Weekly Market Wrap-Up

Grain Market Commentary

Friday, November 20, 2020

by Jordan Morris, Senior Originations Merchant, The Andersons

Another very solid week of gains in the grain markets.   Monday started the week with January beans around $11.50, December corn near $4.09, and December wheat opened the trade week at $5.93.  As of 1:15pm today, the weekly gains should be around 14c in corn and 33c in beans.  Wheat gaining only slighty and should to pick up around 3 cents.

Drivers in the markets have been much of the same this week.   Whats the demand today? Where does the carryout seem to be?  Do the funds see any concerns with the figures? 

Weather in South America is still catching attention.  Rio Grande de Sul and Parana in Brazil have been seeing rainfall.  More rainfall this weekend.  Temperatures are near normal.  Argentine weather is seeing much of the same. Isolated showers through Saturday in Cordoba and Northern Buenos Aires.  Temperatures are pretty close to normal.

Export sales this week were very good.   Net sales for the week ending November 12th were announced Thursday morning. 

Net soybean sales were 1.387 mil tons vs espectations of 600k- 1.2 mil tons.  China accounted for 76% of the sales total.  For the 2020/2021 marketing year, bean sales are already at 85.7% of the USDA forecast.  This is about 30% above an average pace.  

Net corn sales were 1.088 mil tons vs expectations of 600k- 1 mil tons.   Top buyers were Mexico and Japan.  China did buy corn this week, albeit not the largest chunk, but they are still expected to import a record total from the US during the 2020/2021 marketing year.

Funds continue to be owners of a large net long position in corn and soybeans.  I estimate corn length at 255,000 contracts, and beans long near 260,000 contracts.  Wheat is around even, only long around 20,000 contracts.

With as long as the funds are, the corn and bean charts in well into overbought territory.  RSI levels are elevated, and stochastics are starting to turn over. This doesn’t spell doom and gloom by any means, but could be a reason for the trade to take a breather and cool off this incredible pace.   Be mindful of the technical impact moving forward.  The charts are shown below.