Morning Comments November 1, 2021

Grain Bins

Another strong close for corn on Friday as speculative traders/funds have reentered the market with a vengeance. Soybeans struggled a bit to stay green, while Chicago wheat managed to tread water buoyed by new contract highs in Minneapolis wheat. 

We continue to see spillover strength from energies in the corn market. The idea that corn used for ethanol production could be some 200-300 million bushels higher than current USDA estimates has been well discussed but it's just enough of a story to bring some bullish enthusiasm back into the market structure.

While soybeans are struggling with growing carryout estimates in analysts' balance sheets, lots of folks are working to find ways to drop corn carryout back to a billion bushels or so. Of course, these types of outlooks are assuming we ship everything on the books for corn exports and then some as well as see a reduction in production.

We will get an updated production outlook next week from the USDA, as well as an updated supply and demand outlook, so an increase in production/ending stocks chatter this week should be expected. 

Overnight both oil and natural gas markets appear to be trading a touch higher, though we are starting to see some indications that the market has done its job and supply is working quickly to catch up to demand. Opec+ will meet this week to discuss production changes, with talk the Iranian nuclear talks could restart soon, possibly working to remove sanctions currently in place on Iranian oil exports.

The Chinese government has done its job to cool coal prices there, with a continued drop in values and continued chatter that stocks are building. 

The G20 summit was held over the weekend with President Biden claiming he is doing everything he can to work with others around the world to cool inflation and reduce energy prices. Though spending nearly 2 trillion dollars in the Build Back Better plan sends some conflicting messages when it comes to that whole working to battle inflation thing.

Looking ahead we will get updated export inspection numbers this morning as well as get an update on harvest progress this afternoon. Export inspections are expected to remain strong for soybeans, we should also start to see a solid uptick in corn shipments as we traditionally see corn start to take center stage in our export program November forward.

Continued rains are making for a soggy harvest nightmare for most across the Corn Belt, with traders expecting around 80% of the soy crop to be harvested with 75% of corn complete. Wheat planting is all but done in Northern portions of the Soft Red Wheat Belt with talk that acres will be less than expected both in Michigan as well as Ontario thanks to a wet October.

Overall we will continue to see values driven by outside markets and new spec trader interest. The short crop long tail phenomenon is a real one, and we will continue to see strength in small grains, as well as Minneapolis wheat and canola, drive the bus to a certain extent here for the time being.

We are seeing some worry over Covid outbreaks in China. With talk of lockdowns and slowdowns in travel there adding to some already concerning economic data. With China the cornerstone in much of the recent moves higher in just about everything commodity-related we will have to watch any indications of further economic troubles closely.

Corn up 3 to 4

Beans down 2 to 3