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October 4th - Closing Market Commentary

10/04/2021
October 4th - Closing Market Commentary

Grains closed mixed on Monday:

Dec Corn – ¾ cent/bu (5.40 ¾ )

Nov Soybeans – 10 ¾ cents/bu (12.35 ¾ )

Dec Chi Wheat + 1 ¼ cents/bu (7.56 ½ )

Cdn $ +0.00305 (79.435 cents)

WTI Crude Oil +1.71/barrel (77.59)

Grain futures traded in moderate volumes today, following a USA harvest weekend that saw excellent progress made in the central Midwest and western Corn Belt, but which saw combines slowed by rains in the eastern Corn Belt.  This afternoon, after the close of trading, the USDA released their Weekly Crop Condition Report which showed unchanged crop ratings for both corn and soybeans, and which showed that 29% of the USA corn crop is off (18% last week) and 34% of the USA soybean crop is in the bin (16% last week).  Corn is now rated as 88% mature (normal is 77% on this date).

This morning, the USDA released their Weekly Export Inspection Report, which showed increased shipments of all major grains.  Corn shipments increased by 27% week over week, while soybean and wheat shipments were both up 74% from last week.  Of the soybean shipments, 340,000 tonnes were shipped to China.  The return of Gulf terminal loading capacity has certainly helped, but the market is looking for signs of increased export sales volumes, as current YTD marketings lag the pace needed to meet export sales in the USDA balance sheets.

Earlier in the day, the USDA confirmed a Flash Export sale of 426,800 tonnes of corn to Mexico (16.8 million bushels).

Soybeans were under pressure all day.  The market is still reacting to the “found” bean bushels in last week’s USDA Quarterly Stocks Report.  However, the bigger short term concern is whether China comes back to the market in a big way.  Currently, USA export bean sales lag last year’s pace at this time of year by 5.2 million tonnes.  Some are starting to question if the Biden Administration will hold China’s feet to the fire the way that President Trump did.  Estimates suggest that China has only purchased 62% of what was committed to in the Phase One Trade Agreement so far this year.  Time will tell, but Chinese demand could easily resurface on the current break in the market………..

After the close of trading, StoneX released their October 2021 survey of USA production.  The StoneX numbers pegged the USA average corn yield at 176.6 bushels per acre up 3/10 ‘s of a bushel from the USDA September forecast, and down 9/10 ‘s of a bushel from the StoneX September forecast.  Their October USA soybean yield came in at 51.1 bushels per acre, up ½ a bushel per acre from the September USDA forecast, and up 3/10’s of a bushel from the StoneX September numbers.  StoneX raised Iowa and Indiana corn yields, but those did not offset a 4 bu/acre cut in Illinois and a 2 bu/acre cut in Ohio.  All in all, no major surprises in the StoneX numbers, and should be market neutral going into tomorrow’s trade.

On the day today, funds were thought to have been even in their trade of corn futures (long 241,000), were thought to have sold 5,000 soybean contracts (now long 40,000), and were thought to have bought 2,000 Chicago wheat contracts (long 21,000).

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