Rose on Grain – CME Corn & Wheat Finish Week Near Unchanged, Soybeans Move Lower

September 22, 2019 9:41 pm
Published by

Louis W. Rose IV

Corn:

CME Dec corn futures picked up 2 cents on the week to finish at 370¾.  Last weekend our proprietary models (timely predictions published in our complete weekly report) predicted a finish on the week that would be near unchanged to lower, which was correct if one considers 2 cents near unchanged.

CME futures finished near unchanged on, among other factors, continued trimming of ethanol production mitigated by improved export sales and rain and flooding across portions of the upper midwestern US.

Net export sales and shipments were higher Vs the previous sales period at approximately 58M and 18M bu, respectively. Sales were ahead of the average weekly pace required to match the USDA’s export projection while shipments were again well off the pace requirement. The US is 17% committed and 2% shipped Vs the USDA target of nearly 2.1B bu.

Domestically, heavy rain is this week across the upper Mid-west; if rains occur it will likely widen potential for flooding.  It was announced last week that another major ethanol plant would idle production over the near- to medium-term, at least.  Harvest across the southern states continues to progress; yields remain highly variable, with an expectation for significantly lower production Vs the USDA’s Sept projections.

Internationally, cost of production figures out of Argentina favor soybean sowing Vs corn ahead of planting season while droughty conditions across Brazil could translate into higher than currently expected area sown to corn for the 2020/21 marketing year.

CFTC Commitments of Traders data for the week ending Sept 17 (futures only) showed that the trade reduced their aggregate net short position to around 905 bu while large specs increased their aggregate net short position to approximately 883M bu.  Potential for upward movement, via spec short covering, exists.

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

For this week, the standard technical analysis for and money flow into the Dec contract remain bearish.  Market participants will continue to monitor US weather and crop condition ratings, yield reports and US export and ethanol data.  News and rumors concerning US – China trade talks could also significantly influence the market.

Soybeans:

CME Nov soybeans gave up 16 cents to settle at 882¾.  Last weekend our proprietary models predicted a finish on the week that would be near unchanged to higher, which proved to be incorrect.

CME futures commenced the week higher, but ultimately succumbed to rumors of souring relations between US and Chinese lower level negotiators.  Heavy rains across portions of the upper Mid-west, unseasonably hot and dry conditions across the southern states and strong, but weakening, us export data likely helped to mitigate potential weekly losses.

Net export sales were noticeably lower Vs the previous assay period, but still strong, while shipments were higher at approximately 63M and 26M bu, respectively.  Sales were ahead of the average weekly pace required to match the USDA’s export projection while shipments were again off the pace requirement.  The US is 23% committed and 2% shipped Vs the USDA’s target.

Domestically, as with corn, heavy rains are expected across the upper Mid-west this week; mostly hot and dry conditions are expected across the south, with the potential for some relief on Monday.  Record high temperatures and very dry conditions across the southern states have reduced yield potential, especially for late-sown or double-cropped beans.

Internationally, China continues to source soybeans from Brazil, despite cash prices being lower in the US.  Hot and dry conditions across Mato Grosso continue to delay new crop sowing; little relief from droughty conditions is mentioned within the two-week forecast.  Concerns are growing regarding planned upcoming US – China trade talks as lower level negotiators from China abruptly departed the US last week, cancelling planned goodwill visits to US farms in the process.

CFTC Commitments of Traders data for the week ending Sept 17 (futures only) showed that the trade increased its net short position to approximately 331M bu, while managed money firms cut their net short to approximately 228M bu.  Potential upward improvement via spec short covering remains in the market.

For this week, the weekly technical analysis for and money flow into the Nov contract are bearish.  Market participants will continue to monitor US weather, crop condition ratings, export sales and news relating to US – China trade relations.

CME Wheat:

 CME SRW Dec futures up ¾ cent last week, settling at 484¼.  Last weekend our proprietary models predicted a finish on the week that would be near unchanged to higher, which proved to be correct.

CME SRW futures seemed to trade in sympathy with the directionless trade of CME corn.

Net all wheat sales were off noticeably Vs the previous sales period while shipments were higher at approximately 11M and 19M bu, respectively.  Sales were off the average weekly pace required to meet the USDA’s export projection while shipments were just north of the pace requirement. The US is 46% committed and 28% shipped Vs the USDA projection.

Domestically, the thrust of WW sowing season is rapidly approaching.  Excessive rains across portions of the corn and soybean belts and dry weather across the south could ultimately lead to smaller than currently expected planted area for 2020/21.

Internationally, the drought Down Under continues to worsen, with further official estimates of production likely forthcoming.

CFTC weekly Commitments of Traders data for the week ending Sept 17 (futures only) showed that the trade slashed its aggregate net short position to around 15M bu while managed money firms reduced their net short to approximately 35M bu.

For this week, the standard technical analysis for and money flow into the Dec contract remains bearish.  Market participants will continue to monitor domestic and international weather conditions and weekly USDA export data as the thrust of WW planting season approaches.

Have a great week!

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This post was written by Louis Rose