Written Commentary
by Steve Freed, VP of Grain Research
Grains are mixed to higher. SN is up 6 cents and near 8.39. CN is up 1 cent and near 3.19. WN is unchanged and near 5.08. US US stocks are higher. Crude is higher. Copper is higher. US Dollar is lower. Gold is lower.
US equities have rallied on hopes of a vaccine and a slow rebound to the economy. This week’s data includes consumer confidence, durable goods, personal income, pending home sales and Fed Beige Book.
Soybeans are up overnight following higher equity markets. China has been slow in buying of US soybeans. Increase tension between US and China adds uncertainty to their buying US. Talk of favorable US Midwest weather and US farmers could increase final 2020 acres has raises some estimates of the US 2020 crop to 4,430 mil bi and 2020/21 US carryout to closer to 526. This includes higher exports to 2,100 mil bu versus 1,645 this year. Slowdown in US domestic soymeal use offers resistance to soymeal futures.
Corn futures remain in a 3.00-3.40 trading range. Futures have dropped due to drop in domestic fuel demand. Funds are near a record short futures. Favorable US Midwest weather offers resistance to prices. USDA could still increase US 2019/20 corn carryout to 2,225 mil bu versus 2,098 due to lower ethanol demand. Some have lowered their estimate of US 2020 corn crop to closer to 15,400 mil bu due to lower acres. Still US 2020/21 corn carryout could increase t0 3,300 which could be negative to prices.
Rains in east Europe and west half of Russia and US HRW areas offers resistance to futures. Managed funds flipped from a long to a short. France remains dry. World wheat stocks are expected to increase despite forecast of higher trade. This offers resistance to prices. Key could be Black Sea exports and pace.
Managed funds were net sellers of 5,000 contracts of SRW Wheat; were net even in Corn; net sold 2,000 Soybeans; net bought 1,000 lots of Soymeal, and; net sold 3,000 Soyoil. We estimate Managed Money net short 8,000 contracts of SRW Wheat; net short 258,000 Corn; net long 3,000 Soybeans; net short 29,000 lots of Soymeal, and; net even Soyoil.
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