Nick Paumen

Aug 24, 2020

Highlights

  • Good morning! Grains and macro markets look to start out higher.
  • Weekend weather some rains across the upper midwest with most of the corn belt missing them to further expand dryness.  This week, weather is expected to be hot and dry across the central and western corn belt while the northern and eastern corn belt could see showers with the same warm temperatures.
  • Equity markets are higher this morning as the there is optimism towards possible coronavirus treatments.  This week we’ll see the Jackson Hole economic symposium and more discussion by the Federal Reserve to support the U.S. economy. 
  • Both U.S. House and Senate leaders have reserved the right to call back members to Washington to vote on the next round of COVID-19 relief funding.
  • China’s imports of grain for the month of July from the previous year were up 137% for corn, 325% for wheat, sorghum up 147%, and barley up 35%.
  • As of 6:45 AM: Crude oil is up 38 cents at $43.31, DOW futures are up 283 ticks at 28,138 and the U.S. $ index is down 33 points at 92.910.

 Corn

  • Futures this morning trade 2-3 cents better as the market tries to recover from the mid-week slump last week.
  • Funds bought an estimated 61,637 contracts last week to put their total positions at net short 132,622 contracts, the smallest short position since March 10th.
  • Yield speculation will build up as Pro Farmer results found lower yields than the USDA estimate.  The September WASDE will show the first objective yield data from the USDA as they pull samples from field plots.
  • The trade will look for continued new crop sales to support the already second largest export program in the last 30 years. 
  • Spreads: Sept/Dec 13 ¾ cent carry; Sept/March 26 cent carry; Dec/March 12 ¼ carry.

Outlook: Look for slightly higher trade to start the day.

 Oilseeds

  • Soybean futures come out of the night trade at the top side of ranges, with soybean oil and meal both higher as well.
  • Soybean oil continues to trend higher and trades at its best levels since February of this year. Palm oil closed weaker and has settled into a bit of a range.
  • The Midwest has seen 77% of normal precipitation the previous two weeks with the next week not looking much better. 
  • Continued weakness in the U.S. dollar makes our soybeans more attractive to buy as our export program stands around 754.9 million bushels, the largest on record going back to 1990.
  • Funds bought 76,495 contracts last week to put their position at net long 68,411 contracts. 
  • Spreads: Nov/Jan 7 cent carry, Nov/March 8 ¾ cent carry, Nov/May 12 ¼ cent carry.

Outlook: Higher trade as the market looks for continued sales to China and poor weather for pod filling.

 Wheat

  • A quiet morning in the wheat futures as KC is 3 cents higher, Chicago 5 cents higher, and Minneapolis up around a penny.
  • Support in the market is coming from the continued rumors of Chinese interest in U.S. wheat and Argentina battles with production issues due to frost and drought conditions.
  • Russian ag consultancy raised its wheat crop another 500,000 MT to 82.5 MMT, in the last month their projections have risen 6 MMT. 
  • Funds sold 25,766 Chicago contracts, sold 29,530 KC contracts, and sold 21,328 Minneapolis contracts.
  • Spreads: Chicago Sept/Dec 7 ½ cent carry; Kansas City Sept/Dec 10 ¾ cent carry; Minneapolis Sept/Dec 14 ¼ cent carry.

Outlook: Better trade to start the day on borrowed support from corn and soybeans.