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Afternoon Market Recap for October 18, 2021

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Corn and soybeans firm, wheat mixed.

All major grain contracts except for spring wheat moves higher Monday

With fertilizer prices as high as they are, could there be a massive acreage switch from corn to soybeans in 2022? There was enough speculation to spark some technical buying that lifted corn prices 1.25% higher on Monday. Soybeans were also firm, fueled by an influx of export optimism after some bullish export inspection data this morning. Wheat prices finished the session with slightly mixed results on some uneven technical maneuvering.

A band of showers could deliver 0.25” to 0.5” or more to parts of South Dakota, Minnesota and Wisconsin between Tuesday and Friday, but not much moisture will land elsewhere in the central U.S. during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts a return to seasonally wet weather for the upper Midwest and parts of the eastern Corn Belt between October 25 and October 31, with warmer-than-normal conditions likely for most of the country as the month winds down.

On Wall St., the Dow dropped 82 points in afternoon trading to 35,212, with investors ready to see the next round of corporate earnings reports from companies like Netflix and Tesla. Energy futures saw mild to moderate cuts, with crude oil down around 0.25% to stay just above $82 per barrel. Gasoline was also down around 0.25%, with diesel falling 1% this afternoon. The U.S. Dollar softened fractionally.

On Friday, commodity funds were net buyers of all major grain contracts, including corn (+7,500), soybeans (+6,000), soymeal (+3,000), soyoil (+3,000) and CBOT wheat (+6,500).

Corn

Corn prices moved 1.25% higher to start the week on speculation that 2022 corn acres could drop due to high fertilizer prices, which triggered some technical buying today. A solid round of export inspection data from USDA this morning lent additional support. December futures rose 7 cents to $5.3275, with March futures up 6.75 cents to $5.41.

Corn basis bids were steady to mixed on Monday, moving as much as 3 cents higher at an Iowa ethanol plant and falling as much as 10 cents lower at an Ohio elevator today.

Corn export inspections improved 16% to reach 38.4 million bushels for the week ending October 14. That was better than the entire set of trade guesses, which ranged between 25.6 million and 33.5 million bushels. Mexico was the No. 1 destination, with 13.9 million bushels. Cumulative totals for the 2021/22 marketing year still haven’t caught up to last year’s pace, meantime, with 160.9 million bushels since September 1.

Ahead of the next crop progress report, out later today and covering the week through October 17, analysts expect USDA to show corn harvest at 54% complete, up from 41% a week ago. Quality ratings are expected to hold steady, with 60% rated in good-to-excellent condition.

Customs data indicates China imported almost 139 million bushels of corn in September, which is a year-over-year increase of 227%. Year-to-date totals are also massively above last year’s pace, with 981.5 million bushels.

Where do you think grain prices are headed next? There are a lot of opinions floating around right now. For example, Jim McCormick, hedging strategist with AgMarket.net, is currently bullish on corn and wheat but bearish on soybeans. McCormick walked through some factors in play in a recent Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 137,900 contracts, coming in moderately below Friday’s final count of 200,043.

Soybeans

Soybean prices overcame modest overnight losses on some net technical buying today as export optimism slightly outweighed mounting concerns of a switch from corn to soybean acres in 2022 to combat high fertilizer prices. November futures added 3 cents to $12.2075, while January futures picked up 2 cents to $12.2825.

Soybean basis bids showed a bit of variability to start the week, dropping as much as 11 cents at an Ohio elevator while firming as much as 10 cents at a Nebraska processor today.

Soybean export inspections tracked 32% higher than last week’s tally, climbing to 84.4 million bushels. That was better than the entire range of trade estimates, which came in between 58.8 million and 77.2 million bushels. China was by far the top destination, with 62.9 million bushels. Cumulative totals for the 2021/22 marketing year are still roughly half of last year’s pace, reaching 215.8 million bushels.

Later this afternoon, analysts expect USDA to show soybean harvest progress of 62% through October 17, up from 49% a week ago. The agency is unlikely to provide quality ratings moving forward. Last week, 59% was rated in good-to-excellent condition.

Preliminary volume estimates were for 175,021 contracts, shifting moderately below Friday’s final count of 217,799.

Wheat

Wheat prices pushed through a choppy session with mixed results after an uneven round of technical maneuvering Monday. Winter wheat contracts moved modestly higher, while spring wheat contracts eased slightly. December Chicago SRW futures picked up 2 cents to $7.36, December Kansas City HRW futures added 4.75 cents to $7.4850, and December MGEX spring wheat futures slid a penny lower to $9.6775.

Wheat export inspections were lackluster, falling to 5.1 million bushels. That was also well below the entire range of trade guesses, which came in between 11.0 million and 20.2 million bushels. Mexico led all destinations with just under 1.5 million bushels. Cumulative totals for the 2021/22 marketing year are trailing last year’s pace by 13%, with 343.0 million bushels.

Ahead of this afternoon’s crop progress report from USDA, analysts think the agency will show winter wheat plantings move from 60% complete a week ago up to 73% through Sunday.

Russian consultancy Sovecon expects the country’s 2022 wheat production to improve 6.9% year-over-year to 2.965 billion bushels, thanks to “ample rains in early autumn [that] helped moisture reserves all over the country. On average, winter wheat now is in the best shape seen for several years.” Russia is the world’s No. 1 wheat exporter.

Ukraine’s grain exports for the 2021/22 marketing year are trending nearly 12% higher so far, anchored by wheat exports totaling 393.2 million bushels so far. The country has also exported 59.1 million bushels of corn since the beginning of July. Ukraine is coming off a record-breaking grain harvest, so exports are likely to stay ahead of last year’s pace.

Chinese wheat imports between January and September are trending about 25% higher than last year’s pace, with 278.9 million bushels. Chinese barley imports are also up almost 86% year-over-year.

Ethiopia issued an international tender to purchase 14.7 million bushels of milling wheat as it struggles to feed a hungry population following extreme weather that has ranged from severe drought to intense flooding.

Preliminary volume estimates were for 51,941 contracts, tracking slightly below Friday’s final count of 63,799.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Dec 533.75 523 532.75 7
22-Mar 541.75 531.25 540.5 6.75
Soybeans        
21-Nov 1225.25 1210 1221.5 3
22-Jan 1233 1218.25 1229 2
Soymeal                $/ton        
22-Jan 319.6 314.7 318.1 0.8
Soyoil                    cents/lb        
22-Jan 61.92 60.65 61.73 0.54
Wheat                    $/bushel        
21-Dec 738.75 728.5 736.25 2
22-Mar 751.25 741.25 748.75 2
KC Wheat        
21-Dec 749.75 741.25 749 4.75
22-Mar 756.25 748.5 756 4.5
MPLS Wheat        
21-Dec 972 963 967.75 -1
22-Mar 959.75 951.5 955 -2.25
Live Cattle             cents/lb        
21-Oct 125.825 125.125 125.375 -0.6
Feeder Cattle         cents/lb        
21-Nov 161.75 159.225 159.35 -2.075
Lean Hogs             cents/lb        
22-Feb 82.325 80.4 81.7 0.375
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Nov 83.87 81.84 82.49 0.21
Diesel        
21-Nov 2.608 2.5395 2.5414 -0.0323
Unleaded Gasoline   $/gallon        
21-Nov 2.5135 2.4703 2.4846 -0.0018
Natural Gas        
21-Dec 5.588 5.215 5.261 -0.339
Ethanol Futures        
21-Dec     2.207  
U.S. Dollar Index        
21-Dec 94.175 93.865 93.96 0.022
Gold                      $/ounce        
21-Nov 1770.2 1760.2 1770.1 2.9
Copper        
21-Oct 4.791 4.702 4.7195 -0.0145
Fertilizer Swaps     (as of 10/15)  
DAP Tampa-index              655.0 0
DAP-New Orleans              755.1 0
Urea-New Orleans              768.9 0
Urea-Middle East              830.0 0
Urea-Black Sea              710.0 0
UAN (32%) New Orleans              542.9 22.05

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