Ami Heesch

Oct 27, 2020

Ami L Heesch

 

Highlights

Weakness moved through the grain and equity markets while livestock and energy markets appeared to be the bright spot.  The market lacked flash sales from the USDA and harvest progress was reportedly behind where the trade thought it would be, but both corn and beans came in well above the 5-year average.  Worries continue about the fate of the economy with so many new virus cases detected around the globe. The US Presidential election is but a week away, with concerns that results could be unknown for some time after that. Adding to the negativity is the fact that we are coming up to another month-end, where fund positions could get jockeyed around prior to the last day of the month.

 

 

  • The energy markets were mostly in the green with crude oil trading 92 cents higher at $39.48/barre.
  • US$ traded weaker, down 117 at 9297, the gold market is up 3-4 bucks and the CD$ is stronger, up 0.00135 at 0.75915.
  • DJIA down 222 at 27463, S&P down 16 at 3377 and NASDAQ up 72 at 11431.

     

    Corn

    The corn market opened stronger on demand and lack of harvest pressure and farmer selling. Prices retreated midday on a bout of fund selling after the Dec failed to trade through 14-month highs that were reached earlier in the session. Losses were limited from reports of multiple tenders.

        

  • Closes: December at $4.15 ¾, down 2 cents, March at $4.16, down 2 ½ cents, July at $4.16 ¾, down 2 ½ cents.
  • December tickled $4.22 ¼, a stone’s throw from its contract high of $4.24, but failed to hold at or above that level.
  • Ukraine’s corn crop estimated at 33.8 mmt versus 34.8 mmt previously.  Hearing that farmers in Ukraine may look to plant more corn in the spring at the expense of winter wheat this fall, because of extremely dry weather conditions.
  • Spreads: Z/H ¼ carry, Z/N 1 carry, Z/Z 24 ¾ inverse.

     

    Oilseeds

    The soybean market traded lower all day from fund selling after several days of higher prices. Prices drew additional pressure form spillover weakness in the soymeal market. Harvest activity is expected to resume this weekend and into next week as the forecast calls for a bit warmer temps for a few days.

     

  • Closes: November at $10.82 ¼, down 5 ½ cents, March at $10.60 ¼, down 8 ¾ cents, July at $10.51, down 7 ½ cents. The products were weaker with meal down 6 bucks and oil down 39 points.
  • Forecasts for additional moisture are expected to encourage the Brazilian farmer to pick up the planting pace. 23% complete is still behind last year and their average. They have some work to do to catch up.
  • Spreads: and the beat goes on with the X/F narrowing to a 5 ½ cent inverse, F/H moved to a 16 ¼-cent inverse.

     

    Wheat

    The wheat market stirred about early in the session, trying to muster some oomph from disappointing winter wheat crop ratings.  Ukraine is thought to be done planting their winter wheat for this year. They are said to have planted 91% of the intended acreage, which leaves 9% that can be planted to something else in the spring (as stated in the corn comments above).

     

  • December closes: Mpls at $5.61 ½, down 3 ½ cents, KC at $5.48 ½, down 3 ½ cents, Chicago at $6.15 ½, down 4 ½ cents.
  • Paris milling wheat prices saw pressure from improving conditions in Russia and jitters over the rapid increase in virus cases around the globe.
  • Duluth stocks increased 443k bushels to just shy of 18.0 mb. This compares to 19.8 mb this time last year.
  • Spot floor was firmer for 14.5s and 15s for 14 singles and zero trains.
  • Spreads: Mpls Z/H 12 carry (50% of full carry at 24 cents), Kansas City Z/H 6 ½ carry, Chicago Z/H ½ inverse.
  • Mpls Dec sits at a 12 ½ cent premium to the KC Dec. Mpls Dec sits at a 54 ¼ cent discount to Chicago Dec, pretty sizable move from last Thursday when it traded at a 38-cent discount to Chicago Dec and later settled at a 48 ¼ cent discount to Chicago.