On The Money Grain Commentary 10-28-21

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Corn Outlook:

The sun is setting on the corn harvest at 66 percent done versus the average of 53 percent which means that weather in South America and exports will take on a greater role in the months ahead. While there have been concerns of La Nina effecting their production, there are no threats in Brazil for the moment. Meanwhile, Argentina has been dry, but has received showers recently. Currently, the USDA forecasts a record crop for both Brazil and Argentina. That said, if no threats arise, exports may have to carry most of the load. Last week, inspections were below estimates at 21.4 MB and must average 51.4 MB on a weekly basis to reach USDA’s target of 2.5 BB. Unless shipments pick up quickly, their goal may be a long shot. In the meantime, ethanol production has risen to its highest level in over 3 years which will keep corn underpinned a while longer.

Bean Outlook:

Soybeans have been receiving support lately from gains in edible oils and strong exports. Inspections last week at 77.2 MB were the second highest of the season. However, be aware that unless a weather threat arises in Brazil, they are on track to produce a record crop. That said, if we follow the norm, exports will likely peak in November as China usually turns their interest to South America at that time. As I have mentioned in previous comments, when exports peak, they generally fall 65-85 percent through the remainder of the marketing year. In other developments, soybean harvest is in its last furlong at 73 percent done versus the average of 70 percent. Planted acres next spring are expected to be up because of rising energy and fertilizer costs.

Wheat Outlook:

Wheat continues to be underpinned from shrinking stocks and inflationary concerns. However, inflation may not be as big of a factor as many think because the long position of the index funds has declined 21 percent since May. If it were a true consideration, their position would be rising, not falling. In other developments, winter wheat planting is winding down at 80 percent which is par for the average. USDA’s first rating of the season shows 46 percent of the crop in good-to-excellent condition compared to 41 percent a year ago. Export inspections last week were disappointing at 5.1 MB, the second lowest of the season. Since August, the pace has fallen 36 percent which is not a good omen for continued price strength.

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