MARKET SUMMARY 10-15-2021
The NOPA soybean crush report saw September soybean crush totals hit a 3-month low. The total for September was 153.8 mb of soybeans were processed in September, down 5% from last year, and below market expectations of 155.1 mb. Even though, the September total was still the 3rd highest total for the month of September overall. A strong soybean oil market has help elevate the crush totals, and soyoil stocks were above expectations at 1.684 billion pounds. The backside of the crush is the soybean meal, which prices have recently pushed to new lows for the year. The soybean meal export market has struggled, with exports in September at 604,000 MT, down 39% year over year. The tighter crush numbers is likely due to tighter soybean supplies, and the backlog of soybean meal due to low demand. The USDA recently added additional bushels to the marketing year total, and the strong oil demand and the fresh supplies of harvest soybeans should start the next handful of months off to a strong crush pace.
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CORN HIGHLIGHTS: Corn futures firmed today gaining 6 to 9 cents on good export sales and a broad-based rally in most commodities including crude oil which traded above 82.00, a new contract high for November futures. December futures closed at 5.25-3/4 up 9 cents for the day and off 4-3/4 cents on the week.
What started as a risk-off week in commodities, ended with risk on. Export sales were released today (normally on Thursday but due to Columbus Day, shifted back one day) at 40 mb were termed supportive bringing year-to-date sales to 1.087 bb, as compared to 1.043 at this same time last year. The total sales forecasted by the USDA are 2.5 bb which implies sales are now 43.5% of the projected total. Soaring fertilizer costs and supply concerns have many speculating as to what this could mean for corn acreage in the year ahead. At this point, a number that keeps surfacing is 3,000,000 acres shifted from soybeans to corn. Really, this is anybody’s guess but a reduction of three million acres could tighten carry out toward 1 billion. This would suggest $5 as support for new crop with little weather premium priced in. Other dynamics are input availability such as herbicides and pesticides. This may be a challenge for Brazil and Argentina as well.
SOYBEAN HIGHLIGHTS: Soybean futures ended the week on a firm note, with November futures leading a rally today closing 11-1/2 cents higher at 12.17-3/4. For the week though, November still lost 25-1/4 cents. New high prices for crude oil and a strong weekly export sales figure at 42.2 were supportive. Additionally, announced daily export sales this morning totaling just over 34 mb to China and unknown destinations suggests that futures have gone low enough to spark importing countries to pick up their purchasing pace.
Total sales year-to-date are now 970 mb, well behind 1.584 bb for this same time a year ago. Nonetheless, the trend of exports is picking up in recent weeks. Total sales expectations for the year are 2.090 bb which puts year-to-date sales at 46% of expectations. The gulf should be close to full capacity by the end of the month. The dollar was off again for the third consecutive session. Palm and soybean oil are in strong demand due to tightening vegetable oil supplies and perhaps more importantly increasing biodiesel production. Yield results continued to suggest most are harvesting as expected or better than expected yield.
WHEAT HIGHLIGHTS: Wheat futures rallied today on rumors of China buying, as well as supportive fundamentals. Dec Chicago wheat gained 9-1/4 cents, closing at 7.34 and July up 9 at 7.38-1/4. Dec KC wheat gained 12-3/4 cents at 7.43-3/4 and July up 10-1/4 at 7.45-3/4.
Minneapolis wheat led the way yet again today, reaching a December contract high of 9.80. Paris milling wheat futures are also up the equivalent of 17 cents per bushel, making new highs. Interestingly, Dec Chi wheat ended the week exactly where it started at 7.34 – a nice recovery considering the poor start to the week. Fund selling pushed the market down early after the WASDE report but bullish fundamentals have helped wheat to rebound. Unlikely to change much over the coming months are US wheat supplies which are at 14-year low levels. Rumors yesterday said that China bought 5-6 cargoes of French wheat; some sources say it may be up to 10 cargoes. US 2022 HRW wheat prices are competitive to Europe and the Black Sea. At the current pace, Europe’s wheat exports would be somewhere around 47 mmt. This would suggest a negative carryout (around -2 mmt). Therefore, the market is looking to see a decline in European exports, along with Russia’s export reduction due to their soon to be implemented quota system. The USDA reported an increase of 20.9 mb of wheat export sales, though total wheat commitments are down 20% from one year ago. Drought could remain a concern into 2022 and is just one factor supporting prices.
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Author
Bryan Doherty