Rose on Grain – CME Corn and Beans Finish Modestly Lower on WASDE Week; Traders Watching US Harvest Reports, South American Weather

September 14, 2021 2:11 pm
Published by

Louis W. Rose IV

Corn:

CME Dec corn futures gave up 6½ cents last week to finish at 517½.  We did not recommend trading any bias for corn, soybeans, or wheat last week due to the end of week release of the Sept WASDE report and the belated release of US export data, per the Labor Day holiday.  The market is treading water, so far, this week.

The corn market finished modestly lower on higher USDA estimates of domestic and aggregate world carryout and on impending major harvest pressure.  Strong US export data likely limited weekly losses.

In its Sept WASDE report, the USDA increased its 2021/22 domestic carryout was 13% higher Vs the previous report at approximately 1.41B bu.  Aggregate world carryout for 2021/22 was projected 5% higher Vs Aug at 11.72B bu.

Domestically, the US harvest, outside of the southern states, is finally underway.  However, rain and showers seem likely to hinder many harvest efforts this week.

Internationally, NOAA continues to predict a 70% probability for La Nina development across South America during the upcoming growing season, which should offer some support to corn and bean markets over the near-term.  Higher grain prices could see some planned cotton safrinha acreage supplanted with corn.

CFTC Commitments of Traders data for the week ending Sept 7 (futures only) showed that the trade trimmed its net short position to approximately 2.29B bu; large specs trimmed their net long to just north of 1B bu. 

For an in-depth analysis of CFTC data see our weekly COT analysis and commentary.

For this week, the weekly technical analysis for and money flow into the Dec contract remain bearish, with the market also remaining somewhat oversold.  Weather, early harvest reports, and will likely be major market moving factors over the near-term for corn, beans, and wheat.  Harvest pressure is imminent for the corn and soybean markets.

Soybeans:

CME Nov soybeans lost 5½ cents last week to finish at 1286½.  The market is modestly higher this week.

CME soybeans finished near unchanged on strong US export data and updated WASDE balance sheets that continue to convey a bullish scenario.

Domestically, the condition of the US crop was little changed Vs the previous assay period, with no harvest yet officially reported.  We expect such to change in next week’s report.  Yields across most of the southern US look to be mostly strong.

In its Sept WASDE report, the USDA projected 2021/22 domestic carryout modestly higher Vs the previous report at approximately 185M bu, which remains a bullish figure.  Aggregate world carryout for 2021/22 was forecast 3% higher at just above 3.63B bu.

Internationally, planting season across South America (especially Brazil) is nigh and weather conditions across the region are becoming a major focus of market participants.

CFTC Commitments of Traders data for the week ending Sept 7 (futures only) showed that the trade reduced its aggregate net short position to approximately 726M bu; large specs reduced their net long to around 372M bu.

For this week, the weekly technical analysis for and money flow into the Nov contract has remains bearish, with the market also remaining somewhat oversold.

CME Wheat:

CME SRW Dec futures lost 37¾ cents last week to settle at 688½.  The market is modestly higher this week.

CME futures moved lower sympathy with corn, lackluster US export sales data, and a notable increase in the USDA’s aggregate world carryout projection Vs Aug.

In its Sept WASDE report, the USDA projected 2021/22 domestic carryout off significantly Vs the previous report at around 615M bu.  Aggregate world carryout for 2021/22 was projected 1% lower at just north of 10.4B bu.

Domestically, harvest of the US spring crop continues, with poor results being reported.  Current wheat and soybean prices have many US cotton producers considering more acreage to the double crop rotation this fall.

CFTC Commitments of Traders data for the week ending Sept (futures only) showed that the trade increased its aggregate net short position to approximately 118M bu while large specs cut their net long to around 11M bu.

For this week, the weekly technical analysis for and money flow into the Dec contract has turned bearish, with the market having entered oversold territory.  The 650 and 600 levels are downside targets with 750, 775, and 800 likely to evince strong resistance.

Have a great week!

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    This post was written by Louis Rose