Morning Market Review for October 15, 2021

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Overnight gains hint at further recovery. (Comments are updated by 7:30 a.m. Central Time.)

Corn, soybeans and wheat all trend higher ahead of Friday’s session

  • Corn: Up 7 cents
  • Soybeans: Up 10 cents
  • Wheat: Up 7 to 12 cents

*Prices as of 6:50am CST.

Earlier this week, USDA’s World Agricultural Supply and Demand Estimates report roiled the grain markets for a couple of days, pushing down prices in the process. But this report’s influence won’t last forever, and Thursday was proof of that after grain prices began to reverse the damage. Overnight gains suggest additional recovery is possible today as traders prepare to reengage in a pattern of technical buying. Corn prices tested gains of more than 1%, while soybeans added 0.75%. Overnight wheat gains were variable but moved as much as 1.5% higher.

Overseas stock markets posted healthy gains today. Asian markets closed between 0.4% and 1.8% higher, while European markets were trending around 0.25% higher in midday trading. On Wall St., the Dow moved 150 points higher in pre-session trading to 34,934 following a round of better-than-expected corporate earnings reports out yesterday.

Energy prices continue to move higher. Crude oil topped $82 per barrel overnight after gaining nearly 0.9%. Diesel was up by a similar percentage, with gasoline rising around 0.5%. The U.S. Dollar softened slightly. Copper (sometimes seen as a bellwether for the global economy) continues to perform very strongly, moving another 1.6% higher today.

The latest 72-hour precipitation map from NOAA shows mostly dry weather in store for areas west of the Mississippi River between today and Monday. Parts of the eastern Corn Belt may gather between 0.25” and 0.5” during this time. Official 6-to-10-day forecasts predict near-normal temperatures for the central U.S. between October 20 and October 24. Drier-than-normal conditions are likely for the Midwest and Plains next week.

On Thursday, commodity funds were net buyers of all major grain contracts, including corn (+5,500), soybeans (+6,000), soymeal (+2,500), soyoil (+2,500) and CBOT wheat (+4,500).

Corn

Corn prices had a rough start to the week but are on track for a solid performance Friday if overnight gains of more than 1% hold up. We could see plenty more volatility in either direction later this fall as harvest progress pushes forward and as supply and demand fundamentals continue to reveal themselves.

When USDA’s next export recap comes out later this morning, analysts think the agency will report corn sales ranging between 27.6 million and 63.8 million bushels for the week ending Oct. 7.

For the second straight week, ethanol production improved, per the latest data from the U.S. Energy Information Administration on Thursday. Production improved to a three-month high of 1.032 million barrels per day for the week ending October 8. It was also the first time since late July that the daily production average topped a million barrels.

Yesterday, corn basis bids were steady to mixed after tipping a penny lower at an Illinois river terminal while firming 3 to 7 cents higher at three other Midwestern locations.

In France, the country’s 2021 corn harvest has reached 15% completion through October 11, per the farm office FranceAgriMer. That’s up from 7% a week ago but way behind 2020’s pace of 62%. Crop quality is outstanding, however, with 90% of the crop rated in good-to-excellent condition (up a point from last week). France is Europe’s No. 1 corn producer.

The preliminary report from the CBOT showed daily futures volume at 256,140, while open interest moved 509 higher. Options volume was at 72,628, slightly favoring calls (38,421) over puts (34,207). Implied volatility for near-the-money December contracts was just under 22% with another 42 days until expiration.

Soybeans

Soybean prices are fighting through a similar set of circumstances as corn right now. Harvest pressure and some bearish supply and production data from USDA suppressed prices earlier this week. Even so, stocks remain relatively low and export optimism could bring some upside to the table. Overnight gains were around 0.75% heading into Friday’s session, suggesting a round of technical buying today. Several flash sales were reported to various destinations earlier this week, and if more of those materialize, that could also help move the needle in a positive direction.

Prior to USDA’s next export report, out later this morning, analysts think the agency will show soybean sales ranging between 22.0 million and 52.2 million bushels for the week ending October 7. Analysts also think USDA will show soymeal sales ranging be-tween 100,000 and 340,000 metric tons, plus up to 40,000 MT of soyoil sales.

Yesterday, soybean basis bids eased a penny lower at an Illinois river terminal while firming 4 cents at an Iowa river terminal and holding steady elsewhere across the central U.S.

Grain prices have had a wild ride so far in 2021 – from a significant swing higher earlier this year to the latest downturn. Naomi Blohm, senior market adviser with Stewart Peterson, looks at eight charts that better explain the ongoing situation in the latest Ag Marketing IQ blog – click here to learn more.

In another recent Ag Marketing IQ blog, Matthew Kruse, president of Commstock Investments, took a closer look at some headlines and technical signals that have been affecting soybean prices. Exports are ramping up, but moving averages have been dismal. Kruse explains in much greater detail here.

The preliminary report from CBOT showed daily futures volume at 264,074, and open interest fell by 8,481. Options volume moved to 48,966 and moderately favors calls (28,709) over puts (20,257) at this time. Implied volatility in near-the-money November contracts moved to 16.1% with just 7 more days until expiration.

Vegetable oil markets in Asia saw November soybean oil futures in China improving to 70.1 cents. Oilseed markets internationally were mixed but mostly lower today. November soybean futures in China dropped to $25.63. November Winnipeg canola contracts slid slightly lower, to $16.69, after adjustments for volumes and currencies.

Wheat

Wheat prices stumbled some this week but remain in relatively good shape after reaching multiyear highs earlier in 2021 and remaining somewhat close to those levels. Overnight trading suggests prices will firm again on Friday, with gains for most contracts heading into today’s session ranging between 0.75% and 1.5%.

Ahead of USDA’s export report out later this morning, analysts expect the agency to show wheat sales ranging between 9.2 million and 19.1 million bushels for the week ending October 7.

China is planning to auction around 3.7 million bushels of its state wheat reserves on October 20, and will likely begin to draw down its state stockpile in a series of similar auctions later this fall. The country’s 2021/22 domestic production could reach 1.323 billion bushels, according to some estimates.

Russia’s wheat exports for the first eight months of 2021 are down 1.6% from last year’s pace, with 709.7 million bushels between January and August. But thanks to better prices versus a year ago, the total value of those exports is up 15% year-over-year.

French farm office FranceAgriMer estimates that 13% of the country’s 2021/22 soft wheat crop has been planted through October 11, up from 4% a week ago. The country’s winter barley crop plantings also moved ahead to 24%, versus 9% last week.

The preliminary report from CBOT showed daily SRW volume at 71,288, with open interest firming by 1,327. Options volume is at 19,501 and slightly favors calls (10,392) over puts (9,109). Implied volatility for December near-the-money options is at 22.8% with another 42 days until expiration.

Volume in HRW wheat moved to 31,803, with open interest inching 84 higher. Options volume is at 5,320 and heavily favors calls (4,484) over puts (836).

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