Market Thoughts 03.08.21
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Corn Complex- Old crop corn was in range bound trade this week while new crop months edged to new highs. We had a solid week of export inspections for corn, but export sales were lackluster with the smallest sales week for this crop year. Of note we did see a big switch from Unknown to China on this week’s report likely reaffirming Chinses purchase commitments. Shipment pace for the week also cranking along at a pace to help realize USDA estimates. In the southern hemisphere the Brazilian safrinha crop planting continues to lag 2 weeks behind normal pace. Likely accounting for some of the risk premium in new crop US futures has been the concern about safrinha crop size. Argentine crop size also appears to have the potential for slight declines as many of their growing areas entered week two of a dry spell during the late pollination and ear fill stage. Temperatures have been average with rains expected on the two-week horizon. Funds in the corn complex pared back a bit of their bullish bets for the week, while commercials continue to hold a near record short in the complex.
Soybean/Canola Complex- Soybeans also encountered range bound trade with old crop testing but failing to make new contract highs while new crop November contract also failed to make new highs. Canola did continue its run in both old and new crop this week. New crop November canola made new highs for the contract. We continue to hear from multiple Canadian contacts that we will see higher canola seedings given current new crop prices especially versus spring wheat prices. Export sales for beans for the week were seasonally low with shipments still matching pace to execute nearly all USDA projected targets. Funds pared back their bullish bets and even saw slight growth in the fund short position. South American production estimates for beans continue to hold their ground. Brazilian crop size still estimated just over 133MMT, Argentine crop size likely to get paired down lower but likely offset with Brazilian increases. The excessive rain that has hampered harvest in certain areas has also been well timed for late planted soybeans in many areas of the country. The international market has been watching the resurgence of ASF chatter in China. This new strain does not to be appear as deadly but still quite contagious. Chinese meal futures were down quite hard for the week as the market deflated on the growth in ASF cases.
Wheat Complex- Minnie wheat continues to gain on both KC and Chicago complexes. Much of the spring wheat areas continue to remain dry and the market weighs that risk combined with the prospect of smaller new crop acres in both the US and Canada. The KC market continues to monitor dry areas of KS and CO as we edge closer to spring. Internationally areas of the Black Sea and Europe are in decent shape with Russian wheat improving since last fall’s planting. Export sales for the week were season low as well. KC and Chicago wheats have been a bit of laggards in export sales pace, but Minnie wheat still exceeds USDA estimates. Funds have continued to build small long positions into the complexes. We continue to believe that spring and durum acres in the US and Canada will be taking the brunt of acreage changes. With insurance prices now set, fertilizer prices higher and implied netbacks on other crops much more lucrative it will be tough for wheat to avoid fairly major acreage losses.
Outside Markets- The big story for the week in outside markets was big move in dollar index breaking out of its downward range. A strong move in just short of week from sub 90 points to trading near 92 at weeks end. This a bit of must watch for commodity markets as dollar strength could shift origins for potential export partners. Equities also took a hit on the week with all indexes closing well off their highs from early Feb, with the tech heavy Nasdaq taking off 1000 points since then.
This material should be construed as market commentary, observing economic, political and/or market conditions, and not intended to refer to any trading strategy, promotional element, or quality of service. Information contained herein was obtained from sources believed to be reliable but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author.