Markets are trading lower this morning with bearish weather in South America weighing after Friday’s USDA report failed to provide the market with any supportive news.
Friday’s CFTC report showed that managed funds were net buyers of 44k corn to reduce the net short to 24k, net buyers of 13k beans to reduce the net short to 22k, and net sellers of 6k wheat to push the net short out to 29k. The buying in corn and beans was much greater than expected with the net short in both markets much smaller than expected.
Funds on report day were estimated as net sellers of 3k corn to push the net short out to 30k, net sellers of 6k beans to push the net short out to 28k, and net sellers of 3k wheat to push the net short out to 29k.
The USDA report lacked any major surprises on Friday:
Ag Rural reported Brazilian soybean planting at 8.2% complete vs. 17% a year ago. Planting in Mato Grosso has been slow due to dry weather, which could have implications for 2nd season corn planting.
China soybean imports in September were near a record at 11.37 mmt.
APK Inform lowered their 24/25 marketing year grain exports to 37.2mmt from 39.1 due to a smaller corn crop. They forecast corn production at 24 mmt (USDA 26.2). They estimated the Ukraine wheat crop at 21.5 mmt (USDA 22.9).
Russia’s Ag Minister asked exporters at a meeting last week not to sell wheat by tender to international buyers below a minimum price of $250 per metric ton FOB.
Corn posted a lower low, lower high, and lower close on Friday and gapped open lower overnight to push prices toward the bottom of the recent range. The market is oversold. Support is 4.00 and resistance 4.20-4.30.
Beans posted lower lows, lower highs, and a lower close on Friday and then gapped lower overnight. Prices recovered to fill the gap, but are under pressure again this morning. he market is oversold after recent losses. Support is 10.00 and 9.80 with resistance 10.20.
Corn is starting the week under pressure as US harvest is ongoing, the USDA didn’t give the market any bullish news on Friday, South American weather continues to improve, and managed funds were much bigger buyers on the CFTC report than expected. With harvest expected to provide the market with all the grain it needs in the coming weeks, look for prices to pull-back further within its recent range. Longer term, though, the global grain supply outlook isn’t overly bearish with the market expected to be sensitive to weather scares, which are likely to provide marketing opportunities in the coming months. Producers can start to look at re-establishing upside exposure as we get closer to the end of the month, and we get to the back half of harvest.
Beans are starting the week under pressure again after the USDA produced another bearish balance sheet for the US and world. With funds essentially out of their short position and the weather improving in South America, there isn’t much to spark buying in beans. Look for the market to remain under pressure until corn can find a low, and producers should continue to use puts to cover their downside exposure.
Corn down 3-4
Beans down 6-7