Market Thoughts 12.14.20
Corn Complex- Corn climbed marginally higher on the week with a WASDE showing no real changes in the US balance sheets but another cut of 2.5MMT in the world balance sheets. Export sales for the week were within the 10-week average and keeps us ahead of pace to meet USDA export projections. Fund position week over week was flat with the fund length offsetting fund shorts. Ethanol margins continue to remain poor with many plants rumored to be slowing grind slightly and only posting bids out to a certain point. Ethanol industry remains hopeful that new administration will be friendly to biofuels and we see increased travel as Covid vaccine brings normalcy back to travel and gasoline usage. Soybean/Canola Complex- Oilseed complex was a bit volatile on the week with some strength pre-report that was a bit of the buy the rumor sell the fact with the WASDE showing no real changes this month and some market participants hoping for yet another bullish report to trade. Funds pared back their length again this week down to roughly 185k net long. Soybean export sales were quite a bit off their 10 week average with much of the US program winding down as many look to the South American crop that can begin coming off in late January. USDA left Brazilian production at 133MMT this week but did drop Argentine production 1MMT. World stocks continue to slip lower and the need for a strong finish to the South American crop continues to be apparent.
Wheat Complex- Wheat had a nice rally to end the week with a slightly positive WASDE number out on Thursday followed up with rumors that there will be a Russian export tax on wheat. This along with another round of forecasts for a smaller Russian crop put the market on edge. Of note on Russian crop although poorer conditions than usual they do have one of the highest planted acres on record. With the nine lives of wheat we may have had a poor start, but just a little bit of the right weather at the right time and the Black Sea crop still has quite a bit of potential. Wheat is getting back to levels we tested in October and this likely is a good chance to catch up on additional sales needs. KC wheat continues to battle dry conditions across the western half of the high plains. Outside Markets- Equities continue their climb higher with Dow hovering around 30k and Nasdaq holding well over 12.5k. Even in the face of economic headwinds from Covid the market seems to be pricing in brighter days ahead. Dollar index continues to trend lower breaking towards the 90-point level.
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