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September 29th - Closing Market Commentary

09/29/2021
September 29th - Closing Market Commentary

Grains closed higher on Wednesday:

Dec Corn + 6 ½ cents/bu (5.39)

Nov Soybeans + 6 ¾ cents/bu (12.83 ¾ )

Dec Chi Wheat + 3 ¾ cents/bu (7.10 ¼ )

Cdn $ -0.00425 (78.44 cents)

WTI Crude Oil -0.46/barrel (74.83)

Wednesday saw solid strength in grain futures, as corn and soybeans were able to erase much of their losses from Tuesday.  There was an absence of new grain news today to support the rally, but most saw it as speculators placing bets that tomorrow’s USDA Quarterly Stocks Report and Small Grains Update might throw a bullish surprise at the trade.  In the last two years, the USDA has thrown out 200+ million bushel bullish surprises in reported corn stocks, and has thrown out 50+ million bushel bullish surprises in reported soybean stocks.  With reasonably tight projected carryout stocks, neither beans nor corn can afford to see unexpected losses in inventories, hence the bet that tomorrow’s reports MIGHT be friendly.  The Quarterly Stocks Report is due out at noon ET.

Corn was stronger all day due to the aforementioned bets on a bullish Stocks Report tomorrow.  In reality, in light of the trade direction today, tomorrow’s report could be bearish for corn, given smaller feed demand due to smaller USA cattle and hog herds, and due to stagnant ethanol demand.  But over 35 years of grain trading has taught one to never second guess the USDA!!  Today’s EIA Weekly Report showed that ethanol production for the past week fell by 12,000 barrels per day to 914,000.  Despite the small decline in production, national ethanol stocks actually rose by 100,000 barrels.  There is no word on when the EPA will formally release their biofuel projections for 2020, 2021, 2022, but with no formal meetings scheduled, those numbers could be released any day.

Despite trading lower early in the session today, soybeans posted good gains, as both oil and meal traded higher on the day.  Like corn, speculators in general are betting on a bullish USDA Stocks Report, and one could argue that the lower crush pace of the past few months might have more to do with the inability of crushers to find beans to crush than anything.  Rumors of Chinese buying interest in beans also supported the market today, as most of the USA Gulf terminal shipping capacity is now back on line, thus giving exporters more comfort in making sales.

Wheat was very strong early in the session, but gave up most of those gains by the close to end the day near it’s lows.  Rain outlooks for both the Russian wheat crop and for the USA PNW/Southern Plains look to be favorable for wheat development.  Algeria bought 580,000 tonnes of wheat on their tender, but Jordan passed on their tender.  No extraordinary wheat business for USA interests in that business.  The USDA Small Grains Update tomorrow will be watched with market bulls looking for evidence of smaller spring wheat production from the northern Plains.

Tomorrow morning at 8:30 ET, the USDA will also release it’s Weekly Export Sales Report.  Given the small amount of Flash Sale reporting in the last week, expectations are for less than stellar export sales in the past 7 days.  Trade guesses are listed below, but clearly, those the high end of those expectations fall less than 50% of what was sold in the same week last year (estimates are in thousands of tonnes):


On the day, funds were believed to have been buyers across the board, picking up an estimated 5,000 corn contracts (now long 225,000), 4,000 soybean contracts (now long 56,000), and 2,000 Chicago wheat contracts (now long 7,000).

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