Market Thoughts 09.06.21
Current Clients we will be sending out a separate email with the weekly Market Algo readings.
Corn Complex- Corn continued its slow fall lower with cooler wetter weather across the corn belt making the market expect somewhat higher yield estimates in future USDA reports. Market continues to be somewhat concerned with demand prospects with lower ethanol production than expected. The bigger demand news for the week was gulf export house damage due to the hurricane. One export house (accounts for 10-14% of total gulf capacity) is expected to be out of commission for a month. Although we have seen a swift shift to non-gulf houses to cover capacity there will be limitations and we can expect some missed export demand as the market rations away elevation capacity. Depending on length of downtime this could be bearish both corn and soy basis in the country. WASDE report out on the 10th will get a look at demand revisions for corn and soy as well USDA announced they will fully include FSA certified acres in this report. Earlier then they have in the past given FSA reporting was substantially complete to include in the Sep report this year.
Soybean/Canola Complex- Soys also traded lower on the week hanging either side of the $13.00 mark most of the week. This market is also concerned about demand as we have not seen the giant surge in export sales like this time one year ago. With the above-mentioned gulf issues soy elevation capacity during the heart of the harvest rush might be limited given the capacity constraints even with a smaller export program. For those of you that have not booked physical bean basis up to your comfort level we likely need to get those needs covered sooner than later as we are seeing record strong bean basis levels for harvest right now. Canola lower on the week as StatsCan confirmed lower production ideas much as the market had been anticipating. A buy the rumor sell the fact reaction as the market didn’t get any more bullish news. Canola market floors will still be well supported with a crop the smallest since the 12/13 crop year.
Wheat Complex- StatsCan out this week with their estimates on spring wheat production up north and estimates came in slightly above expectations. With 16.1 MMT of expected production that places spring wheat production estimates the lowest in the last 10 years. The market has already been trading this much tightened production number in the US and Canada. Will take issues in Aussie or Arg milling wheat crop to get another leg higher in prices. KC crop has been watching increased moisture chances across much of OK and KS as they approach their seeding periods. One note is durum market in the US and Canada continues to rocket higher as the exporters seem to have led the charge to this point and now millers showing bids as well to support the higher price levels. As mentioned previously durum market traditionally tops early in the crop year as the market secures needed supplies. Keep an eye on this market if you have durum on the farm.
Outside Markets- Equities closed at near record levels, even after digesting poor jobs data released at weeks end. Crude did rally on the week with many gulf wells shut-in prior to hurricane arrival in the gulf late last week. Dollar index fell off its recent highs but remains at the high end of the range for the year.
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