Market Thoughts 11.15.20
US and World Carryout and S&D Charts following commentary
Corn Complex- USDA WASDE report was out this week with a dramatic US yield cut (from 178.4 to 175.8) and a sizeable increase in exports of 325 million bushels. Market action was a bit of the buy the rumor sell the fact as market moved higher post report and then closed weaker day of report and through the balance of the week. Fund activity for the week was estimated growing their length by a little over 10k contracts. We won’t have official CFTC funds for last week until Monday of the upcoming week due to Veterans Day. China Dalian corn futures have fallen off their near term high but still have not liquidated much of their gains from the last couple of months. Of note on the world stage USDA slashed Ukrainian corn production by 8MMT which is just over a 25% decrease month on the month. Most Ukrainian corn is exported so most of their exports ended up in the US balance sheet.
Soybean/Canola Complex- Soybeans also saw decreased yield by a little over one bushel per acre versus the October report. That yield decrease went straight to the bottom line with US carryout projected at 190 million bushels with a 4.2% Stocks-Use. Interestingly USDA did not increase exports for beans even with the large sales to date. World balance sheets were also tightened mostly due to the decrease in US bean production. We will continue to need the finality of the South American crop to hit its estimates and more crucial will be the larger US bean acreage along with solid trendline yields to keep the US and world balance sheets in order.
Wheat Complex- Both US and World wheat balance sheets saw little change month to month. Major world exporter balance sheets still hold a comfortable stocks to use ratio. In fact, as you will see in chart below projections are slightly higher year on year. Pretty quiet across the wheat complex during the week with mostly back and forth price action in all complexes. We are beginning to see a bit of strength the in the ND spring wheat basis, but still have a ways to go before we hit price objectives.
Outside Markets- Equity markets continue to move higher on the week even with the legal challenges surrounding the presidential election and the prospect of more coronavirus cases and lockdowns in both the US and around the World.