Soybeans And Corn May Be Overbought

Morning Outlook

Grains are mixed. SH is up 2 cents and near 12.67. Last week’s high was 12.75. SMH is near 417.1. Last week’s high was 422.5. BOH is near 40.81. CH is up 2 cents and near 4.53. WH is unchanged and near 6.26. KWH is down 1 cent and near 5.87. Some feel soybean and corn futures may be overbought. US stocks are higher. US Dollar is marginally lower. Crude is higher. Gold and copper are higher. POTUS signed the relief bill avoiding government shutdown.

For the week, SRW Wheat prices were up roughly 16 cents; HRW up 19; HRS up 14; Corn was up 14 cents; Soybeans up 40 cents; Soymeal up $9.00, and; Soyoil up 150 points. Crushing margins were down $0.06 at $0.98 (March); Oil share up 1% at 33%.

Chinese Ag futures (May) settled up 24 yuan in soybeans, up 28 in Corn, up 24 in Soymeal, down 56 in Soyoil, and down 64 in Palm Oil. Malaysian palm oil prices were down 28 ringgit at 3,541 (basis March) tracking weaker Chinese vegoil prices.

Brazil weather in this coming week is unlikely to change greatly with rain falling most frequently and most significantly from Mato Grosso to Parana, Sao Paulo and Minas Gerais. The bottom line for Brazil is good for center west and center south crop areas even though some areas will not get abundant rain. Southern areas could see drier weather.

Argentina weather over the 3-day period ending Sunday morning was warm and generally dry in the central and southeast parts of the nation. Net drying occurred in most of the nation and topsoil moisture is rated short to very short in the majority of the nation’s key grain and oilseed production areas while subsoil moisture was rated short to very short in the west and adequate to slightly short in eastern parts of the nation.

Dry Argentina forecast plus ongoing strike could increase demand for US soybean/soymeal. There is talk that Argentina export group has offered a 35 pct increase in salary and Covid bonus to help end the strike. Lower SA crops could drop US 2020/21 to 100? Key remains when USDA decides to raise US demand, lower carryout, SA weather and China buying.

CH made new highs near 4.53. Lower SA crops could increase US export demand and push CH to 4.90. 2021 South America corn crop could be down 9-15 mmt from USDA Dec guess. US 2020/21 carryout 1,000? Key remains when USDA decides to raise US demand, lower carryout and raise cash US price outlook.

WH tested October highs. KWH is near 2 year high. Close over 5.90 KWH could trigger new buying. Dry US plains/Russia 2021 weather, Russia export tax and lower EU exports could allow WN to test 6.50. Key remains demand for food in 2021 and vaccine versus increase virus cases and 2021 World wheat supplies.

On Thursday, Managed funds were net sellers of 2,000 contracts of SRW Wheat; bought 10,000 Corn; net bought 5,000 Soybeans; sold 4,000 lots of Soymeal, and; bought 3,000 lots of Soyoil. We estimate Managed Money net long 25,000 contracts of SRW Wheat; long 355,000 Corn; net long 258,000 Soybeans; net long 101,000 lots of Soymeal, and; long 116,000 Soyoil.