TFM Daily Market Summary 9-30-21


USDA Quarterly Grain Stocks reports typically brings some surprise and the September report did not disappoint.  Analyst estimates were 82 million bushels too low, a miss by 47%, as the USDA put ending stocks ate 258 million bushels versus expectation of 174 million bushels.  This was the largest miss in either price direction since 2005 in term of bushels.  The USDA went back to the January report an adjusted the final soybean crop from last year to find the extra bushels.  The USDA added .8 bushels/acre to last year’s yield and increased production by 81 million bushels, which carried over into the Grain Stocks report.  Prices tumbled during the trading session, but November beans held support at $12.50 level.  Charts turned technically more negative with the price action today, so the next few days could be key for the short-term direction in soybean prices.


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CORN HIGHLIGHTS: Corn futures ended the session mixed with front month finishing with small losses of 2-1/2 to 2-3/4 cents in December. Today’s Stocks report was termed slightly negative with the September 1 supply-on-hand figure at 1.236 billion, 69 million bushels more than the pre-report estimate of 1.167.

Future prices rallied prior to the report, trading at their highest price in nearly a month, reaching 5.48-1/2. Yet, the report was slanted negative, and it didn’t take long for the market to quickly sell off following sharp losses in the soybean complex. However, strong gains in wheat and a continuation of strong basis suggests farmers’ selling remains light, helping to rally prices into the close. The markets could be expecting yield numbers to be somewhat disappointing. In conversation with farmers so far, we would argue that corn yields are inconsistent. Some farmers are seeing much better than anticipated, others worse and many about what they thought with perhaps a slant to slightly lower. This month’s low came on the last USDA report September 10 when December traded to 4.97. This is a sell opportunity if behind on sales. The market will have little new news in the days and weeks ahead as harvest progresses. In no order, yield results, the value of the dollar, and energy news will provide direction. It looks likely the market will remain in a sideways pattern with 5.00 as support and 5.50 to 5.75 as overhead resistance.


SOYBEAN HIGHLIGHTS: Soybean futures ended with sharp losses on yield revisions for 2020 crop on today’s Quarterly Stocks report. Stocks increased 82 million bushels above the pre-report estimate of 172 mb to 256 million. The market reacted, finishing 27-3/4 cents weaker, with front month November closing at 12.56, it’s lowest close since June 17.

Today’s negative report was totally unexpected. Coming into the month, November soybeans we’re trading near 10 cents lower than last month, what we would term a huge victory considering Hurricane Ida, harvest pressure, and a sharp rise in the US dollar. Yet today’s unexpected increase to last year’s production caught the market off guard and as futures moved lower, they likely uncovered significant liquidation as sell stops were triggered. What is interesting about today is that supplies are much larger than expected yet early this summer the cash market was leading the rally. Therefore, we do call into question today’s number. One possibility is that commercials aggressively bought beans and have been storing. Concerned with a drought pattern last year moving into the growing season this year is a plausible explanation for end users to aggressively have purchased supply. We still question the yield increase.


 WHEAT HIGHLIGHTS: Wheat futures rallied sharply today on bullish report numbers. Dec Chicago wheat gained 15-1/4 cents, closing at 7.25-1/2 and March gained 14-1/4 cents, closing at 7.36-1/2. Dec KC wheat gained 20 cents, closing at 7.31-3/4 and March gained 19-1/4, closing at 7.39-1/4.

Today, we received the USDA’s Quarterly Stocks report, as well as their Small Grains Summary. Both reports were positive for wheat prices. The average pre-report estimate for September 1 wheat stocks was 1.857 bb, but the actual number came in at 1.780 bb (a 77 mb difference). Compared to 2.158 bb a year ago, the current stocks number is a reduction of about 18%. The all-wheat production pre-report estimate was pegged at 1.681 bb but the production number today came in 35 mb lower at 1.646 bb. Interestingly, in the breakdown of wheat by class, the Spring wheat production number came in at 331 mb, which was 2 mb above the average pre-report estimate. Though we would term this as neutral, one might think that given the problems encountered this season in the HRS growing areas we would see a number below the estimate. A reduction of 255 mb from last year’s number of 586 mb (or 44%) is quite substantial and likely helped with the 9 to 10 cent gains in Minneapolis wheat today. The USDA’s average wheat yield is also down 5.4 bushels per acre from last year, now at 44.3 bpa. Though overshadowed by today’s reports, the USDA today reported an increase of 10.7 mb of export sales for 2021-2022. Additionally, the US 7-day forecast shows 1/2 to 2 inches of rain in the HRW areas, and this moisture may move into the Midwest this weekend.


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Bryan Doherty

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