TFM Daily Market Summary 10-1-21


Bullish USDA Small Grains Summary and Grain Stocks report could have wheat targeting the $8.00 level.  Thursday’s USDA report gave wheat a double dose of bullish news as both wheat supplies and production were reduced.  In the Quarterly Grain stocks report, as of  September 1, all wheat stocks were reported to be 1.78 bb, down 18% from a year ago, but also 79 mb below the average pre-report estimate. This was the lowest stockpiles in over a decade.  On-farm storage was down 41% compared to last year.  With tight on-farm supplies, end users will need to “bid” up in order to pull those supplies out of storage.  In the Small Grains Summary, total production in all classes of wheat was pegged at 1.646 billion bushels, well below expectations.  The biggest impact on the production total came from the spring wheat class, as yield was dropped to 32.6 bushels/acres, a 16 bushels/acres drop, and harvested acres saw a large amount of abandonment.  The past two trading sessions, wheat futures gained 35 cents and finished the week trading 31-1/2 cents higher.  Prices have broke out of the most recent trading and are possibly looking to challenge the contract highs.  Global wheat prices are supportive, as MATIF wheat futures posted new contract highs, and the global demand is strong for wheat.  Technically, chart could be pointing to a test of $8.00.


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CORN HIGHLIGHTS: Corn futures closed with gains of 4-3/4 to 9-1/4 cents, as sharply higher wheat prices, fertilizer supply concerns, and mixed yield results provide support.

December gained 4-3/4 to close at 5.41-1/2 and September lead today’s gains, closing 5.37-1/4, up 9-1/4. December 2022 closed at 5.31-1/2, up 8-3/4, a new contract high close. For the week, new crop December gained 14-3/4 cents. Bullish traders must argue this week was a huge victory as prices gained close to 15 cents. This, despite a USDA report that wasn’t termed bullish, as well as harvest pressure, not to mention sharp gains in the US dollar. We sound a bit like a broken record, but growing concerns regarding fertilizer cost and availability for the year ahead is prompting new crop buying. We also believe it will keep farmers very selective in their selling old crop they are planning to store. The other story that continues to develop in the background is higher energy prices, as crude oil is trading near 75.00 a barrel with many calling for this contract to trade as high as 100.00.

 SOYBEAN HIGHLIGHTS: Soybean futures closed weaker by 6 to 9 cents on follow through selling after yesterday’s bearish Stocks report, technical selling, and a higher US dollar. November futures lost 9-1/4 cents for the session, closing at 12.46-1/2 and down 38-1/2 cents on the week.

Also adding to the negative tone is talk that a significant number of Chinese crushers have shut down for the week due to poor margins, as well as taking holiday. Bottom line, the market doesn’t have friendly momentum and this week’s news was not supportive. An adjustment to last year’s yields by eight tenths of a bushel was enough to send prices lower after carryout jumped surprisingly larger than expected, to end the marketing year at 256 million bushels. The market was expecting 176 mb. Harvest is getting underway in a big fashion as well. As we indicated yesterday, we do believe some producers, if not many, have maintained a bullish bias in soybeans and, therefore have been waiting for a price rebound to make sales. Now that harvest is here, they may be selling as they would rather store corn.  It is early to draw conclusion to yield results, yet it appears that rainfall throughout much of August was very beneficial.

WHEAT HIGHLIGHTS: Wheat futures had another very strong day – a carryover from yesterday’s bullish report news. Dec Chicago gained 29-3/4 cents, closing at 7.55-1/4 and March gained 29-1/2 cents, closing at 7.66. Dec KC wheat gained 27-3/4 cents, closing at 7.59-1/2 and March gained 27-1/4 cents, closing at 7.66-1/2.

Wheat had another notable trading session to say the least, with impressive double-digit gains in all three contracts. Wheat has not been at today’s levels since mid-August, and Dec Minneapolis almost surpassed its contract high of 9.37-1/2. With the numbers released yesterday it is easy to see why. Stocks were around 77 mb below expectations, and production came in 180 mb below last year. Production estimates may continue to fall in the months ahead as world weather is skethy. While rains fell in the Southwest Plains yesterday and today, drought in that region remains a concern with the long-term forecast showing above normal temperatures and below normal precipitation. The next potential market mover for wheat is the October 12 WASDE report which, at this point, is also expected to be bullish. Any concern over delayed reports due to a government shutdown has been alleviated (at least temporarily). Congress voted to keep the government funded through December 3, though they are expected to reach the debt limit on October 18.

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Kelly Rubisch

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