TFM Daily Market Summary 11-12-21


Soybean meal prices surged higher this week, adding $29.40/ton and closing at the highest prices seen since August.  The soybean meal market has been the backside of the strong soybean oil trade for months, but this week, it was soybean meal’s time to shine.  Market talk was demand for feed has increased as cattle producers were looking for supplies in feedlots, a possible result of higher DDG prices due to strong corn values.  Secondly, Argentina is forecasted to plant its lowest soybean acre total in 15 years, which could improve global meal demand.  Argentina is the world’s largest exporter of soybean meal. The move in meal was also technically driven, as prices rallied through resistance to challenge the $366/ton level.  The rally could be overdone given the strength this week, and next week’s price action will be closely watched for additional gains.


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CORN HIGHLIGHTS: Corn futures firmed again today, finishing 7-3/4 higher in December at 5.77-1/4. For the week, December 2021 closed 24-1/4 higher, while new crop December 2022 closed the week 8 cents firmer at 548-1/2, its highest weekly close for the year. Despite a higher dollar, corn and wheat were big winners for row crops, as was a large jump in the soymeal market this week. Export sales were termed neutral at 42 mb.

Export sales year to date are 1,262.8 billion bushels. This compares to last year’s figure for the same time period of 1.345 bb. The pace of exports over the last several weeks continues to concern bullish traders. Yet this week’s USDA report had no change to exports, while it increased ethanol usage by 50 million bushels. Many feel that positive margins for ethanol could increase total corn usage another 100 to 150 million bushels, bringing the total for the year to 5.35 and 5.4 billion. Money flow into row crop commodities, despite a higher dollar, is impressive and encouraging, perhaps indicative of tight world inventories. Wheat supplies are perhaps the most concerning. Uncertainty with Ukraine and Russia relations are likely providing support for wheat, which is spilling over to corn in the form of higher prices. Lastly, President Biden and the president of China are expected to meet Monday in a virtual summit.


SOYBEAN HIGHLIGHTS: Soybean futures experienced sharp gains, closing higher with November going off the board at 12.34, gaining 21-3/4 cents. January is now the front month and it too finished sharply higher, adding 22-3/4 cents, finishing the week at 12.44-1/4. For the week, January added 38-3/4 cents. Strong advances in soymeal and continued talk that China has made large purchases provided support this week. Prices have advanced since Tuesday after the WASDE report indicated a less than expected increase in ending stocks.

Also grabbing the market’s attention today is news that President Biden and Chinese President Xi Jinping will meet in a virtual summit on Monday, provided short covering and buying interest in hopes of more purchases of US soybeans. Export sales of 47.4 million bushels were termed supportive. The YTD total continues to lag well behind last year, which at this same time was 1.831 bb. Today’s strong activity and strong gains on the week are reflected in a weekly hook reversal on price charts. Yet, without weather concerns out of South America, we doubt soybeans have much upside potential. The January contract is now the lead contract, which is up against stiff overhead resistance at key moving averages, as well as a downward channel line. If January futures can pierce 12.50, the next area of resistance is 13.00, where the 40-day moving average currently sits. Unwinding of spreads between long meal an oil was noted on talk that Biden administration is close to revealing new biofuel mandates that may actually lower the mandates.


WHEAT HIGHLIGHTS: Though closing off the highs, wheat futures still managed to have solid gains today. This comes despite a lack of fresh grain news and a surging US dollar, which has moved above the 95 mark. Dec Chicago wheat gained 9-1/2 cents, closing at 8.12-1/2 and July up 8-3/4 at 8.14-1/4. Dec KC wheat gained 10-1/2 cents, closing at 8.28 and July up 6-1/4 at 8.14.

Today, Chi and KC wheat made new contract highs and closed higher for the fourth consecutive session. MPLS wheat closed higher for the third consecutive session. Russia’s wheat export tax is currently around $70 per metric ton, but some analysts feel that it could get to the $100 level, as Russians try to slow export demand and cheapen their domestic prices. Currently, Russian wheat prices are still cheap compared to most origins. Additionally, the Russian Ag Minister stated that a new export quota will be announced soon for January thru June. In other news out of Russia, there are concerns that they may invade Ukraine, which could impact not only the wheat market but commodities as a whole. There was also word out of China yesterday that the real estate conglomerate, Evergrande, defaulted on a debt payment. This is not the first time they have been in the news; not long ago there were concerns that they would collapse and that news took its toll on the financial and commodity markets. In eastern Australia more heavy rains are expected, which could compound quality and disease concerns that already exist around their wheat crop. Paris milling wheat futures again made new all-time highs today, though like the US markets they did settle back to end the session. Rains are moving across the Midwest today with some snow in the northern regions. In a longer-term outlook, the developing La Nina pattern may bring a colder winter to the US, and a drier spring and summer.


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Bryan Doherty

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