Though outside markets found a way yesterday to recover after Friday's sell off, grains were unable to hold on to early morning strength, closing lower across the board.
Many folks attributed yesterday's weakness to money flow and the fact that speculative traders have been piling back into grains pretty extensively these last few weeks. Looking at yesterday's commitment of traders report, we see specs the longest in corn they have been since May when contract highs were achieved, while managed money in both Minneapolis and Kansas City wheat is within shouting distance of a record long position.
ABARES, or Australia's version of the USDA, released their updated production outlook early in the day yesterday, potentially spooking some of that length out of wheat as the group expects a record crop there for the second year in a row.
At 34.4 million metric tons this crop estimate would add 106 million bushels to the global wheat crop versus the most recent USDA estimate. Some private analysts believe production estimates could continue to grow in the coming months as well. While quality issues have impacted the crop in some regions of the country, it appears as though overall milling quality supplies could maintain a somewhat normal level thanks to better-than-expected yields.
Yesterday's export inspection figures were a bit lower than we've seen recently, though soybeans continue to dominate much of the elevation space at export terminals, breaching 2 million metric tons inspected for another week.
Corn inspections came in well below what is needed to ship each week to meet USDA projections yet again, though folks continue to say a big uptick will be seen soon. We did see China in for the second week in a row taking just under 4 million bushels of corn. With an estimated 430 million bushels or so worth of sales on the books with China, we most definitely need to see a pretty extensive uptick in shipments there soon.
Wheat inspections came in around half of what is needed to meet USDA projections as American wheat continues to maintain its place as some of the most expensive wheat in the world.
We did see Egypt in yesterday buying a record amount of wheat on a one-time tender, as they appear to be tired of paying more every time they come back to the table. Sellers were split between Russia and Romania, with Ukraine in on a decent chunk for good measure.
Outside of fundamental news, it appears we are back in risk-off mode this morning as the Moderna CEO tells the Financial Times that it's unlikely current vaccines will be effective against the new variant.
In addition to questions about efficacy, we are finding Omicron in other countries throughout the world while COVID cases in general seem to be surging in the U.S., Germany and abroad.
Again, for many these developments will have little effect on their day-to-day life, while in other parts of the country and the world we may see returns to lockdowns or at the very least slowdowns, leading to questions regarding future demand.
As of this writing, crude is trading at its lowest level since the end of August, with Dow futures looking to open nearly 500 lower on the day.
Looking ahead, it is hard to tell what these markets want to do. From a technical standpoint it feels like what should have been a buy signal yesterday in corn became a selling point, and this is becoming frustrating for many expecting this market to follow through on its breakout.
The wheat chart as a whole looks abysmal, though the “story” in wheat hasn't really changed much in the last 3 trading days. With the end of the year coming and so much uncertainty when it comes to where we head a correction should not come as unexpected, though one can't help but wonder where a correction could lead if we were to run into further global economic turmoil.
Bottom line, we are still at historically high levels with decent cash values present for just about anything, maybe taking some risk off the table here on some open bushels wouldn't be the worst thing one could do as we head into December.
Markets today will be driven by COVID developments and money flow.
Corn down 7 to 8
Beans down 13- 14