Market Thoughts 1.10.21
Current Clients we will be sending out a separate email with the weekly Market Algo readings.
Corn Complex- Another week higher for the corn complex. The market traded sideways thru week end after early week gains. Much of the trade waiting in expectation for the USDA WASDE report coming out Tuesday the 12th. Export sales for the week were on the low end of trade guess, but still maintains pace above the USDA forecasts. Managed money continues to increase their bets on higher prices increasing the size of their net position by 17k contracts on the week. Their net long is nearing 350k contracts. Also noted for the week is continued record commercial short in the market well over 1.3 mil contracts. This implies producers have been willing sellers into this rally. Looking outside the US we see continued average moisture forecasts for the crop in SA, especially tough has been the main growing regions in Argentina. We also need to watch moisture deficits in Brazil as their safrinha corn planting will begin in February and accounts for 70% of their total corn production.
Soybean/Canola Complex- Both old and new crop soybeans rallied hard for the week. With some forecasts showing drying for the heart of the Argentine grain belt, seeming to be the biggest driver on the week. For the week the managed money shrunk by 20k contracts to 175k. It would appear the commercial long conversely increased their long by over 28k contracts. The market has been of the belief that the spec fund was leading this rally in the last week, but it appears commercial pricing/ownership has led more than many in the trade believe. Canola has held much the same trajectory as beans. World veg oil pricing has helped keep a floor under the overall oilseeds rally as all classes of veg oil continue to be offered higher.
Wheat Complex Wheat complex followed the rest of the complex this week with decent strength in the spring wheat. KC and CME held ground bit did not gain as much as Minnie. Export sales for HRS was good for the week with sales above the 10-week average. Total pace for Minnie now 5% above USDA expectations. We continue to monitor dryness in the western third of the US winter wheat belt and watching Black Sea weather, but with crop in dormancy it’s only speculative on how crops are responding to winter weather and their condition when they break dormancy.
Outside Markets- US equities continue to set record highs. Even with unrest during the week, the market did not seem phased by any implications from it. US dollar index neared 2018 lows early in the week with a rally to close the week back above 90 points by week end. Dollar trade has been a big consensus short trade, if we see some reason for dollar rally could see a quick unwind of that trade. Of note for the week the 10-year bond yield broke back above 1.0% for the first time since March. With continued chatter of additional stimulus after the start of the Biden administration, the markets continue to price potential inflation in the future. We haven’t thought about interest rates in a bit as producers and now may be a time to look at ways to secure some cheap long term rates.
Previous Report and Trade Estimates for Upcoming USDA WASDE Report
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.