Grains closed mixed on Friday:
Dec Corn + 4 ¾ cents/bu (5.41 ½ )
Nov Soybeans – 9 ½ cents/bu (12.46 ½ )
Dec Chi Wheat + 29 ¾ cents/bu (7.55 ¼ )
Cdn $ +0.00140 (79.130 cents)
WTI Crude Oil +0.85/barrel (75.88)
Friday saw little in the way of new grain news, following yesterday’s blockbuster USDA Quarterly Stocks Report and Wheat Production Report. Today’s grain trade saw corn rally nicely after initially trading lower in the overnight session. Of course, corn values were helped out largely by the 30 cent rally in wheat futures today. Soybean values could never get to positive price levels as the market continues to deal with the almost unbelievable Stocks Report yesterday which showed 2020/21 crop year ending soybean stocks of 254 million bushels – the bean rally this past spring was predicated on a projected carryout of less than 100 million bushels.
Anecdotal USA Midwest harvest news continues to paint a picture of better than expected corn yields in Iowa and much of the western Corn Belt, while Illinois corn yields, while good, are slightly less than expected back in July/August. There was talk today from the Biden Administration’s Secretary of Energy speculating that the Environmental Protection Agency would NOT reduce the biofuel blending mandates when it does issue them in October/November. The EPA appointees are independent to make such decisions and not beholding to the Energy Secretary, but market bulls heaved a sigh of relief over the comments anyways. Ultimately, strength in corn today was more about the price of wheat than anything.
Wheat futures soared on continued analysis from yesterday’s confirmation from the USDA of a smaller than expected American wheat crop. That has analysts recalculating the amount of wheat that will be fed in the USA, and therefore was supportive to corn as well. With the uncertainty over USA wheat supplies, the whole notion of Russian export restrictions on wheat reared up again today. Next week, Russia is planning on raising it’s export tax on wheat by another $4.30/tonne. Speculators were more than happy to buy the rumor of further export restrictions, but there was no confirmations one way or the other today.
Soybeans were the weak sister in the grain trade today. The Energy Secretary biofuels comments did allow for some strength in soyoil relative to soymeal today, but ultimately soybean futures closed just 4 cents/bu off of their lows for the day. Anecdotally, USA Midwest soybean harvest yields appear to be strong, with many analysts pointing to a slight increase in yields. Private estimates regarding the size of the USA 2021 soybean and corn crop will start to be released early next week, with StoneX expected to release their numbers on Monday. Ultimately, while important, the size of the USA bean crop will not be the primary determinant of price direction going forward. Price will be determined by demand, and that demand continues to look strong from China and from USA biofuels. We just need to get past some nearby harvest pressure in the meantime.
The CFTC Weekly Report on fund positions in commodities was released this afternoon, and it showed fund longer than expected in corn futures by 15,000 contracts, funds longer than expected in soybean futures by 5,000 contracts, and funds less long (actually short) than expected by 18,000 contracts. On the day Friday, funds were thought to have been buyers of 4,000 corn contracts (now long 241,000), while selling an estimated 4,000 soybean contracts (now long 45,000), and buying a whopping 20,000 Chicago wheat contracts (now long 19,000).
Locally, the Sarnia terminal opened up a small amount of allocation for soybeans late today, but far less than what local commercial grain companies were expecting or need. Wanstead Farmers Co-op is well positioned, despite the frustrations of current logistics into the terminal. We have plenty of space at our respective locations for those growers looking to move their soybeans!!!