Grains closed lower on Friday:
Dec Corn – 3 ½ cents/bu (5.30 ½ )
Nov Soybeans – 4 ¼ cents/bu (12.43)
Dec Chi Wheat – 7 ¼ cents/bu (7.34)
Cdn $ +0.00600 (80.25 cents)
WTI Crude Oil +1.05/barrel
Grains reversed course from solid early gains to close lower on Friday afternoon. Initial strength had bee tied to rumors of a return of the Chinese to buying USA grains following the Chinese week long national holiday for their Golden Week. However, with no exporter confirmation of business, and no USDA Flash Sale announcements, the market began to drift lower. Last year, between September 1st and October 10th, there were 20 USDA soybean Flash Sale announcements to China and/or Unknown Destinations .In 2021, over the same period, there have been 7 USDA soybean Flash Sale announcements to China and 1 cancellation.
Corn futures closed at their lows for the week, as the Midwest harvest continues to roll along, with good overall yields being reported. A number of weather systems will interrupts the USA harvest over the next 15 days, but nothing in the forecast suggests any long delays to harvest for any region. Mexico’s refusal to accept a new GMO corn trait got some airplay on Friday, even though the ban does not take effect for 3 years. With the USA co-mingling all GMO traits in their handling system, there is some concern that Mexico (the USA’s biggest corn customer) could enact some restrictions sooner than later. That likelihood seems remote, but tallk of the GMO ban, coupled with ongoing harvest hedge pressure allowed for some weakness in corn yesterday.
Soybean price direction was all about the price of soyoil. On Thursday, soyoil traded as much as 2 cents/pound higher, and the bean market rallied. On Friday, bean oil lost just over ½ a cent per pound, and the soybean market dipped slightly. Harvest soybean yields are anecdotally reported to be slightly better than the USDA September Crop Report predicted. Going forward, bean price direction will continue to be heavily influenced by Chinese export demand and by domestic biodiesel usage. We expect both of those factors to favorably influence soybean values in coming weeks (after harvest pressure on prices wanes).
Chicago wheat closed out the week giving up a total of 21 cents/bu of the 30 cents/bu that was gained the previous week. Overall tight USA and global wheat stocks will continue to support wheat values, but good rains across the USA Plains are improving winter wheat crop production prospects, and resulting in some increased producer selling as well.
The CFTC released their weekly update on fund positions in commodities on Friday after the close of trading. Funds were longer than expected in corn futures by 5,000 contracts, funds were less long soybeans than expected by 1,000 contracts and funds were less long Chicago wheat futres than expected by 9,000 contracts. On the day Friday, funds were thought to have been sellers across the board, liquidating an estimated 3,000 corn contracts (now long 239,000), 3,000 soybean contracts (now long 43,000), and 6,000 Chicago wheat contracts (now short 3,000).
Tuesday, October 12th, the USDA will release it’s October Crop Report. Focus of the trade will be on revised USA 2021 production numbers, and on any revisions to demand numbers for USA grains. Below are highlights of the trades expectations for the Tuesday report, with the trade expecting to see increases in USA carryouts for corn and beans and reductions for wheat:
