TFM Morning Update 10-20-2023

CORN

Corn is trading unchanged to slightly higher this morning after its close above 5 dollars in December yesterday for the first time in over two months.
Since the WASDE report last week showing the USDA’s guess for the national yield at 173.0 bpa, corn has been in an uptrend gaining over 37 cents from its low.
As of last week’s CFTC report which showed funds heavily short by over 100,000 contracts, many of those positions would be underwater by now which could cause more short covering and higher prices.
While recent rains have caused water levels on the Mississippi River to improve slightly, the longer-term forecast is dry and those low water levels are still a concern.

Soybeans are beginning the day lower as the December and January contracts struggle to break above their 100-day moving averages.
Soybean meal is slightly lower while soybean oil is higher, and crush margins overall have improved significantly over the past month driving domestic demand.
This week has revealed a number of bullish news pieces with export inspections, NOPA crush, and export sales all stronger than expected. Open interest has increased as well, and Nov beans could be on track for a 30-cent plus gain on the week.
Brazilian producers are becoming more concerned with the El Nino pattern which is causing very hot and dry conditions in both Brazil and Argentina, causing a bulk of plantings to be delayed.

Wheat is the only commodity trading higher this morning between corn and soybeans with December Chicago wheat challenging the 6-dollar level for the first time in over a month.
As in corn, funds hold a very large short position in wheat and with prices seemingly recovering, funds will likely need to short cover.
The Brazilian 23/24 wheat crop is seen at just 10.5 mmt, down 5.9% from the previous estimate due to dryness, and Argentina’s wheat crop is now rated 47% poor to very poor due to drought, up 5 points from last week.
Australia has been dry as well with its wheat production slashed significantly, but recent rains across the country could improve production by several million tons.

Amanda Brill