Written Commentary
Soybeans, soymeal, soyoil, corn and wheat traded higher. US stocks were lower. US Dollar was lower. Crude was higher. Gold was higher.
SOYBEANS
Soybean traded higher after USDA dropped their weekly crop ratings and announced new US soybean sales to China. SX traded back above 10.50 and increased its inverse over 2021 contracts. Managed funds are net buyers of 8,000 soybeans, 2,000 soymeal and 3,000 soyoil. We estimate Managed funds are net long 244,000 soybeans, 80,000 soymeal and 87,000 soyoil. USDA announced 264 mt US soybean sold to China. There is talk of improved chances for rain in parts of Brazil and Argentina. Still old crop Brazil soybean supplies are tight and there is talk they may have to import soybean to crush before their 2021 harvest. Argentina farmer continues to be a slow seller of soybean which could reduce their crush. This is helping soymeal futures. USDA estimated that 61 pct of the US soybean crop is harvested. Most feel US farmers will complete soybean harvest by this weekend. Then the question is how will the pipeline be filled for record exports after harvest. USDA rated the crop 61 pct good/ex versus 62 last week. Best crops are in KY, MN, MO, TN and WI. Lowest rated crops are in IA, LA, ND. and OH. One group could see higher futures into Q1 2021 then gradual drop in prices into fall of 2021 assuming normal US 2021 crop
CORN
Corn futures traded higher after USDA lowered slightly their estimate of the US 2020 corn Crop and announced new US corn sales to China. Managed funds are net buyers of 7,000 corn. We estimate Managed funds are net long 171,000 corn contracts. China corn futures continues to trade higher. Prices are near $9.71 and could soon test $10.00. Some feel higher prices could be due to part of the crop dropped due to flooding. Others feel stocks could be down due to aggressive selling of reserves. Higher margins could increase their demand for imported corn. USDA did announce 420 mt US corn to China. Some feel they may have bought a total of 1.0 mmt recently. Some feel China may take 20-25 mmt of imported corn, 3-4 from Ukraine, 1-2 from Brazil and 18-19 from US. USDA still estimates China corn imports at only 7 mmt. USDA estimated US corn harvest near 41 pct done and rated the crop 61 pct good/ex versus 62 last week. Best crops are in KY, MN, MO, SD and lowest rated crops are in IA, MI. and OH. One group could see higher futures into Q1 2021 then gradual drop in prices into fall of 2021 assuming normal US 2021 crop.
WHEAT
Wheat futures started lower on talk of potential rains across portions of US south plains and SW Russia. Rally in soybean and corn futures and late drop in US Dollar may have helped rally wheat futures into the close. Managed funds were late buyers 2,000 wheat. We estimate Managed funds are net long 31,000 wheat. Wheat futures continue to chop around. One weather map is dry across US south plains. The other has rains in east half of the HRW growing area. USDA estimated that 68 pct of the US winter wheat crop is planted with 41 pct emerged. USDA will start reporting crop conditions on Oct 26. Russia farmers continue to be slow sellers of wheat. Russia fob export prices is up to near $249 or $6.33 per bushel. One group could see slow trend higher in wheat futures into Q2 2021. This due to talk of lower Russia and Argentina 2021 crops. There could also be ongoing dry conditions across US south plains HRW growing area.
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