Written Commentary
GRAINS OUTLOOK
Happy Holidays. Grains are higher. SH is up 12 cents and near 12.72. SMH is near 421.7. BOH is near 41.02. CH is up 1 cent and near 4.48. WH is up 1 cent and near 6.31. KWH is up 1 cent and near 5.88. US stocks are marginally higher. US Dollar is lower. Crude is lower. CBOT grain trading will close early today and will be closed Friday for Holiday.
For the week, SRW Wheat prices are up roughly 16 cents; HRW up 16; HRS up 12; Corn is up 11 cents; Soybeans up 44 cents; Soymeal up $15.00, and; Soyoil up 120 points. Crushing margins are up $0.01 at $1.05 (March); Oil share unchanged at 32%.
Chinese Ag futures (May) settled up 62 yuan in soybeans, up 8 in Corn, down 4 in Soymeal, up 214 in Soyoil, and up 246 in Palm Oil. Malaysian palm oil prices were up 21 ringgit at 3,556 (basis March) at midsession following rival veg oils.
Key to prices as we finally end 2020 will be South America weather, money flow , vaccine versus virus, US and Black Sea 2021 weather, new US administration policy on trade and domestic spending and US Fed action on money and interest rate policy. Most look for higher prices in Q1 2021 due to tightening US corn and soybean balance sheets. Managed funds are long grain futures and should add to longs. SH objective could be 13.00 then 14.00, CH 4.60 and WH 6.50. Some still feel BOH could test 50 cents. SMH 450.
One grain group estimates US 2020/21 corn carryout near 1,465 mil bu versus USDA 1,702. Thus due to higher export demand. Same group could see US 2021 corn crop near 15,156 and 2021/22 carryout near 1,549. This could support futures, basis and spreads.
Same grain group estimates US 2020/21 soybean carryout near 100 mil bu versus USDA 175. Thus due to higher crush and export demand. The group could also see US 2021 soybean crop near 4,600 and 2021/22 carryout near 256. This could support nearby futures and inverse over new crop futures.
Same grain group estimates US 2020/21 wheat carryout near 884 mil bu versus USDA 862. This due to lower domestic use. he group could also see US 2021 wheat crop near 1,900 and 2021/22 carryout near 851. 2021 HRW crop 710 vs 659 ly and HRW carryout 226 vs 348 ly. SRW crop 325 vs 266 ly and SRW carryout 148 vs 105 ly. HRS crop 517 vs 530 ly and carryout 284 vs 284 ly.
On Wednesday, Managed funds were buyers of 10,000 contracts of SRW Wheat; bought 20,000 Corn; net bought 9,000 Soybeans; bought 5,000 lots of Soymeal, and; bought 5,000 lots of Soyoil. We estimate Managed Money net long 27,000 contracts of SRW Wheat; long 345,000 Corn; net long 253,000 Soybeans; net long 105,000 lots of Soymeal, and; long 113,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures up roughly 8,900 contracts; HRW Wheat up 1,400; Corn up 10,800; Soybeans down 11,600 contracts; Soymeal up 250 lots, and; Soyoil down 7,600.
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