Rose on Grain – CME Corn and Soybeans Finish WASDE Week Lower, Wheat Unchanged

October 18, 2021 11:09 am
Published by

Louis W. Rose IV

Corn:

CME Dec corn futures gave back 4¾ cents last week to finish at 525¾.  We did not recommend trading any bias for corn, soybeans, or wheat last week due to the WASDE release on Tuesday.

The corn market finished slightly lower USDA on slowing US export data and USDA’s higher projections of both domestic and world aggregate carryout.

In its Oct WASDE report, the USDA increased its 2021/22 domestic carryout 7% Vs the previous report at approximately 1.5B bu, which is still bullish enough.  Aggregate world carryout for 2021/22 was projected 1% higher Vs Sept at 11.89B bu.

Domestically, the US harvest, outside of the southern states where the harvest is effectively complete and where yield reports have been mostly strong, is underway.  Major US producing regions are expected to see mostly favorable weather conditions for harvesting this week.  For the week ending Oct 10 the US crop was estimated at 41% harvested, 10 percentage points ahead of the rolling 5-year average pace.

Net export sales and shipments were lower Vs the previous sales period at approximately 41K and 36M bu, respectively.  Sales were head of the pace required to meet the USDA’s latest projection while shipments were again well off the pace requirement.  The US is 43% committed and 5% shipped Vs the USDA’s upwardly revised target.  Sales are well ahead the average expected pace for this point of the season. 

CFTC Commitments of Traders data for the week ending Oct 12 (futures only) showed that the trade reduced its net short position to approximately 2.33B bu Vs the previous assay period; large specs reduced their net long to around 1.1B bu.  Such liquidation is common ahead of WASDE releases.

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 no longer oversold.  Weather and harvest reports will likely be major market moving factors over the near-term for corn, beans, and wheat.

Soybeans:

CME Nov soybeans lost 25¼ cents last week to finish at 1217¾.

CME soybeans finished lower, despite strengthening US export data, on notable increases to the USDA’s domestic and world aggregate projections of carryout.

In its Oct WASDE report, the USDA projected 2021/22 domestic carryout significantly higher Vs the previous report at approximately 320M bu, which remains a bullish figure.  Aggregate world carryout for 2021/22 was forecast 6% higher at just above 3.84B bu.

Domestically, harvest of the US crop is underway, with yield reports better than originally expected.  As with corn, harvest conditions across the US will likely be mostly favorable this week.  Yields across most of the US continue to be mostly strong and, in general, better than originally expected.  For the week ending Oct 10 the US crop was estimated at 49% harvested, 9 percentage points ahead of the rolling 5-year average pace.

Net export sales and shipments were higher Vs the previous assay period at approximately 42M and 63M bu, respectively.  Sales and shipments were ahead of the pace required to meet the USDA’s latest projection.  The US is 46% committed and 6% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season. 

Internationally, sowing across Brazil continues, with Conab predicting record production for the new crop.

CFTC Commitments of Traders data for the week ending Oct 12 (futures only) showed that the trade reduced its aggregate net short position to approximately 533M bu; large specs reduced their net long to around 121M bu.

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

CME Wheat:

CME SRW Dec futures finished unchanged last week at 734.

CME futures finished unchanged in sympathy with corn, failing to move higher despite quickening US export sales data and tightening of the USDA’s domestic and aggregate world balance sheets.

In its Oct WASDE report, the USDA projected 2021/22 domestic carryout off significantly Vs the previous report at around 580M bu.  Aggregate world carryout for 2021/22 was projected 2% lower at 10.18B bu.

Domestically, current wheat and soybean prices had many US cotton producers considering more acreage to the double crop rotation this fall.  However, a late cotton crop, a wetter than average fall, and skyrocketing cotton prices seem likely to hold southern wheat acreage in check.  Still, soybeans, which are much less expensive to produce per acre than cotton, could curb expected cotton area in 2022.  Private estimates of planted area continue to come in higher Vs USDA.  For the week ending Oct 10 sowing of the US crop was estimated at 60% complete, on par with the rolling 5-year average pace.

Net export sales were higher Vs the previous assay period while shipments were lower at approximately 21M and 17M bu, respectively.  Sales were ahead of the average weekly pace required to meet the USDA’s official target while shipments missed the mark.  The US is 50% committed and 34% shipped Vs the USDA target.  Sales are ahead of the average long-term pace for this point of the season while shipments are off their expected pace.

CFTC Commitments of Traders data for the week ending Oct 12 (futures only) showed that the trade reduced its aggregate net short position to approximately 369M bu while large specs flipped their net long to a net short of almost 50M bu.

For this week, the weekly technical analysis for and money flow into the Dec contract remains supportive to bullish.  The 700, 675, 650, 625, and 600 levels are downside targets with 750, 775, and 800 likely to evince significant to strong resistance.

Have a great week!

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    This post was written by Louis Rose