Market Thoughts 08.22.21
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Corn Complex- Corn corrected on the week with decent rains seen throughout the NW corn belt followed up with news that RFS mandated blending volumes for biofuels could be lowered for this year. After the market close on Friday that story was clarified to state that 2021 volumes would be lower but 2022 would be higher based upon gasoline demand. We continue to see old crop corn basis levels leak lower across most of the corn belt as the last farmer bushels continue flush out combined with the prospect of a timely harvest with new crop potentially hitting scales by mid-late September in many areas easing concerns among end users awaiting new crop supplies.
Soybean/Canola Complex- Beans and canola took on the good wallop to end the week with the concern about the RFS mandate volumes and how it may shape the use of veg oils for biodiesel. This usage sector for veg oil has really driven crush margins the last few months for both bean and canola processors so concern about demand from renewables accentuated the selloff for the week. Soybean export sales were large on the week but was expected with multitude of announced sales report over the course of the last week. Friday did end the 11-day streak of announced export sales. US beans were competitive for the Oct/Nov slot and that’s where we believe many of the sales got done at. Not to be lost in the overall export sales is the fact we may have missed a large chunk of sales for September that normally would flow to the US and likely were sourced more out of Brazil.
Wheat Complex- We saw technical corrections in wheat with much of Russian and overall smaller world wheat crop priced into the markets for the moment. We continue to wait on Canadian production estimates here at the end of the month. Just looking at futures spreads we still see decent carries in KC and Chicago, but Minnie still is inverted. Carries indicate the market does not see massive shortfall of supply and is paying producers and elevators to carry it until later. As we are still early in the new crop wheat season, it will be interesting to watch as exporters and major importers manage their supply/demand concerns.
Outside Markets- US dollar was the big story for the week with index trading back above early April highs and forming continuous chart with a bit of double bottom look since the lows from the first of the year. Equities have held off recent record highs. Energy also had trouble on the week with WTI crude trading back in the low 60’s per barrel.
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