MARKET SUMMARY 9-24-2021
Brazil is the world’s largest producer of soybeans, and its production looks to continue growing larger in the future. Over the past 30 years, Brazil’s soybean production has grown nine-fold, as the country has added more acreage and improved efficiency of production. Since passing the United States as the world’s largest soybean producer a couple years ago, the gap between the two countries has widened. In the next crop year, Brazil is projected to produce another record crop, targeting 5190 billion bushels, up 3.9%, as acreage should grow an additional 3.6% to 98.62 million acres. This expansion is fueled by strong profits supported by high soybean prices and the currency relationship between the U.S. dollar and the Brazilian real. Like the United States, China is the largest buyer of these soybean supplies. Over the next few weeks, the planting of the Brazil crops will pick up, with October as the important month. The soybean market will be focused on the U.S. harvest and supplies but will keep a close eye on the planting pace and Brazilian weather.
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CORN HIGHLIGHTS: Corn futures finished softer in Friday’s session, losing 2-1/2 cents in December to close at 5.26-3/4 and 3/4 cent lower in December 2022 to close at 5.04-3/4. Dec corn futures were trying to close higher for the second consecutive week but failed with the soft close, as December futures were down 1/2 cent on the week and did trade 14 cents off the week’s low on Monday. Yesterday, Dec corn futures pushed through resistance at the 20-day moving average with 5.40 as the next area for resistance, with support at the 10-day moving average underneath at 5.24, as well as psychological support at 5.25. It is likely the market will trade in a choppy pattern with the month end next week as well as the Stocks report due out at the end of next week, or until more harvest results are available. If behind on sales, use rallies to get current. On the weather front, near-term forecasts are drier, which should aid the harvest pace into next week. Harvest results could impact price movement. So far, we would argue mixed as some yield is outstanding and some disappointing. Corn basis will continue to fade with harvest continuing to push forward at a good pace, so the immediate cash market will likely dictate the futures prices. South America will continue with early full-season corn planting with little weather concerns there so far, another limiting. Technically, the corn market looks to have made a turn higher after the September 10 report, and prices are trying to work higher in a window where it may be difficult.
SOYBEAN HIGHLIGHTS: November futures gained 3/4 cent today, closing at 12.85 and January gained 3/4 cent, closing at 12.94-3/4. Today there was word out of China that they ordered soybean crushing plants to close in two provinces. This is part of their five-year plan to reduce emissions. It is unclear how long these plants will remain closed, but we do know those provinces have missed their targeted emission numbers. In other China news, this week we commented on the Evergrande situation. There is talk that they have missed an interest rate payment, which could be weighing on the financial and grain markets. November soybeans on China’s Dalian exchange are near the equivalent of $19.82 per bushel and close to 2021 highs, suggesting China may need to buy US soybeans. The market is still waiting for the Gulf to get back up and running, with the potential for increased US soybean sales. Harvest here in the US continues with mostly favorable conditions forecasted for the next two weeks. On September 30, we will get the results of the quarterly Grain Stocks report, which could show a revision in the USDA’s soybean carryout of 175 mb. From a fundamental perspective, supplies are expected to remain tight into next year.
WHEAT HIGHLIGHTS: December Chicago wheat gained 6 cents today, closing at 7.23-3/4 and March gained 6-1/4 cents, closing at 7.34-3/4. Dec KC wheat lost 1/4 cent, closing at 7.19-3/4 and march lost 3/4 cent, closing at 7.27-3/4. With a mixed close, yesterday’s strength in the wheat market did not carry through into today. There were some rumors that China bought European wheat and may have also bought US SRW wheat. There is still concern over the quality of European wheat. There is still talk that Russia will impose rationing on wheat exports starting January 1. In terms of US wheat export sales, we are in the third consecutive week of greater than needed exports to meet the USDA projection. From a weather perspective, there is a chance for rains next week across the US southern Plains, though big picture concerns over drought in that region are expected to remain into 2022. Wheat conditions outside of the US are mostly favorable with Russia and Argentina having beneficial rains in their forecasts. From a fundamental standpoint, supplies are tight, which should help keep prices supported for the next several months.
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Author
John Heinberg