining a half cent in the Dec.  “Hurry up and wait,” appears to be the theme in front of tomorrow’s monthly USDA crop report. Spread volumes cooled off a little on Day 2 of the Goldman Roll, but remained a large percentage of overall trade. Fund traders were viewed net buyers of about 10,000 contracts in a day of limited short-covering. They are believed to be heading into Thursday short 230,000 corn futures and options. Before the “main event”, we will get weekly export sales early Thurs morning at the usual time. A big week of corn sales are expected, as pre-ordained by the massive Mexican business announced last week. It would not be unreasonable to expect corn sales to top 2 mmt in this report, which would easily be a marketing year high. The recent drive by US exporters to catch up on sales has been somewhat impressive, particularly in the face of big crops that need to be marketed in South America (less so in Ukraine this year). 

The soybean market sustained modest strength as the chart continues to demonstrate stability in front of tomorrow’s crop report. The USDA report is expected to show a slightly reduced yield/production number along with some tightening of the US and World carryouts. Additional support comes from reports that there will be a soybean frame contract announcement during President Trump’s visit to China this week, quantities were not known at this point but they are expected to be much less than the 12.5 mmt frame contract announced this summer when the Chinese delegation made their annual pilgrimage to Iowa. The headline would be supportive and was a factor for the bean market today, but also not likely to spark significant gains on the board. South American weather maps feature good moisture for much of the center/north of Brazil in week 1, turning hotter and drier for that area in week 2.

Overnight price action weakened. Crop report tomorrow should dictate trade, Egyptian business more than three dollars below their last tender combined with Brazil abandoning their plans to allow 750 TMT of tariff-free wheat could keep rallies in the HRW and SRW markets in check at least until the data is released. Egypt ended up buying only two cargoes of Russian wheat. Before the crop report, the weekly export sales report will come out in the morning. Last week we saw sales came in at 348 MT. If the Iraqi business from last week made the sales report, Thursday morning’s data could be quite large. So, we could see a report that comes in similar to last week, or we can see a report upwards near 750 TMT.

Anna Kaverman

Market Report

Tuesday November 7th, 2017

December 17 corn closed down ¼ at $3.47 ¾ and March 18 closed down ½ at $3.61. January 18 closed up 2 at $9.96 and March 18 closed up 2 ¼ at $10.06 ½. December wheat closed down 3 ½ at $4.27 ¼ and July 18 closed down 3 ¼ at $4.71. Crude oil closed down $.14 at $57.43.

The corn market was quietly weaker for a third consecutive, betraying little hint of excitement heading into the November crop report. The funds were viewed small net sellers of the day, implying they will head into tonight net short close to 240,000 futures and options. Corn appears to be in “hurry up and wait mode”, looking for more input from the USDA, headlines out of Trump’s Asia trade tour, and the conclusion of harvest in the US and planting in South America. On the latter weather front, Harvest weather in the United States may be slow for a while because of wet fields and seasonably mild temperatures. Some drier weather is expected soon that should translate into a better harvest environment after a period of net drying.  Weather conditions in South America are either improving or will be good for the next couple of weeks. As for Thursday’s crop report, the near-universal trade consensus is for the USDA to raise corn yields 1-2 bpa from October, resulting in a 50-100 MB increase in production. Much of this belief is based off the historical tendency for the USDA to raise yields in Nov after raising them in the October report (which they did). It will be interesting to see if this translates into much of a bump in domestic carryout, though, given signs of improved demand.  World numbers are an afterthought. It will likely be too early for the USDA to adjust South America much, while EU (larger) and Black Sea (smaller) estimates are likely tugged in opposite directions.

The soybean market sustained modest strength as the chart continues to demonstrate stability in front of Thursday’s crop report. The USDA report is expected to show a slightly reduced yield/production number along with some tightening of the US and World carryouts. Additional support comes from reports that there will be a soybean frame contract announcement during President Trump’s visit to China this week, quantities were not known at this point. With that said, just like when the trade delegation visits Iowa in the summer, these frame contracts are agreements to future business and not actual sales in the books, political theater and goodwill gestures. Nevertheless, the headline would be supportive and was a factor for the bean market today, but also not likely to spark significant gains.  The feature trade was soybean oil resurrecting its rally to establish a new high close. If the chart can sustain new highs it would suggest a run back to the September highs over 36 cents next. A tightening oil stocks trend along with a possible increase in domestic biodiesel production utilizing soybean oil feedstock to accelerate usage are the drivers to the bean oil rally.

Price action was unable to rebound from a defensive overnight session. In fact, prices initially weakened even more, with the SRW and HRW wheat contracts dropping to almost seven lower before settling around three cents off its lows. There is still some skepticism on the actual percent of unharvested acres across some of the Spring wheat states, most notably North Dakota and Montana. With a crop report Thursday morning, this may be a part of the recent strength in Mpls compared to that of KC and especially Chicago where the Mpls/Chicago spread has firmed in each of the past eleven sessions. The next USDA crop report is Thursday morning. After the Sept 29 crop report in which the USDA gave us a small increase in planted acres, harvested acres down a little, yield increased a bit, production up a tad and feed being lowered, we knew there were going to be some changes to the Oct report. Traders were anticipating an increase in US ending stocks, and the USDA obliged, raising 2017/18 US ending stocks 27 mil to 960 MB. Maybe a little more than expected, but within the range of expectations. On the Oct report the USDA also raised 2017/18 World wheat ending stocks around 5.0 MMT. This was a little bit of a surprise, but leading up the report we did see Russia, India, the FSU and EU all raise their wheat production forecasts, with only Australia lowering their estimates. Surely there will be some tweaks, but mostly, each country by now knows what they have so we should see only minor adjustments. Look for both US ending stocks and World stocks to be lowered slightly from last month’s estimates.

Anna Kaverman

Market Report

Monday November 6th, 2017

December 17 corn closed down ¼ at $3.48 and March 18 closed down ½ at $3.61 ½. January 18 closed up 7 ¼ at $9.94 and March 18 closed up 7 at $10.04 ¼. December wheat closed up 5 at $4.30 ¾ and July 18 closed up 3 ¼ at $4.74 ¼. Crude oil closed up $.1.71 at $57.57.

The corn market was notable for a complete absence of fireworks, in a day where it seemed like almost every market around it. Corn closed very nearly unchanged Monday, coming off a week that also finished close to unchanged.  Managed Money traders were viewed net sellers of about 3,000 corn today, implying they will head into Tuesday net short 235,000 futures and options.  Given that it is report week, it will be interesting to see if they hang with such an aggressive position heading into Thursday.  Cash markets were mostly steady. After the close, the USDA pegged harvest progress at 70% complete. This advanced 16% wk/wk, which was close to expected, but remains 13-14% behind last year and average. This would imply there are 23.5 million acres left to harvest, nearly half of which are in three states – MN, NE, and Iowa. A clear (albeit cool) outlook for most of the week should help get harvest back on track in the soggy Eastern Belt. Technically, corn remains stuck between range resistance and support at $3.60 and $3.45, respectively. With harvest entering the “gut slot”, Dec deliveries about to become a feature, and another bearish USDA report possibly incoming, funds may have one last stab here into November to make the short trade work. Downside counts to $3.35 CZ remain open, but we don’t regard that as a high percentage trade.

The soybean market bounced back in another defense of its uptrend support, keeping the chart formation intact for now as we demonstrate stability in front of Thursday’s crop report.  The report is expected to show a slightly reduced yield/production and tightening of the US and World carryouts.  Soybean oil led the rally for most the day as part of the broader energy rally that was stoked by geopolitical events in the Middle East over the weekend and included the biggest one-day rally in crude oil in nearly a year. Meal was also a rally participant and some late buying of meal and selling of oil took the oil share off its highs into the close. US soybean harvest advanced to 90% up from 83% a week ago. The states with the largest amount of unharvested beans left in the field at this point are MO 1.357 mln, IN .884 mln, NC .835 mln, and IL .827 mln.  Total remaining acres to harvest stands at 8.873 mln.

Price action across the wheat complex was a little better with much of the price action in Chicago Dec hugging the $4.30 level. By the end of the session Chicago finished higher. Trade looks to be continuing to try and build off the news late last week of Iraq buying 500 MT of HRW, and a COT report on Friday that showed the funds a little more short than expected. News over the weekend was minimal, and inspections this morning were below expectations. This afternoon’s condition reports should be taken with a grain of salt as its only two weeks in. Winter wheat planting at 91% is in line with last year and the five year average, but the window for what is left to plant is closing quickly. Winter wheat emerged is seen at 75% vs 65% last week, 78% this time last year and 77% normal. Winter wheat conditions improved by 3% overall to 55% G&E, with most of that coming in the HRW wheat states.

Anna Kaverman