Grains are lower at midday:
Corn – 2 cents/bu (Dec @ 3.99 ½ )
Soybeans - 4 cents/bu (Jan @ 10.50 ¾ )
Chi Wheat – 3 ¾ cents/bu (Dec @ 6.05)
Cdn $ -0.00300 (74.915 cents)
WTI Crude Oil -1.45/barrel (35.94)
Grains continue to trade lower on Thursday, but values are up sharply from their early lows today that saw corn down 8 ½ cents/bu, soybeans down 6 ¼ cents/bu, and Chicago wheat down 11 cents/bu. Both corn and soybean futures have actually traded in positive territory during today’s day trading session. Anticipated good demand continues to underpin grain values, but in the short term, building fears over economic recession from COVID-19 lockdowns have commodity and equity markets spooked, with nervous investors selling and moving money to perceived safe havens.
Corn values got a good boost this morning from the USDA Weekly Sales Report and from the USDA Daily Flash Sales Announcements. In the Weekly Export Sales Report (as of close of business Thursday, October 22nd), the government reported that 2.2437 million tonnes of corn was sold last week. That volume was 50% bigger than the highest trade guess, and a whopping 4 times higher than the volume of corn sold on this week last year. Soybean sales were in the upper end of trade expectations with 66% of last week’s business being sold to China. Actual export sales data is listed below (in thousands of tonnes):
In Flash Daily Sales Reporting, the USDA confirmed the following export sales of corn in the past 24 hours:
- 891,540 tonnes to Mexico (2020/21 marketing year)
- 541,010 tonnes to Mexico (2021/22 marketing year)
- 140,000 tonnes to Unknown (2020/21 marketing year)
All totalled, these sales amount to 1.57255 million tonnes or 61.9 million bushels. That is a LOT of corn to be sold in one day!! Mexico took full advantage of yesterday’s 14 ½ cent/bu price drop to secure big volumes of corn. Unfortunately, there were no announcements of corresponding export sales of soybeans or wheat today.
We obviously did some technical damage to the markets over the past couple of days. Corn futures are likely the most vulnerable at the moment. Off shore demand looks to remain very buoyant for corn, but COVID-19 restrictions could seriously impact American driving practices, and that heightens concerns that the USDA current ethanol usage projections may be vastly overstated. That concern, has some believing that the USDA might leave corn ending stocks unchanged in their November update. If so, a 2.1 billion bushel corn carryout does not support December corn futures over 4.00 per bushel. Adding to nervousness over corn is the fact that despite funds selling an estimated 40,000 corn contracts in yesterday’s sell off, open interest actually increased in corn futures. Since funds were long futures and subsequently sold some of those futures yesterday, one would have expected to see a big drop in open interest. The fact that open interest actually rose means that there were new sellers that entered the corn market yesterday…………..