Morning Comments

Dec corn +8 at 4.1325

Nov beans +18 ½ at 11.0475

The DOW is UP

USD is Down

Crude oil -.24 at 38.91


Good morning,

Overnight the ag markets were quite firm, benefitting from a strong finish Wednesday; corn would finish 6–8 cents higher by the morning break in old crop positions. Corn finished just two cents away from last Tuesday’s ‘gap lower’ trade – will be interesting to see if this functions as a magnet or resistance? Outside markets remain on a positive footing, eyeing what appears to be a favorable political outcome (divided government). The tilt back toward “La Nina” dryness in South America has been a factor since the start of the week and continues to offer the market significant support. The weekly export sales report helped corn extend modest overnight gains with another strong showing. Net new old crop sales of 2.611 million metric tons (mmt) were 75% above the prior four week average and toward the high-end of analyst expectations. Mexico was the big buyer of note (they also picked up 541k for new crop), followed closely by unknown (782k), China (210k), South Korea, and Colombia. This leaves outstanding corn sales at a whopping 26.335 mmt, which is more than triple the amount of sales on the books at this time last year (granted, last year was a sluggish one!). Though shipments to date have been behind trend, we suspect they will pick up soon, especially given the growing diversity of export originations. One point of note is that this is somewhat old news; the pace of 8 AM sales announcements has slowed dramatically this week (106k mt to sorghum only today). Market is also positioning for Tuesday’s USDA November crop report, with wire services starting to publish analyst surveys overnight.

With the voting booth closed and the streets relatively calm, Wednesday was ‘get me back in’ day. Corn traded either side of unchanged most of the session but caught a bid mid-morning and ultimately finished 4-5 cents higher. Managed Money traders were likely the major buyers as they look to reestablish abandoned length, picking up roughly 20,000 corn Wed. This would leave them net long at least an estimated 270,000 futures and options going home tonight. Cash markets were headlined by the continued sharp downswing in Gulf values, but the interior had equal amounts of gainers and losers.

The weekly EIA report leaned a little bearish for ethanol but could be construed slightly positively for corn. Ethanol production added +2.1% this week to a 961,000 bbl/day rate, which would consume 5.09 billion bushels of corn over a marketing year. Imports made a surprise appearance and domestic demand was light, but an implied uptick in ethanol exports helped keep inventory from building much (just +0.4% this week to 826 million gallons, which is still perilously close to a four year low). Not a great day for the crush; ethanol finished close to flat, which would imply spot margins move to only ~15-25 cents/bu processed, or 5-10 c/gal, both including fixed costs. This is down about 10 c/gal from recent highs. Tough to say what the elections portend for this sector, though we note the EPA will come out with 2021 biofuel targets soon.

Overnight grain markets traded higher led by beans trading into new contract highs above $11. Technically, between yesterday and the overnight, the gaps in corn, wheat, beans, and meal have all been closed. The strength is supported by anticipation of further tightening on US and global balance sheets in next week’s crop report along with weather uncertainty in the southern hemisphere. In a La Nina year the markets are very responsive to a dry start to the season although the forecasts do offer some help and production expectations still remain strong at this early point. The weather concerns have overshadowed a slowdown in daily export sales announcements, perhaps because you already have over 81% of our projected soybean export program booked just two months into the marketing year.

There is talk of China kicking the tires on some additional US soybean purchases but with Brazil planting rapidly catching up, additional US sales are expected to be limited to filling in the back end of their seasonal buying program. The USDA reported new daily sales of 106 tmt of sorghum to China and 33 tmt of soybean oil to India – both for 20/21.

The US election remains unsettled for now, but equities are sharply higher while the dollar is down -.81 and lending some additional macro fuel to the grain rallies.

Weekly export sales featured a big number in corn at 3.15 mmt combined, wheat sales of 597 tmt, beans 1.531 mmt, meal 332 tmt and oil 7 tmt were each within expectations. In China’s shopping cart this week, they bought 212 tmt of corn, 341 tmt of sorghum including 98 moved over from previously announced unknown sales, zero wheat, 811 tmt of beans including 579 from unknown and a cancellation of 67, 47 trb of cotton including a cancellation of 38 in the old crop with new sales of 9 trb in the new crop, 3.6 tmt of beef and 10.3 tmt of pork.


Outstanding soybean sales on the books stand at 31.853 mmt compared to 11.565 mmt this time last year. Of that total, China is earmarked for 14.686 mmt with unknown for another 10.503 mmt. Accumulated exports marketing year to date total 16.648 mmt compared to 9.334 mmt this time last year. Combined sales plus shipments total 48.501 mmt, or 1.782 billion bushels. This represents 81% of our projected 2.2 billion bushel export program for the year, just two months in.


Darren, David, and Elizabeth

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