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Grain Market Recap: 

It was a tough week for grain bulls. In spite of numerous headlines indicating further escalation within the Black Sea region, corn, soybeans, and wheat all closed the week notably lower. This is the first time in more than a year that the markets effectively shrugged off supply-side risk headlines stemming from the Russia-Ukraine conflict. In short, this means one thing - demand needs to step up to the plate. Grain futures will have difficulty sustaining rallies until the demand outlook improves. 

Corn:

December corn futures managed to break an 8-session losing streak on Friday, settling 3 ¾ cents higher at 497-2. Ultimately, the Dec corn contract shed 33 cents this week after opening at 524, and is closer to testing a new contract-low than it is to a new recent-high. Settling below the psychologically significant 500 level is less than ideal, but we still remain in our 497-502 pivot pocket. There are a number of factors working against corn bulls right now - seasonality, favorable forecasts, higher expected carryout, and sluggish demand. But, how long can we move in the same direction? Whether it’s a substantial flash-sale, or an unrealized forecast, it seems that the December corn contract is ripe for a shorter-term, counter-trend bounce higher. Even if that materialized as the result of short-covering. In the case that corn futures manage to break lower to begin next week’s trade, we could find support between 480-482. The bearish sentiment permeated from a managed money perspective as well. While funds are still holding a net-long position of 12,675 contracts, short positions swelled by 20,988 contracts this week . Holistically, the broken down position of speculative funds is now holding long 188,722 contracts, and short 176,047 contracts. 

Soybeans:

This week’s price action in soybeans was the canary in the coal mine. In spite of 134,000 MT in flash sales on Thursday, the contract failed to put together a holistically constructive day for bulls. For the week, November soybeans settled 49 ¼ cents lower at 1333-2. Year-over-year (old crop) soybean sales at 1.942 billion bushels are on pace to meet  USDA’s projection of 1.980 billion bushels (down 8% from last year), but new-crop commitments remain concerning. Even amidst the Thursday’s flash sales, and stronger-than-expected new crop sales, total new crop commitments of 297 million bushels thus far notably lags last year’s same-week new crop commitments of 561 million bushels. While there is substantial turbulence in the Chinese economy currently, it should be regarded as a forewarning of potential demand concerns as harvest approaches. As it stands, China is only on the books for 3.0 MMT of soybeans compared to 8.7 MMT at the same time last year. Even still, soybeans remain the most fundamentally well-supported commodity within the grain complex. Managed money continues holding a sizable net-long position of 90,316 contracts in spite of this week’s selloff. Broken down, that is 123,434 long positions and 33,116 short positions.

Wheat: 

Like corn, September wheat futures broke a 7-session losing streak on Friday settling 6 cents higher at 633. The price action in wheat was discouraging this week. We had multiple headlines indicating that the Black Sea Grain Deal is far from being extended, and the market’s disregard should not be ignored. Bottom line, demand needs to materialize. U.S. wheat prices (on an F.O.B basis) remain significantly higher than Matif wheat. We need to see non-Ukranian or non-Russian tenders for wheat be filled in order to put together a winning week for wheat futures. Thus far, our 4-star support pocket of 622-633 has held, but we need more than supply-side risk headlines to ultimately push higher. The exogenous rallies we’ve had over the last few weeks have been very short lived, and from a speculative standpoint, presented selling opportunities. If we cannot prove that U.S. origin wheat can be sold abroad, that will likely continue. Managed money seemingly agrees, as their net-short position has swelled to 57,020 contracts (42,109 last week). Broken down, that is only 57,652 long contracts, while the short positions total 114,672. Open interest across the grain complex is substantially lower than it has been historically, as the total positions of speculative funds in the September wheat contract serves as a blaring example of that. 

TRANSCRIPT

Well, another wild week is in the books coming into the day. In December, corn futures were lower for eight consecutive sessions. But today that streak came to an end. With the December contract settling three and three quarters, that entire 2.97 and a quarter still that did little to alleviate losses for the week, which amounted to $0.33. November soybeans.

They were able to gain ground today as well, finishing the day $0.08 higher to settle at 1333 and a quarter for the week, though, new crop beans lost 49 and a quarter since September. Chicago wheat today, $0.06 higher, close at 633, a trim losses for the wheat that 71 and a quarter since our updated weather outlooks continue to show near-normal temperatures coupled with above normal precipitation levels throughout much of the Midwest through the middle of August.

And many analysts see that as a catalyst for this week's weakness as it could help crop conditions improve nationwide. A recent customer based crop survey put out by Stone Access Week showed an estimated national average cornmeal that 177 bushels per acre in the national average, soybean yield up 50 and a half bushels per acre. USDA will update their estimates in next Friday's report, and with new crop weekly options expiring on the day of that report, market analysts and participants may look to utilize these short term options as a cost effective way to help manage price risk or express an opinion in the markets.

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