TFM Daily Market Summary 09-14-2021


China is forecasted to have record corn production for this year, and this has the market worried about potential demand impacts. The USDA Foreign Agricultural Serve (FAS) forecasted on last week’s USDA World Agriculture Production report, the Chinese corn production for the 2021/22 marketing year at 273 Million Metric Tons (MMT), increased by 5 mmt or 2% from last month, and up 5% from last year and 5-year averages. This large crop was produced by a jump in the plant area and a boost in overall yield, but mostly, the jump in production comes from a change in agricultural policy, focusing more on corn production versus soybeans. The extra supply could have a long-term impact on the potential export demand from China. Expectations are for China to import approximately 26 MMT of corn in the 2021/22 marketing year, but that number may be too aggressive. The most recent USDA report added additional export demand and has lifted the size of the U.S. corn production higher. Traders in the market may be concerned that these demand numbers are high and due for further reduction, which could increase U.S. corn stockpiles. The window for U.S. exports for corn will occur later in the fall, and the Chinese have a large amount of sales on the books from strong buying earlier in the summer. Watching their actions will be key for corn prices to see if the demand targets are realistic or overstated.

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CORN HIGHLIGHTS: Corn futures ended with moderate to strong gains as Dec led today’s rally closing 7-0 cents higher at 5.20-3/4. Dec 2022 gained 3-1/2 closing at 5.02. The bullish reversal on Friday and follow-through today is looking more friendly, especially with today’s close near the top of today’s trading range. Weekly crop ratings indicated a 1% drop in the good to excellent category, now at 58%, while 15% of the crop is rated poor to very poor. Harvest is 4% complete, in line with the 5-year average of 5%. Heavy rains in parts of the South have hampered early harvest progress. Stronger wheat prices provided support, as did a lack of farmer selling and a pickup in end-user buying. The high on Dec futures from last Friday held as resistance. Stochastics were considered over-sold in recent sessions and have provided a buy signal with what is termed a cross-over. Couple this with the 200-day moving average holding as support and the big picture might be suggesting that downside pressure is subsiding.

SOYBEAN HIGHLIGHTS: Soybean futures closed mixed as Sep (last trading day today) went off the board 4 cents higher while back months gave up gains from earlier in the session to finish with small losses. Nov ended the session at 12.82-1/2, down 2-1/4 cents. Funds are estimated to be near 60,000 contracts long, considered by some to represent recent liquidation, mainly due to shipping issues and a lack of large overseas purchases. Talk of more sales from Brazil to China didn’t help today’s cause. Yet, many believe, as do we, that sales this time of year, regardless if from Brazil or the U.S., are supportive representing bushels moved out of the Western Hemisphere. A mostly conducive weather forecast should allow harvest to kick into full steam in the days and weeks ahead. Yield results will likely provide the best avenue for price direction. Very early results are mixed, with most holding their breath waiting to see if disease issues, along with dry conditions in August had much impact, or if timely rains rescued yield.

WHEAT HIGHLIGHTS:  Sep futures are officially off the board as of today’s close. With that said Sep Chi wrapped up posting a 10-1/2 cent gain closing at 6.85 and Dec up 13-3/4 cents closing at 7.00-3/4. KC Sep went off the board with an 8 cent gain at 6.86-1/2, and Dec contracts up 15-1/2 cents, closing at 7.01-3/4. The morning started off strong after global crops are once again shrinking. France reported the soft wheat crop would shrink to 36.1 mmt versus their last estimate of 36.7 mmt. To go alongside, Stats Canada reported today that wheat production dropped to just 21.7  mmt down from last month’s estimate of 22.95 mmt. As Russian wheat prices continue to climb, along with higher export taxes – it is hopeful this week that maybe U.S. wheat can become slightly more appealing to global tenders. U.S. spring wheat crop is likely to move even lower once abandoned spring wheat acres are realized. Wheat has given up a lot of recent rallies, and news stories like these are just what the bulls need to rebound in current market environment. Recapping yesterday’s crop progress report: Weather allowed for winter wheat planting to continue, as of this week 12% of acres are planted ahead of the 5-year average of 8% and spring wheat harvest is officially deemed finished.

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John Heinberg

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