Like the results along the Pro Farmer Crop Tour, it was a bit of a mixed bag for the grain markets this week. Opportunistic demand has picked up with flash sales reported nearly every day of this week, and weekly export sales have been encouraging. As long as the dollar remains weak, U.S. grains coming out of the Gulf should be competitive with Brazil The Crop Tour’s findings mostly corroborated the USDA’s projections, but there were a few notable differences. Specifically, the Crop Tour’s projections for 181.1 national average corn yields were 2 BPA lower than USDA’s projected 183.1 national average. The Minnesota corn numbers are likely the biggest contributor to that difference as the USDA expects an average of 185 BPA there, while the Crop Tour data suggested it was around 170 BPA. On the other hand, the Crop Tour painted a rosier picture for soybean yields relative to the USDA by 1.7 BPA.
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Corn:
The slow bleed in corn continued this week, with the December corn contract settling 1 cent lower to 391. Fundamentally, things have been looking up for corn. Mexico purchased 4.3 mil bu in a flash sale on Thursday, and new crop export sales were strong. USDA reported new crop sales at 1,291.2k tons – much higher than average trade estimates, and up 40% from last week’s 920.9k tons. Meanwhile, the technical landscape there is an interesting one. Volatility is virtually non-existent with a 14-period average true range of just 7 ½ cents. While the price slowly trickles lower, RSI has steadily increased since the July 24th lows. The bottom may not be in yet, but the signs of exhaustion are evident. Managed money remains pessimistic on corn, with Friday’s Commitment of Traders report showing a net-short position of 257,896 positions across futures and options. While managed money’s net-short position grew by 8,889 positions from last week, they are well off from their record net-short position of 353,983 positions from July 9th.
Soybeans:
Soybeans managed a higher weekly close for the first time in 3 weeks, settling 15 ¾ cents higher at 973. American soybeans are seemingly back on the menu for global importers, as flash sales were recorded each day of this week. The weakened dollar is making Gulf bids increasingly competitive. Moreover, with rate cuts looming, the DXY may continue to slide. Like corn, USDA reported impressive new-crop export sales this week for soybeans, totaling 1,676.9k tons – up nearly 25% from last week’s 1,344.2k tons. On the technical side, Wednesday’s failure to break and settlement above 985 ½ was deflating, and contributed to Thursday’s sell-off. However, forecasts calling for extreme heat may be able to add some steam for bulls headed into next week. The 20-day moving average has been a major sticking point for soybeans this year, and a clean break above 985 ½ sets up for a test of the moving average around 996, and ultimately the 1000 handle. Managed money is reportedly holding a net-short position of 182,768 across futures and options. That’s an increase of 8,321 positions from last week’s 174,447 position net-short, and they are now within 3,000 contracts of their record net short position of 185,750 established in early July.
Chicago Wheat
December Wheat was the biggest loser this week, shedding 26 ½ cents to settle at 528. The market is seemingly discounting supply-side concern narratives out of France and Eastern Europe, because the sell-off appears to be accelerating, despite sitting at 4-year lows. Moreover, managed money significantly trimmed their net-short position this week, which is now just 52,985 positions – 20,303 fewer positions than last week.
