Special Market Update
Grain Market Commentary
Tuesday, September 15, 2020
By Tiffany Weitzel, Originations Merchant, The Andersons
I’m always hesitant to get to carried away with bullish news but with soybeans over $10 across the board it’s hard not to be excited. Crop condition ratings continue to fall, with Monday’s report showing bean ratings down 2% to 63% good to excellent. This is still above last year’s 54% with 37% of the crop dropping leaves compared to 13% last year. China continuing to buy from the U.S. NOPA crush conditions are expected to be down from July, and the past 4-month highs but above last August, which was the largest August crush on record. Export inspections are up 49% for the year. As of the close last Tuesday the COT had beans pushing 200k contracts long. The record is 253k during the 2012 drought.
Corn is riding beans coattails. National ratings fell a point from last week to 60% good to excellent vs 55% last year but below the five-year average of 65%. Corn denting and maturity are above pace at 89% and 41%. Harvest is 5% complete. This time last year was 3%. Expecting to see harvest increase Kansas corn and Iowa soybeans this week. Ethanol production is expected to be down 20% for the year and not back to pre Covid levels until 2022. Nearly 250 ethanol plants shut down around the world, but production has ramped back to within 10% of August last year. Much Ethanol demand is waiting on policy implementation and regulation. The Trump administration rejected waivers from the U.S. oil refiners that asked to be spared from their obligation to blend biofuels into their fuels. This was a big win for the Ag sector, as least temporarily. Funds are currently long 55k contracts. If they continue to buy that would add support to the corn market. CZ21 has traded 3.90, the current contract high of 4.23 was made during the summer of 2019.
The forecast for most of the belt remains dry through the end of September. Putting in incremental orders as the market climbs continues to bring your average up. One sale near the top doesn’t do much for you except give you bragging rights. Don’t try and outguess the market, be strategic and look not only at the crop in the field but what’s in the seed bag for 2021. Once you’re in the combine priorities shift and you don’t want to miss these opportunities.