Morning Comments October 29, 2021

Harvest 4

Corn again higher yesterday as we continue to talk about what solid ethanol margins mean for demand in the year ahead. Chicago wheat catching a solid bid helped lend some support as well. While soybeans tried for the second day in a row to trade notably higher only to fail on the move, putting in lower highs on the chart.

One well-respected analyst mentioned that this current move-in corn seems to be coming from an incredible focus on-demand growth. Many analysts right now are completely ignoring any potential offsets we could still be open to when it comes to production.

Of course with energies as strong as they are and concerns over what fertilizer costs and supply disruptions could do when it comes to corn production in the year ahead both in the Northern and Southern Hemisphere, corn being this strong should not necessarily come as a surprise--though many are wondering how long it can last if we do see a shift in energies or find that yields were a bit better than expected. 

Lots of talk about corn exports as well. As we discussed earlier in the week, the export sales book compared to typical pace early in the marketing season remains stout. However, it will become imperative we start to see more solid shipments in the weeks ahead as well as continued sales as the pace of sales we are making versus a year ago has slowed. 

Soybean exports came in on the low end of expectations yesterday, though still decent at just over 1 million metric tons. While corn export sales still remain on pace to meet or exceed current USDA projections if shipped, soybean sales are lagging significantly. Looking at a year-over-year comparison of who has what on the books when it comes to US soybean purchases China is just under 366 million bushels lower than a year ago, with sales to unknown down 135 million bushels. 

With continued moisture in Brazil's bean growing regions and a nearly record fast planting pace down there we are starting to come to terms with the fact USDA export projections could be much higher than reality. Interesting to note that soybean deliveries came in much higher than expected last night. You don't deliver something you feel will gain value if you keep it. 

Overnight we saw Eurozone inflationary indicators come in much higher than expected. With CPI up 4.1% on the month we are now seeing inflation there match the 2008 peak. Energy costs on the month were up nearly 24%. 

Lots of talk that the first Fed rate hike here in the US will come in June, though many feel other central banks may make the move sooner. The consumer is feeling the pinch big time now and it's only a matter of time before they become an angry constituency.

Folks concerned with continued inflation will be watching what takes place in DC over the weekend closely. The Build Back Better Plan floated by the Biden administration has been whittled down to just over a trillion dollars. Some folks thought a vote would be held in the coming days with Biden claiming he was confident it would pass. However late last night Pelosi backtracked saying there was no such vote on the schedule just yet.

Looking ahead, there isn't much in the way of big news expected today. It's likely we will be at the mercy of outside markets and continued inflation chatter.

Corn steady to 1 higher

Beans 3-4 higher