Grains closed lower on Wednesday:

Dec Corn – 10 ¼ cents/bu (5.12 ¼ )

Nov Soybeans – 3 cents/bu (11.95 ¼ )

Dec Chi Wheat -10 ¼ cents/bu (5.12 ¼ )

Cdn $ +0.00175 (80.415 cents)

WTI Crude Oil -0.20/barrel (80.44)

Grain prices slumped today, but rallied into the close to end the day well off of their lows.  At their lowest point this morning, December corn futures were down 15 ¾ cents/bu, November soybeans were down 13 ¾ cents/bu, and December Chicago wheat was down 21 ¼ cents/bu.  The market continues to react to yesterday’s bearish USDA October Crop Report, despite a number of market friendly fundamental news reports today.

Yesterday, the USDA increased projected ending US stocks of 2021/22 corn from their September estimate by 92 million bushels and raised projected 2021/22 ending US stocks of soybeans by 135 million bushels.  Those increases were bigger than the trade had projected, but were not a huge surprise overall.  The bigger surprise yesterday came from the projections for larger world stocks of corn (an increase of 4.11 million tonnes of corn and an increase of 5.68 million tonnes of soybeans).  Last night, the USDA also indicated that US corn and bean conditions had improved by 1% in the good/excellent category, while the trade had expected condition ratings to be unchanged.

This morning, the USDA confirmed the following 2021/22 export business as part of their Export Flash Sale Reporting system:

• 330,000 tonnes of soybeans to China
• 198,000 tonnes of soybeans to unknown destination
• 161,544 tonnes of corn to unknown destination

Market bears jumped on sentiments of weakness early today, in their attempts to push grains lower.  Some are suggesting that recent rains in Argentina and Brazil have solidified early South American crop prospects to the point that some weather premium can come out of the market.  It seems early to be talking up Brazilian corn production, when only last week, analysts were laying odds on the probability of another La Nina impacting Argentina and southern Brazil again in 2021/22.  There is no denying however ,that the Brazilian soybean crop is being planted at a much better pace today than what happened in the dry conditions of 2020.

The soy complex is being supported by the tremendous demand for edible oils.  Malaysian Palm Oil traded to an all time record high last night.  Yesterday, the USDA’s October report showed a surplus in US soyoil stocks for 2021/22, but that surplus is the smallest in the past 5 years.  The USDA is projecting a 25% increase in US biofuel usage of soybean oil, while the private industry is projecting a minimum of a 33% expansion, with some calling for as much as a 65% increase in growth.  Soyoil will continue to support bean prices.  Any evidence of a resumption of Chinese buying should help bean prices as well.

You would not know it by today’s weakness in wheat markets, but Iran is reportedly in the market to by a record 8 million tonnes (294 million bushels) of wheat in 2021/22, up from an annual average of just 1 million tonnes over the past 5 years.  This interest in wheat buying comes after the country’s worst drought in the past 50 years.  Russia is expected to be the main supplier (surprise, surprise).  The USDA currently has Iranian wheat imports pegged at only 2.5 million tonnes. However, wheat prices slumped along with corn today.  USA winter wheat areas are expected to receive beneficial rains over the next 10 days.  European wheat prices declined similarly to USA values today, while Russian wheat prices were basically unchanged.

On the day today, funds were believed to have been sellers of 15,000 corn contracts (now long 216,000), sellers of 5,000 soybean contracts (now long 10,000), and sellers of 8,000 Chicago wheat contracts (now short 11,000).