Rose on Grain – CME Corn, Soybeans, and Wheat Finish Lower Ahead of Major Report Week

November 7, 2021 4:46 pm
Published by

Louis W. Rose IV

Corn:

CME Dec corn futures gave back 15¼ cents last week to finish at 553.  Last week our proprietary models predicted a finish on the week that was to be near unchanged to higher, which proved incorrect. 

The corn market finished lower, despite strong US export sales, on continued weak shipment data, and continued harvest pressure.  Positioning ahead of the monthly WASDE and Conab reports likely affected futures closes for corn, wheat, and beans this week.

USDA will release its Nov WASDE report on Tuesday, Nov 9 at the usual time.  At this time, we believe that projected domestic and aggregate world carryout projections for corn and wheat could well be higher Vs Oct while carryout projections for domestic soybeans could be trimmed and world carryout projections could be somewhat higher.

Domestically, major US producing regions are expected to see less than favorable harvest weather across most of the Midwest for the coming week.  For the week ending Nov 1 the US crop was estimated at 74% harvested, up 8 percentage points Vs the previous week and the same measure ahead of the rolling 5-year average pace.

Net export sales and shipments were higher Vs the previous sales period at approximately 48K and 29M bu, respectively.  Sales were again head of the pace required to meet the USDA’s latest projection while shipments were again well off the pace requirement.  The US is 49% committed and 9% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season; shipments are off their expected pace.

Internationally, in addition to the to the Nov WASDE report (Nov 9), market participants will be looking forward to official crop reports being released in Brazil, Argentina, and others.  Conab will release its Nov Crop Survey report on Thursday, Nov 11.

CFTC Commitments of Traders data for the week Nov 2 (futures only) showed that the trade increased its net short position Vs the previous assay period to approximately 2.8B bu while large specs increased their net long to almost 1.6B 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 supportive to bullish.  Index fund rolling and, of course, the Nov WASDE and Conab Crop Survey reports will likely be major market moving factors for corn, beans, and wheat.

Soybeans:

CME Jan soybeans lost 44 cents last week to finish at 1205½.  Last week our models predicted a finish on the week that was to be near unchanged to lower, which proved to be correct.

CME soybeans finished significantly lower, despite a continuance of strong US export data, on US harvest progress and yield reports and strong expectations for new crop across South America.

Domestically, as with corn, major US producing regions are expected to see less than favorable harvest weather for the coming week.  Harvest across the southern states continues, with mostly strong yields being reported.  For the week ending Nov 1 the US crop was estimated at 79% harvested, up 6 percentage points Vs the previous assay period and 2 percentage points off the rolling 5-year average pace.

Net export sales and shipments were higher Vs the previous assay period at approximately 68M and 97M bu, respectively.  Sales and shipments were again well ahead of the pace required to meet the USDA’s latest projection.  The US is 57% committed and 19% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season; shipments are also ahead of the expected pace.

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

CFTC Commitments of Traders data for the week ending Nov 2 (futures only) showed that the trade increased its aggregate net short position to approximately 824M bu; large specs notably increased their net long to around 215M bu.

For this week, the weekly technical analysis for and money flow into the Jan contract remains bearish, with the market now somewhat oversold.

CME Wheat:

CME SRW Dec futures gave back 6¼ cents last week at 766½.  Last week our models predicted a finish on the week that was to be near unchanged to higher, which turned out to be, more or less, correct.

CME futures finished lower, post a move above strong resistance, on likely targeted profit-taking on spec longs, disappointing overall US export data, and in sympathy with corn.  Strong SRW sales likely provided support to the market.

Domestically, private estimates of planted area continue to come in higher Vs USDA; however, we expect SRW acreage across the eastern Cotton Belt to be off Vs last season.  For the week ending Nov 1 sowing of the US crop was estimated at 87% complete and 67% emerged, which is on near on par with the rolling 5-year average pace.  SRW producing regions are expected to see rain this week while HRW areas are expected to see a continuance of mostly dry conditions, which is less than desirable.

Net export sales were higher while shipments were lower Vs the previous assay period at approximately 15M and 5M bu, respectively.  Sales were ahead of the average weekly pace required to meet the USDA’s official target while shipments were around half the pace requirement.  The US is 55% committed and 37% 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.  SRW sales were notably higher at almost 2M bu.

Internationally, weather across the Black Sea region (especially Russia) remains generally favorable for winter crop development.  Rumors that Russia may expand it export tax continue to circulate.

CFTC Commitments of Traders data for the week ending Nov 2 (futures only) showed that the trade increased its aggregate net short position to approximately 393M bu while large specs flipped their net short to a net long of around 23M bu.

For this week, the weekly technical analysis for and money flow into the Dec contract remains supportive to bullish, with the market no longer in an overbought condition.  While the market breached strong resistance at 800, the market will likely have trouble moving and remaining above it again.

Have a great week!

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    This post was written by Louis Rose