Written Commentary
MORNING OUTLOOK
Grains are mixed to higher. SF is up 3 cents and near 11.73. SMF is near 395.5. BOF is near 37.72. CZ is up 1 cent and near 4.21. CH21 is near 4.26. WZ is up 3 cents and near 5.98. WH21 is near 6.04. KWZ is down 1 cent and near 5.50. KWH21 is near 5.59. US stock market is moderately higher. Crude is higher. US Dollar is lower. Gold is lower. Cooper is higher. Grain trade is all about demand for US corn and soybean exports and weather. Financials are still about the virus versus the vaccine.
Soybean market continues to be supported by estimates of tighter US soybean balance sheet, potential for more China buying US soybean and South America weather. Brazil LH Feb prices are 50 cents above March. Large net fund long makes the market vulnerable for quick profit taking and long liquidation on a slowdown in bullish news. Most look for nearby soybean to trade over 12.00, soymeal over 400 and soyoil closer to 40. One analyst now suggest soybeans could test 15.00-16.00. Matif Canola seed price are new contract highs. Asian soybean and soyoil futures making new contract highs. China currency is at 30 month high. There is talk that China is Stockpiling Crude and Ag goods.
Corn market is also supported b talk of higher US export demand and weather problems in Ukraine and South America. Dec 2021 corn is also supported by the need to fight for higher 2021 acres to help increase supply to satisfy demand. Today’s US ethanol data should show production unchanged for last week and a small drawdown in stocks. Key to US gas/ethanol demand is the timing of a successful vaccine.
Wheat futures remain a follower with adequate World wheat supplies offsetting weather worries in US. Black Sea and South America. Some funds are using a short wheat position as a hedge against long soybean and corn positions. Large Australia supplies is competing for Russia supplies.
On Tuesday, Managed funds were sellers of 3,000 contracts of SRW Wheat; bought 7,000 Corn; bought 12,000 Soybeans; net bought 5,000 lots of Soymeal, and; net bought 1,000 lots of Soyoil. We estimate Managed Money net long 20,000 contracts of SRW Wheat; long 254,000 Corn; net long 251,000 Soybeans; net long 84,000 lots of Soymeal, and; long 108,000 Soyoil.
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