Special Market Update

Grain Market Commentary

Tuesday, November 17, 2020

by Tiffany Weitzel, Originations Merchant, The Andersons

The continued rise in the soy complex has kept everyone hopping. The monthly U.S. soybean crush reached a new high in October. Monday the National Oilseed Processors Association (NOPA) reported 185.245 million bushels of soybeans crushed last month, up from 161.491 million bushels in September. Well above the average trade guess of 177.1.  Compare this to 175.397 million bushels in October 2019. This was the largest crush on record, surpassing the record previously set in March 2020 of 181.374 million bushels. Soybean futures continue their climb setting new 4 ½ year highs almost daily. There is also a long-term dryness trend in Southern Brazil and Argentina lending some uneasiness to the market.

South America which favored greatly throughout the U.S. - China trade war is not getting much of an opportunity to take advantage of the rapidly climbing market. Interestingly Brazil ran out of soybeans earlier this year, mush sooner than anticipated due to the increased sales to China. So much in fact that they had to import soybeans. Something rarely done by the top soybean exporter. 30,000 tonnes of those imports came from the United States. That is a tiny amount by global trading standards but the most U.S. soybeans Brazil has purchased since 1997.

Us Soybean harvest is at 96% complete, Corn at 95%. Both up 4% from last week, and for all intents and purposes basically complete.

Traders see at least an addition 250 million bushels of corn demand from China as a reason to suspect tightening ending stock projections. Exports were stronger as well, coming in at 817,476 mt from expectations ranging from 650,000 to one million.

We’ve seen the energy markets develop an aggressive rally to start the week, with global equity prices strong and positive economic Chinese data. Vaccine news no doubt lends to the trend but there is still an overshadowing of the reality we may have an economic slowdown as the coronavirus worsens and economies are forced into temporary shutdowns.