Market Thoughts 11.30.20
Happy Thanksgiving Week and Weekend! Hope you all had an enjoyable time with family and friends.
Corn Complex- A holiday week in the corn complex and all complexes in general. Even with option expiration the previous Friday and first notice day for Dec corn upcoming on the 30th, there were few major fireworks for the week. Export sales were strong again this week rising slightly above market expectations and keeping corn sales pace approximately 15% of ahead of USDA estimated sales. Export shipments for corn were decent but not setting any new records and right in line with 5-year average pace for this week. As we move out of the bean export season it will be important for us to see corn shipments pick up to meet USDA pace. Ethanol margins have been getting pummeled over the last couple of weeks with reduced holiday travel expected and continued shutdowns in important ethanol markets. DDGS demand has remained strong with bean meal spiking higher with the move in oilseed complex.
Soybean/Canola Complex- Beans ended the week slightly lower after punching some lows mid-week and rallying back towards highs at week end. Export sales for the week were at a 10-week low and on the low end of estimates. The demand side of beans has become better defined as export sales announcements have slowed and currently booked sales have shipped. The market has shifted to a bit more of a supply side market as it awaits weather forecasts and production potential for Brazil and Argentina. US acreage will still be critical this spring, but a large SA crop will hold the markets attention if it holds at or higher than current estimates. Of interest in the oilseed complex is the meal market’s reluctance to breech the $400/ton level. We have tested it multiple times but have failed to close above that level. Meal led rallies and moves are often more sustainable than just soybean price movements alone so keeping an eye on the overall soy complex is important as we judge overall price movement in the soybean complex.
Wheat Complex- Wheat finished the week with a bit of strength as it bounced off mid-week lows. With most of the northern hemisphere crop in dormancy right now the market is in a bit of a sideways trade mode waiting for spring emergence. Australian crop remains large and will keep markets fed with crop as Black Sea and Ukraine continue with strong export paces. US export sales for the week were above market expectations helping to lead the strength late in the week. White wheat was the leader for the week with strong sales to China and Unknown. Although not on the pace we have seen them in the corn and oilseeds market we have witnessed China in buying all classes of US wheat this year.
Outside Markets- Equities continue to surge higher as positive coronavirus vaccine news has the market betting on worldwide economic growth coming the next year. US dollar index is on lows testing its low from early Sept. A break below the September lows would set up a retest for lows seen from early 2018 in the 88 to 89-point level vs the 91.75 level we trade today. As mentioned previously the weaker dollar would continue to make US commodity exports competitive in world markets.