Rose on Grain – CME Corn, Soybeans, and Wheat Finish Week Higher

October 31, 2021 12:28 am
Published by

Louis W. Rose IV

Corn:

CME Dec corn futures gained 30¼ cents last week to finish at 568¼.  We did not recommend trading any bias for corn, soybeans, or wheat last week. 

The corn market finished higher on strong US export sales and harvest pressure that will soon be mitigated.  The market seemed to ignore strengthening US currency last week.

Domestically, major US producing regions are expected to see mostly favorable harvest weather for the coming week.  For the week ending Oct 24 the US crop was estimated at 66% harvested, up 14 percentage points Vs the previous week and well ahead of the rolling 5-year average pace.

Net export sales and shipments were lower Vs the previous sales period at approximately 35K and 27M 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 47% committed and 8% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season; shipments are now 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.

CFTC Commitments of Traders data for the week ending Oct 26 (futures only) showed that the trade increased its net short position to approximately 2.48B bu Vs the previous assay period; large specs increased their net long to around 1.18B 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 have turned supportive to bullish.  Weather and harvest reports will likely be major market moving factors over the near-term for corn, beans, and wheat while index fund rolling could mean weakness for corn and wheat.  Index fund rolling continues next week.

Soybeans:

CME Jan soybeans gained 18¾ cents last week to finish at 1249½.

CME soybeans finished modestly higher on strengthening US export data, with uncertainty premium associated with this season’s South American crop locked into the market amid tight domestic carryout projections.

Domestically, as with corn, major US producing regions are expected to see mostly favorable harvest weather for the coming week.  For the week ending Oct 24 the US crop was estimated at 73% harvested, up 13 percentage points Vs the previous assay period and modestly ahead of the rolling 5-year average pace.

Net export sales were lower, and shipments were higher Vs the previous assay period at approximately 43M and 88M bu, respectively.  Sales and shipments were again well ahead of the pace required to meet the USDA’s latest projection.  The US is 54% committed and 14% 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.  It will be interesting to see Conab’s thoughts on this season’s Brazilian crop.

CFTC Commitments of Traders data for the week ending Oct 26 (futures only) showed that the trade increased its aggregate net short position to approximately 747M bu; large specs increased their net long to around 124M bu.

For this week, the weekly technical analysis for and money flow into the Nov contract remains bearish.

CME Wheat:

CME SRW Dec futures gained 16¾ cents last week at 772¾.

CME futures finished higher in sympathy with corn and on dryness across the Great Plains, despite weakening US export sales and strengthening US currency.

Domestically, private estimates of planted area continue to come in higher Vs USDA, but we have some doubts due to what we believe will be reduced acreage across the southern states.  For the week ending Oct 24 sowing of the US crop was estimated at 80% complete, which is on par with the rolling 5-year average pace.

Net export sales were lower while shipments were higher Vs the previous assay period at approximately 10M and 7M bu, respectively.  Both sales and shipments were off the average weekly pace required to meet the USDA’s official target.  The US is 53% committed and 36% 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 lower at less than 275K bu.

Internationally, weather across the Black Sea region (especially Russia) remains generally favorable for winter crop development.  There are rumors that Russia may expand it export tax.

CFTC Commitments of Traders data for the week ending Oct 26 (futures only) showed that the trade increased its aggregate net short position to approximately 357M bu while large specs reduced their net short to around 58M bu.

For this week, the weekly technical analysis for and money flow into the Dec contract remains supportive to bullish, with the market now in an overbought condition.  The 700, 675, 650, 625, and 600 levels are downside targets with 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