Rose on Grain – CME Grains Move Higher on WASDE Week

August 16, 2021 11:04 pm
Published by

Louis W. Rose IV

Corn:

CME Dec corn futures gained 16½ cents last week to finish at 573.  We did not recommend any trading bis or corn, soybeans, or wheat due to the WASDE’s scheduled release on Thursday.

The corn market finished higher on notable tightening of the USDA’s domestic balance sheet, coupled with a modest tightening of the aggregate world balance sheet.  A quickening of US export sales and strong new crop sales also lent support to the market.

Domestically, the latest USDA crop ratings showed the crop rated in 62% good, or better, condition, off 2 percentage points Vs the previous release.  Most major producing areas are expected to see at least some rainfall this week.  Corn harvest has commenced across southernmost producing regions, with early yield reports quite favorable.

In its Aug WASDE report, the USDA increased its 2021/22 domestic carryout was slashed 13% Vs the previous report to approximately 1.25B bu.  Aggregate world carryout for 2021/22 was projected 2% lower Vs July at 11.2B bu.

Net export sales were higher while shipments were lower Vs the previous sales period at approximately 15M and 42M bu, respectively.  Sales were ahead of the pace required to meet the USDA’s latest projection while shipments again fell short of the pace requirement.  The US is 99% committed and 92% shipped Vs the USDA’s target.  2021/22 sales were again relatively strong.

Internationally, both private and official estimates of Brazil’s safrinha crop continue to move lower.

CFTC Commitments of Traders data for the week ending Aug 10 (futures only) showed that the trade trimmed its net short position to approximately 2.51B bu; large specs slightly increased their net long to around 1.23B bu. 

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

Soybeans:

CME Nov soybeans 28¼ cents last week to finish at 1365.

CME soybeans finished modestly higher on quickening old crop export sales, strong new crop sales and a continuance of bearish official USDA projections.  Strength in other row crops also lent support to the market.

Domestically, the latest USDA crop condition ratings showed 57% of the crop rated in good, or better, condition, which is off 3 percentage points on the week.  The southern crop has received much needed rainfall over the weekend.  As with corn, most of the US crop will likely see showers and rainfall this week.

In its Aug WASDE report, the USDA projected of 2021/22 domestic carryout unchanged Vs the previous report at approximately 155M bu.  Aggregate world carryout for 2021/22 was forecast 2% higher at just above 3.5B bu.

Net export sales were higher while shipments were lower Vs the previous assay period at approximately 4M and 5M bu, respectively.  Shipments again fell short of the pace required to hit the USDA’s latest projection.  The US is 100% committed and 96% shipped Vs the USDA’s target.  2021/22 sales remained strong.

CFTC Commitments of Traders data for the week ending Aug 10 (futures only) showed that the trade reduced its aggregate net short position to approximately 947M bu; large specs trimmed their net long to around 435M bu.

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

CME Wheat:

CME SRW Sept futures gained 41 cents last week to settle at 774¼.

CME futures moved higher sympathy with corn and on notable reductions in the USDA’s projections of both aggregate world and domestic carryout.

In its Aug WASDE report, the USDA projected 2021/22 domestic carryout off notably Vs the previous report at around 625M bu.  Aggregate world carryout for 2021/22 was projected 4% lower at just north of 10.2B bu.

Domestically, US winter wheat harvest is nearing completion, with harvest of the spring crop having begun.  US spring wheat continues to be rated in abysmal condition.

Net export sales were slightly lower Vs the previous assay period while shipments were higher at approximately 11M and 23M bu, respectively.  Sales were off the average weekly pace required to meet the USDA’s official target while shipments were ahead of the pace requirement.  The US is 37% committed and 16% shipped Vs the USDA target.  Sales are ahead of the average long-term pace for this point of the season while shipments are near on par with their expected pace.

CFTC Commitments of Traders data for the week ending Aug 10 (futures only) showed that the trade increased its aggregate net short position to approximately 436M bu while large specs increased their net long to around 85M bu.

For this week, the weekly technical analysis for and money flow into the Dec contract remains bullish, with the market now overbought.  The 700, 650, and 600 levels are downside targets with 800 likely to evince relatively strong resistance.

Have a great week!

    Subscribe to be notified when this post is updated!

    ---

    This Market Report constitutes copyrighted material and may not be reproduced in any manner, either in part or in whole, without prior written consent from Rose Commodity Group. However, redistribution via forwarding of the full link to the report is permitted. Quotations (limit 3) from the report are permitted, so long as they are accompanied by attribution to Rose Commodity Group and a link to the full report.

    ---

    This publication is presented for informational purposes only. While the information contained herein is believed to be accurate and factual, the possibility of error exists. Commodity trading is an inherently risky proposition and there is no guarantee that trades based on the information enclosed herein will result in profitable outcomes.

    This post was written by Louis Rose