Morning Comments October 21, 2021

Bin sunset harvest

It was a big day yesterday, with soybeans now trading back up to levels not seen since before the USDA surprised us with an extra 81 million bushels of old crop supplies at the end of September.

As we discussed earlier this week, excitement in the energy complex is spilling over big time into world vegetable oil markets as palm oil values have hit a new all-time high and soy oil is doing its best to challenge market highs put in place earlier in the summer.

Crude traded to new highs yesterday as well after a surprise reduction in stocks and indications of much better-than-expected gasoline demand last week.

Not to be left out, corn continues to trade to the highest levels seen since before the September stocks report as ethanol production has ramped up as well. Last week's production figures were the largest we've seen since 2019 and were just under a record, while stocks grew slightly on the week. 

From an overall fundamental picture, not much has changed from a supply and demand standpoint, but with all that is happening in the outside market structure, commodities as a whole are a freight train, with most bears deciding to sit on the sidelines until this most recent move is complete.

Looking ahead, we will get updated export sales figures this morning. Traders are expecting reasonably decent corn and wheat sales, with soybean sale expectations creeping up on 2 million metric tons for the week. 

Recent currency moves have helped improve Chinese crush values, though there is some concern over what that market could look like going forward as hog producers in the country try to find a happy medium when it comes to production and prices. Talk is all of the beans offered out of government reserves this morning were purchased.

Brazilian weather has been great with limited complaints to start their growing season, while we will continue to monitor dryness in Argentina. With La Nina now all but guaranteed we will continue to watch Argie weather closely as it is the area in South America most likely to be impacted. 

This will likely have a much larger influence on corn values than beans as producers there are expected to ramp up corn production this year as export taxes and cost structures limit a farmer's desire to plant beans.

Russian wheat production figures are already outpacing USDA estimates with a portion of the harvest left to complete, though rumors indicate another increase in their export tax is likely. This is working to keep wheat firm.

We'll be watching export sales figures closely this morning to see just how much demand is happening without a daily flash sale. Energies will likely be the leader in direction as nearly all markets look to be starting the day by taking a breather. 

Corn down 2-3

Beans down 7-8