If you would like to receive our technical comments including price projections and cycle analysis for important tops and bottoms, click on the link at the bottom of the commentary to sign up for a 30-day free trial subscription. Follow Ag Watch Market Advisors on Facebook and Twitter for timely information not posted in our blog
Corn stockpiles are tightening but are more than adequate to meet demand. With 2020-21 ending stocks at 2.167 BB, the third largest in over 20 years, a flare up in South America may be needed to stimulate additional bullish interest. As of last week, the fund long position stood at 685 MB, and it is not uncommon for it to top 1.0 BB. This means there is room for it to grow. In other developments, export inspections at 24.8 MB, a marketing year low, offered little inspiration. To reach USDA’s target of 2.325 BB, we must ship 46.8 MB on a weekly basis. Looking at harvest, it is running well ahead of pace at 41 percent done versus the average of 32 percent. However, rain is in the forecast during the next 10 days which will slow its speed.
Last week, USDA gave the bulls a gift when they lowered 2020-21 ending stocks 170 MB to 290 MB. This was a larger reduction than expected and is the smallest stockpile since 2015. So, where do we go from here? For now, the focus will remain on China as they continue to be an active buyer of U.S. soybeans. However, rhetoric between the U.S. and China has intensified recently over the Covid pandemic, and their interest could climax next month after Brazil’s crop is planted. Right now, their planting is off to the slowest start in 10 years as conditions are dry. Meanwhile, scattered showers are in the forecast. Keep in mind that unless there is a serious threat to their production, our exports tend to peak in November. In the meantime, inspections last week were a marketing year high of 79.2 MB with China taking 59.7 MB, or 75 percent of the total. Looking at planting, it is progressing at gang buster speed and is 61 percent complete versus the average of 42 percent.
With record world stockpiles of wheat, the primary factor propping up prices is continued dryness in the southern Plains and in Russia. Going into next week, the forecast for both areas looks to remain dry. Planting is progressing at above average speed and is 68 percent complete compared to the average of 61 percent. In other developments, export inspections last week were 18.8 MB, and just above the average of 17.9 MB that must be shipped each week to reach USDA’s target of 975 MB.
Comments and suggestions are provided for information purposes only. Information contained herein is obtained from sources believed to be reliable but not guaranteed to its accuracy or completeness. Readers using the information contained herein are responsible for their own actions. No presentations can be made that recommendations will be profitable or that they will not result in losses. This information is neither an offer to sell nor solicitation to buy of the commodity futures mentioned herein. The writer may be trading in the commodities mentioned.