- Corn futures bounced higher, then slipped back this week as US harvest nears its conclusion and news out of South America remains mixed. December futures ended the week at $4.6700 per bushel, three cents higher versus the Friday before.
- As of November 12, US corn harvest was 88% complete. That’s up from the five-year average of 85%, but below the consensus call for 90%.
- Old-crop corn export sales exceeded expectations with 1.8 million metric tons sold. But there were no sales of the 2024-25 crop.
CORN COMMENTARY BY MATT TRANEL
- The corn market turned in a modest week of trade following last week’s bearish WASDE. Prices popped back up to the $4.80-per-bushel resistance area a couple of times before retreating back close to the lows experienced on report day. Despite intraday volatility, markets remain rangebound, looking for the next story to propel futures one way or the other. Managed money traders have continued to build their short position in the corn market, presumably from bigger yields in the 2023 crop year. As of last Friday’s CFTC Commitments of Traders report, managed money was short 176,065 contracts.
- The support underneath the corn market seems to be borrowed from the soybean complex. Soybeans remain tight on their balance sheet and with early South American weather being dry, prices have popped to reflect that. A wetter weekend forecast brought weakness to soybeans late in the week, which could spill over to corn as well. Farmers are looking ahead at 2024 plantings and corn must at least stay in contact with soybean prices to keep enough acres. Argentina also reduced its expected planting estimates from 7.3 million hectares to 7.1 million.
- Unfavorable weather is still impacting planting Brazil, while drought in the Amazon region causes logistical pains. But weakness returned and the January contract dropped to $13.4025 per bushel, down seven cents on the week.
- In the US, soybean harvest is nearing completion, reaching 95% by November 12. That compares to 91% on the five-year average and expectations for 96%.
- Export sales of the 2023-24 soybean crop were strong, totaling 3.9 million metric tons. That’s at the higher end of the predicted range. There were no new-crop sales.
SOY COMMENTARY BY KRISTIN STIEN
- Beans went on a wild, 56-cent ride higher at the beginning of the week, only to give it back. Volatility is the name of the soybean game starting in mid-November through January, thanks to South American weather. This year is no exception. Weather news started the rally, with parts of South America too wet and other parts too dry for planting. If you add the massive Chinese purchases of US soybeans that occurred before President Xi and President Biden’s meeting, it’s easy to see why the rally occurred. The meeting between the two presidents resulted in a commitment to investment in solar, wind and renewable energy. This encourages soy processors to continue their goals of ramping up production. Meanwhile, the National Oilseed Processor’s Association released news of record crushing activity in the month of October. That allowed beans to test $14.00 per bushel before the bearish news started to factor in.
- While some global economies are starting to show better signs, consumer buying and inflation remain high. That hangs a cloud over the head of commodities fearful of how governments will react. Historically, $14 soybeans have often given pause to physical buyers and that appears to be the case again this week. Continue to keep an eye on South American weather. The rain that Argentina received late this week may bring relief and provide resistance in the market. Unfavorable weather conditions going forward could open up the ceiling that beans have faced all year long.
- With poor weather reports and ongoing tensions in Europe, predictions call for a decrease in US wheat stocks. Nearby futures settled at $5.5075 per bushel, down 24.5 cents week-over-week.
- Farmers have almost finished planting winter wheat. As of November 12, 93% of the crop was in the ground, on par with the five-year average, but slightly behind the consensus call for 95%.
- Wheat export sales were weak, with 176,296 metric tons of the old crop and zero metric tons of the 2024-25 crop sold.
WHEAT COMMENTARY BY MEG JOHNSTON
- The November WASDE increased the overall wheat yield and production numbers, which leant a bearish tone to futures pricing last week. This week, we have seen that tone persist, even with the confirmation of further Russian attacks on shipping vessels. That means the futures market has already factored in those events, and we are continuing to trade on news of a large US wheat crop per the WASDE. We are not quite back to the early-November lows on December wheat futures, but if we continue this trend of working lower, we could be.
- It is interesting to note that money managers have been shorting Minneapolis wheat pretty heavily. As of last week, they were short 31,000 contracts. That tells me money managers think we have hit the highs.
- Russia is still offering wheat at lower prices, but with the recent attacks, the risk doesn’t seem to outweigh the discount and we are not hearing of confirmed sales. We are catching news of heavy rains in Northern France, which could impact its 2024 soft wheat and winter barley crops. This is not something currently driving business to the US wheat market, but it is something to keep an eye on. The rain in Argentina has arrived too late to really help their wheat crop and the Rosario Grain Exchange is reducing the forecast to 13.5 million metric tons.
Futures and options on futures trading involves significant risk and is not suitable for every investor. Information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended for informational purposes. Information is obtained from sources believed reliable but is in no way guaranteed. Opinions, market data and recommendations are subject to change at any time. Past results are not indicative of future results. Jon Spainhour, Matt Tranel and Kristin Stien maintain financial interest in the commodity contracts mentioned within this research report at the time it is published. Katie Burgess, Tracy Mobley, Mark Majoros and Meg Johnston do not maintain financial interest in the commodity contracts mentioned within this the research report at the time of publication. This report is in the nature of a solicitation.