Grains Rally on Bullish USDA Numbers

Morning Outlook

Grains are higher. SF is up 10 cents and near 11.56. SMZ is near 389.5. BOZ is near 36.44.  CZ is up 2 cents and near 4.25. WZ is up 3 cents and near 6.11. KWZ is up 4 cents and near 5.64. US stocks are higher. Dollar is higher. Crude is higher. Copper is higher.

Chinese Ag futures (January) settled up 59 yuan in soybeans, up 15 in Corn, up 50 in Soymeal, up 104 in Soyoil, and up 116 in Palm Oil. Malaysian palm oil prices were up 93 ringgit at 3,349 (basis January) supported on ideas of tight supplies.

The Brazilian growing regions over the 6 to 10 day period continues with showers and thunderstorms bringing fair to good amount of rainfall to 95% of the growing areas. Temps will run close to average. The Argentine growing regions over the 6 to 10 day period continues with light to moderate rainfall favoring the far northeastern growing areas with things quiet elsewhere. Temps will run near average before cooling for the weekend and early next week.

The 6 to 10 day US forecast has dry weather dominating the Plains and Midwest. Temps go back up to above average for most of next week.

USDA estimated US 2020 corn crop near 14,507 mil bu. Total 2020/21 corn demand is estimated near 14,825. This includes exports near 2,650. Carryout is now estimated near 1,702. Private estimates range from 1,627 to 1,650. This suggest corn prices may need to trend higher to slow demand and help increase US 2021 corn acres. USDA lowered Ukraine crop to 28.5 mmt and exports to 22.5. Most of Ukraine exports go to EU. USDA dropped EU imports to 20.0 mmt from 24.0. Combined Brazil and Argentina crop is near 160 mmt versus 153 last year. Exports are estimated near 73 mmt versus 72 last year. US exports are estimated near 67 mmt versus 45 last year. Dry weather could reduce supplies there. USDA baseline 2021/22 crop is estimated near 14,890 and carryout is near 1,792. One guess is now near 1,532.

USDA estimated US 2020 soybean crop near 4,170 mil bu. Total 2020/21 US soybean demand is estimated near 4,519. This includes exports near 2,200. Some are as high as 2,325. USDA carryout is now estimated near 190. Private estimates range from 100 to 115. This suggest soybean prices may need to trend higher to slow demand and help increase US 2021 soybean acres. Combined Brazil and Argentina crop is near 184 mmt versus 175 last year. Exports are estimated near 92 mmt versus 102 last year. US exports are estimated near 60 mmt versus 45 last year. Dry weather could reduce supplies there. USDA baseline 2021/22 crop is estimated near 4,465 and carryout is near 155. One guess is now near 105.

USDA estimates World 2020/21 wheat crop near 772 mmt versus 765 last year. China is 136 vs 133 ly, India 107 vs 103, EU is 136 vs 155. Russia 83.5 vs 73.6 and US 49 vs 52. Exports are estimated near 190 mmt vs 192 last year. Rússia 39.5 vs 34.4, EU 26 vs 38, Austrália 19 vs 9.5, US 26 vs 26, Canada 25 vs 24, Ukraine 17 vs 21 and Argentina 12 vs 13 ly. World wheat end stocks are estimated near 320 mmt versus 300 last year. Wheat prices should follow corn unless Black Sea and US 2021 supplies drop.

On USDA Tuesday, Managed funds were net buyers of 9,000 contracts of SRW Wheat; bought 57,000 Corn; bought 33,000 Soybeans; bought 9,000 Soymeal, and; net bought 5,000 lots of Soyoil. We estimate Managed Money net long 50,000 contracts of SRW Wheat; long 364,000 Corn; net long 278,000 Soybeans; net long 100,000 lots of Soymeal, and; long 105,000 Soyoil.

Preliminary Open Interest saw SRW Wheat futures down roughly 4,400 contracts; HRW Wheat down 1,600; Corn up 33,600; Soybeans up 14,300 contracts; Soymeal up 2,700 lots, and; Soyoil up 3,100.

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