MARKET SUMMARY 10-14-2021
Milk markets are using a strong demand tone to shoot to their highest prices since May. Class III milk futures have been quickly moving higher through the end of September and into October. The November milk futures hit a bottom on September 23 at $16.79/cwt, have now gained just oner $2.80 cent at today’s high. A strong demand tone has helped support the market. Export demand has stepped up, especially in the Asian markets. In addition, the anticipation of a strong holiday demand season domestically has help support cheese and butter prices. The dairy markets may have got an additional boost from the announcement by President Biden late yesterday regarding the port backlogs on the West Coast. Demand has been good overseas, but the backlog for shipping has helped build up supplies. Technically, 19.57 high today match the May high to the penny, and prices have faded. This could be a classic double top on the chats and matching prices the market hasn’t seen in 5 months. The next couple days of trade could be interesting, as this market decides to push higher, or profit take and correct lower.
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CORN HIGHLIGHTS: Corn futures rebounded, finishing the session with gains of 2 to 4-1/2 cents on a “risk on” day in commodities and equities. After pushing lower early in the week, a lack of farmer selling, a weaker dollar, stronger ethanol grind and new high prices for spring wheat were all viewed as supportive for corn futures today.
December futures led today’s rally gaining 4-1/2 cents, closing at 5.16-3/4. Rain delays are causing some harvest issues, but overall, this season’s harvest continues to run a faster than normal pace. Corn has dried in the field as is one of the driest crops harvested in recent memory. Feedback continues to suggest the crop is running slightly better than expected. Worries the economy could be slowing and affected by supply chain disruptions and inflation might suggest less demand for items such as beef and pork. Put another way, downward revisions to feed usage. Today’s ethanol stats indicated production increased from6.846 million barrels last week to 7.224 this week. Stocks at 19.847 million barrels was down from last weeks 19.931. Corn used this past week was the highest since June at 104.768 mb. Export sales will be released tomorrow due to the one-day delay from Columbus Day.
SOYBEAN HIGHLIGHTS: Soybean futures recovered gaining 11 cents in November on another announced export sale of 132,000 ton for unknown destinations, a weaker dollar and firmer energy all provided support. A buy signal due to a crossover in stochastics in over-sold territory also added support.
Export sales will be released tomorrow. Any sale of over 100,000 metric tons is announced the day of the sale. It will be interesting to see if a cumulative effect of smaller sales will show a response to lower prices. If there is a surprise lurking, it could be end users are stepping up to the plate. Though carry out is twice what it was 60 days ago, it is still snug. We don’t believe today’s trade activity was sending a signal that prices are done declining, yet we were impressed with the way prices finished near the top of today’s trading range. Soymeal could be indicating it’s close to a price bottom gaining 4.00 today. Soybean oil also finished with solid gains of 60 to 85 cents. Soy oil continues to find support on tight world vegetable supplies. India is reducing import tariffs. Beneficial rains in South America are noted for this week.
WHEAT HIGHLIGHTS: Wheat futures had solid gains today, as most markets tried to recover from yesterday’s selloffk, with wheat behaving more in accordance with the WASDE report numbers. Dec Chicago wheat gained 6 cents, closing at 7.24-3/4 and July up 2-1/2 at 7.29-1/4. Dec KC wheat gained 9-1/4 cents, at 7.31 and July up 7-1/2 at 7.35-1/2.
Along with corn and soybeans, wheat made a recovery today. MPLS wheat was able to make another new contract high. The US Dollar losing some ground was also helpful to wheat prices. For the 13th week in a row, Russian wheat values have increased. The Russian wheat harvest is 95% done, with 76.4 mmt reported to be harvested. The USDA has the Russian crop pegged at 72.5 mmt – either they are too low in their estimate, or they are factoring in the reduction that is caused by cleaning and drying the crop. Paris milling wheat futures are also sharply higher after losses yesterday. Today there were rumors that China is buying 5-6 cargoes of French wheat. Iran’s ag minister stated that they would need to buy 294 mb of wheat due to terrible drought in that region of the world. US weather-wise, SRW wheat areas are getting rain and HRW wheat areas should remain mostly dry for the next week. Drought could remain a concern into 2022 and with a 14-year low in US wheat supplies this could be a major issue next year.
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Author
John Heinberg