Afternoon Market Recap for October 27, 2021

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Bullish ethanol data sparks corn rally.

Soybeans and wheat also finish Wednesday’s session in the green

It was a good day for corn prices, especially after the U.S. Energy Information Administration released a very bullish round of ethanol production data this morning. That triggered a round of technical buying that sent corn prices soaring 2.5% higher. The ensuing spillover strength, along with positive demand fundamentals, helped some wheat contracts move as much as 1.1% higher today. Soybeans were also in the green but were only able to scrape together much more modest gains.

Between Thursday and Sunday, large portions of Missouri, Iowa, Illinois, Indiana and Ohio will gather at least another 1” of rainfall, per the latest 72-hour cumulative precipitation map from NOAA. But the agency’s 8-to-14-day outlook predicts a return to seasonally dry weather for the central U.S. between November 3 and November 9, with cooler-than-normal temperatures likely for the eastern Corn Belt.

On Wall St., the Dow is headed for a losing session for the first time in four days, dropping 102 points in afternoon trading to 35,654. That’s still very near all-time highs, however. Meantime, more than a third of the companies in the S&P 500 have released their 3Q earnings reports, and 83% of them have bested earnings expectations so far.

Energy prices moved back into the red today on news of rising domestic stocks. That sent crude oil down more than 2.25% this afternoon to fall back below $83 per barrel. Diesel dropped 2.5%, with gasoline down nearly 3%. The U.S. Dollar softened moderately.

On Tuesday, commodity funds were net buyers of corn (+5,500) and soybean (+1,000) contracts but were net sellers of soymeal (-1,000), soyoil (-3,000) and CBOT wheat (-4,000).

Corn

Corn prices jumped higher after the EIA reported one of the largest weekly ethanol production totals on record (more on that below). That triggered a round of technical buying that handed out double-digit gains by the close. Rain-related harvest delays lent additional support. December futures rose 14.25 cents to $5.5775, while March futures added 14 cents to $5.6625.

Corn basis bids were steady to mixed on Wednesday, moving as much as 15 cents higher at an Iowa river terminal while dropping as much as 8 cents lower at an Iowa processor today.

Ethanol production has reached the second-highest volume on record, according to the U.S. Energy Information Administration, with a daily average of 1.106 million barrels. Demand also appears to be keeping pace with higher production trends, as stocks dropped 155,000 barrels last week for a new total of 19.93 million barrels.

Prior to tomorrow morning’s export report from USDA, analysts anticipate corn sales ranging between 31.5 million and 52.0 million bushels for the week ending October 21.

South Africa’s 2021 corn production is expected to reach 638.2 million bushels, per the latest data from the country’s Crop Estimates Committee. That would be a year-over-year increase of around 6% for Africa’s top corn producing nation, if realized.

Grain traveling the nation’s railways added another 25,857 carloads last week, bringing 2021 cumulative totals to 967,856 carloads. That’s a year-over-year increase of 6.7% so far.

How well do you understand basis contracts? Grain marketing consultant Roger Wright offers a helpful primer in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 362,473 contracts, trending 56% higher than Tuesday’s final count of 232,270.

Soybeans

Soybean prices tested moderate gains this morning on the heels of spillover strength from corn, but those gains largely evaporated by the close. Moving forward, traders will be watching the next round of export and harvest data closely. November futures crept half a penny higher to $12.3850, while January futures picked up 2 cents to $12.4950.

Soybean basis bids jumped 10 to 15 cents higher at three interior river terminals and also firmed 12 cents at an Ohio elevator while dropping 5 cents lower at an Indiana elevator and holding steady elsewhere across the Midwest on Wednesday.

Ahead of the next export report from USDA, analysts expect to see soybean sales come in between 45.9 million and 74.2 million bushels for the week ending October 21. Analysts also anticipate soymeal sales ranging between 150,000 and 385,000 metric tons, plus up to 30,000 MT in soyoil sales.

Will 2022 be another boom year, or is a bust in the cards? Of course, it’s too early to tell, but Brady Huck, risk advisor with Advance Trading, shares some thoughts on the critical roles that flexibility and balance will play next year. Click here to learn more.

Preliminary volume estimates were for 317,964 contracts, moving well above Tuesday’s final count of 197,991.

Wheat

Wheat prices enjoyed mild to moderate gains today, thanks to ample global demand and spillover strength from corn, which spurred a round of technical buying. December Chicago SRW futures rose 8.5 cents to $7.6075, December Kansas City HRW futures added 5.5 cents to $7.8275, and December MGEX spring wheat futures picked up 0.5 cents to $10.22.

Ahead of Thursday morning’s crop progress report from USDA, analysts think the agency will show wheat sales ranging between 7.3 million and 20.9 million bushels for the week ending October 21.

Dry conditions in Ukraine and Russia could result in lower planted acres of winter wheat for the 2021/22 season. For Russia, that means a possible reduction of 3.8% from a year ago, with 43.243 million acres. Large portions of the Black Sea region have received between 30% and 60% of normal precipitation in recent weeks, according to Sovecon’s Andrey Sizov.

But thanks to a record-breaking harvest this season, Ukraine’s total grain exports are up 17.5% from a year ago so far. That includes wheat exports totaling 429.9 million bushels, plus another 78.7 million bushels of corn exports.

Egypt purchased 13.2 million bushels of wheat from Russia, Romania and Ukraine in an international tender that recently closed. The grain is for shipment during the first 10 days of December.

Jordan passed on all offers from its international tender to purchase 4.4 million bushels of wheat that closed earlier today. The country has struggled to close similar deals, although it did buy 2.2 million bushels of wheat last week.

Preliminary volume estimates were for 74,087 CBOT contracts, which was a moderate drop from Tuesday’s final count of 92,945.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Dec 563.25 539.5 557.25 14.25
22-Mar 571.5 548.25 566 14
Soybeans        
21-Nov 1257.5 1227 1239.25 0.5
22-Jan 1266.25 1236 1249.75 2
Soymeal                $/ton        
22-Jan 332.5 323 329.2 3.2
Soyoil                    cents/lb        
22-Jan 62.19 60.78 61.26 -0.68
Wheat                    $/bushel        
21-Dec 762.75 745 759.75 8.5
22-Mar 775.25 758 773 8.5
KC Wheat        
21-Dec 786.5 771.5 782.75 5.5
22-Mar 789.5 774.25 785.75 5.5
MPLS Wheat        
21-Dec 1032.5 1010.75 1022 0.5
22-Mar 1016.75 991.75 1005.5 3.5
Live Cattle             cents/lb        
21-Oct 127.5 126.675 127.1 0.275
Feeder Cattle         cents/lb        
21-Nov 160.1 158.1 158.45 -1.325
Lean Hogs             cents/lb        
22-Feb 75.7 74.175 74.375 -0.775
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Nov 84.51 82.36 82.67 -1.98
Diesel        
21-Nov 2.5688 2.4949 2.5155 -0.0618
Unleaded Gasoline   $/gallon        
21-Nov 2.5077 2.4304 2.4487 -0.0681
Natural Gas        
21-Dec 6.281 5.886 6.203 0.2
Ethanol Futures        
21-Dec     2.207  
U.S. Dollar Index        
21-Dec 94.005 93.675 93.79 -0.151
Gold                      $/ounce        
21-Nov 1799 1785.8 1793.3 0.6
Copper        
21-Oct 4.3925 4.3925 4.3925 -0.094
Fertilizer Swaps     (as of 10/22)  
DAP Tampa-index              650.0 -5
DAP-New Orleans              749.6 -6
Urea-New Orleans              763.4 -6
Urea-Middle East              845.0 15
Urea-Black Sea              765.0 55
UAN (32%) New Orleans              592.5 49.6

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