Corn market continues higher
December corn was up 17-1/4 cents this week to close at 419-1/4. July of 21 corn was 11-1/2 cents higher this week to close at 420-1/4. December corn has rallied 113 cents in the last 12 weeks. This is the largest rally for this time of the year since 2010 when corn rallied nearly $2.50 per bushel from August 1st until the end of October. Japan was the largest buyer of US corn for the week ended October 15th picking up a net 19.3 million bushels, including 6.4 million bushels switched from unknown. China was the number two buyer booking 17.1 million bushels. Export sales were much better than expected this week totaling 72.1 million bushels and well above the volume needed per week to reach the USDA’s current estimate of 2.2 billion bushels.
Fund buying continued to drive the corn market higher this week after continued daily flash sales and a strong weekly export sales report. It is now estimated that the combined net long for the corn, soybean and wheat market is within spitting distance of the 2012 extreme net long. China imported 1.08 million tons of corn in September, this is up a whopping 675% from a year ago. Basis levels continue to remain strong for much of the corn belt even with harvest over 60% complete. The corn market remains extremely overbought technically. Without fresh fundamental news it will be very difficult to attract additional buying. A close below 402-1/2 opens the door to a larger correction in this market.
Soybeans pushed to new contract highs
November soybean futures lost 15-1/2 cents this week to close at 1050. July soybeans lost 10 cents to close at 1035-1/4. NOPA crush numbers for September were released this week, a reported 161.5 million bushels of soybeans were crushed by NOPA members in
December corn was up 17-1/4 cents this week to close at 419-1/4. July of 21 corn was 11-1/2 cents higher this week to close at 420-1/4. December corn has rallied 113 cents in the last 12 weeks. This is the largest rally for this time of the year since 2010 when corn rallied nearly $2.50 per bushel from August 1st until the end of October. Japan was the largest buyer of US corn for the week ended October 15th picking up a net 19.3 million bushels, including 6.4 million bushels switched from unknown. China was the number two buyer booking 17.1 million bushels. Export sales were much better than expected this week totaling 72.1 million bushels and well above the volume needed per week to reach the USDA’s current estimate of 2.2 billion bushels.
Fund buying continued to drive the corn market higher this week after continued daily flash sales and a strong weekly export sales report. It is now estimated that the combined net long for the corn, soybean and wheat market is within spitting distance of the 2012 extreme net long. China imported 1.08 million tons of corn in September, this is up a whopping 675% from a year ago. Basis levels continue to remain strong for much of the corn belt even with harvest over 60% complete. The corn market remains extremely overbought technically. Without fresh fundamental news it will be very difficult to attract additional buying. A close below 402-1/2 opens the door to a larger correction in this market..
November soybeans were 33-3/4 cent higher this week to close at 1083-3/4. July of 21 beans rallied 24-1/2 cents this week to close at 1059-3/4. Front month soybean traded to 1083 this week, this was their highest level since July 14, 2016. Soybean export sales were on the high end of the trade guesses but down 14% from last week totaling 81.77 million bushels this week. China was the biggest soybean buyer this week switching 395,000 metric tons from unknown destinations to China. Boots on the ground in Brazil say planting should advance rapidly over the next two weeks. Analysts will most likely avoid cuts to production in Brazil unless acreage is affected. Brazilian farmers will push plantings past optimal windows for both corn and soybeans given the extremely high domestic prices. Soybean meal has led the gains this week for the soy complex trading to its highest level since May of 2018. With the meal market closing well off its highs and favorable rains in the cards for much of South America fund selling could appear as the November contract nears expiration.
Malaysian palm oil output fell 7.6% versus last month in the first 20 days of October. Production has slumped 10% and rising coronavirus cases could further accelerate supply issues as a labor shortage continues. The soybean market continued into overbought levels as prices traded to a new contract high this week. Late day price action on Friday is seen favorable to bulls and a higher high and higher lows than previous week keeps the uptrend intact. First support should come in at 1063 while the near-term upside target remains at 1095-3/4.
Wheat continues higher
December Chicago wheat was 7-1/2 cents higher this week to close at 632-3/4. December KC wheat rose 11 cents this week to close at 569-3/4. December MPLS spring wheat rose 17-3/4 cents this week to close at 577-1/2. Egypt paid the highest price in over five years for 165,000 tons of Russian wheat. The price was $278.15 Rubles per metric ton, $22/MT more than the price paid a month ago by Egypt. In Russia, the price for wheat and flour is at an all time high while drought continues to persist in the wheat producing part of the country. Rains are projected to bless the heartland in the coming week with low pressure system bringing much needed rain to winter wheat country. The weakening La Nina is also seen as supportive to better growing conditions for the plains looking out into next year.
Government Extends Food Box Program
The block/barrel average continues to explode higher as it moved another 15.125 cents higher on the week to $2.6138/lb. The cheese market seems to be supported by the recent farm to families food box program that was set to end in October. Today it was announced that it will be continued through the end of the year. Typically November and December are bad months for cheese prices with the vast majority of them finishing lower. But potentially the continuation of the program will keep cheese prices buoyant through the rest of the year. The Class IV products of butter and non-fat powder were disappointing as both finished the week lower. The recent 10 cents butter rally was once again squashed at the $1.50/lb level to finish the week 7.5 cents lower at $1.435/lb. Non-fat powder prices look to have put in a double top at the $1.145/lb level as prices finished the week 4.25 cents lower at $1.0975/lb.
Futures prices had a very volatile week as the milk production report had production 2.4% higher than the previous year pushed prices lower on Wednesday nearly limit in the December contract. But consequently, the relentless cheese market went higher and forced futures back up as prices finished limit up on November and December today. If the November contract holds onto this week’s gains it could close at the highest level a November contract has ever closed at, currently $22.19.
Author
Kelly Rubisch