MARKET SUMMARY 10-11-2021
Crude oil futures continued their climb and trade above the $80.00/barrel barrier. Strength in the energy sectors stays active in the market, and crude oil futures are pushing to the next psychological price level of $80 a barrel. The combination of relatively tight supplies and surging demand have been the support under the energy market. Charts may be set to challenge some technical resistance at the high of today’s price range, as a trend line can be drawn of the high price peaks going back to March last spring, which may have been the reasoning for some softening of oil prices off the session high of $82.18. Prices will likely consolidate around this area, building a base for the next potential leg higher, a possible test of $90/barrel.
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CORN HIGHLIGHTS: Corn futures edged higher with small gains, ending today’s session 1-1/2 to 3 cents higher. Harvest delays due to expectations for heavy rains the next few days across the Midwest, continued concern regarding availability of skyrocketing fertilizer costs, and higher energy all were supportive factors today.
Tomorrow the market will have more news to digest in the form of a USDA WASDE report due for release at 11:00 central. December futures closed 2-1/2 cents higher at 5.33. Yield, feed, and exports will be under the scope tomorrow and likely will see some changes. Projected carryout is expected at 1.421 bb as compared to September’s 1.408 bb. The average per-report yield estimate is 175.9 bu/acre and compares to the September figure of 1.408. Feed could be reduced slightly due to a downward revision of near 3 million hogs on the most recent Hogs and Pigs report. Exports could be the wild card. Last month’s figure was 2.475 bb. Higher shipping costs and some arrows pointing toward lower imports from China, not to mention time lost for shipping due to Hurricane Ida, might suggest lower exports.
SOYBEAN HIGHLIGHTS: Soybean futures ended with double digit losses as both meal and oil went on the defensive today. November lost 14-3/4 cents to close at 12.28-1/4, the lowest close for November contract since March 30. Good yield results and expectations that tomorrow’s ending stocks will be confirmed higher weighed on futures. The average pre-report estimate for ending stocks is 289 mb with a range of 192 to 373 mb. Last month’s figure was 185 mb.
Despite strong world vegetable oil prices, a rapid start to the planting pace in Brazil and a lack of fresh positive news is weighing on futures. The technical picture looks weak, and with harvest pressure in full swing, it is our bias that farmers may have been light on sales for new crop anticipating higher prices. This is likely bringing more beans into the pipeline. The big picture is the bigger concern as Brazil will likely have another record production year assuming normal conditions. Demand for meal will likely be reduced from last month due to a near 3 million less hogs on the most recent Hogs and Pigs report. Higher energy prices are viewed as supportive, yet the more near-term picture is of rising supply numbers.
WHEAT HIGHLIGHTS: Without much news to drive wheat, most traders already positioned themselves ahead of the WASDE report, leading to a mixed to lower close today; the market will be looking for direction tomorrow. Dec Chicago wheat lost 2-1/4 cents, closing at 7.31-3/4 and March lost 1-3/4 to end the session at 7.45-1/2. Dec KC wheat lost 3 cents, closing at 7.34-1/2 and March was down 3 at 7.42-3/4.
Due to the Columbus Day holiday, some data is delayed for release until tomorrow, including crop progress and grain inspections. More impactful will be tomorrow’s USDA Supply and Demand report, which is anticipated to be friendly, as pre-report estimates for US wheat carryout are at 581 mb vs 615 mb last month. That number would be the lowest in 14 years if the expectations are correct. World wheat carryout is also projected to be reduced to a five year low of 280.9 mmt (vs 283.2 mmt). Specifically looking at spring wheat, it is predicted the USDA will report a decline in production due to abandoned acres. Weather wise there will be a fair amount of rain across the US over the next few days, and temperatures are expected to cool down as well. Russian wheat prices have been higher for 12 consecutive weeks. Winter wheat conditions are favorable in Europe and Argentina remains dry. The high level of the US dollar does remain a point of concern for wheat prices, as they usually share an inverse relationship.
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Author
Bryan Doherty