Sunday Night Calls

November 29, 2020 by Steve Freed VP Grain Research
Grain calls are higher. Soybean 3-5 higher, corn 1-3 and wheat 1-3. SF is near 11.91. SMF is near 396.3. BOF is near 38.43. CH21 is near 4.33. WH21 is near 6.06. KWH21 is near 5.65. Drier than normal weather over 35 pct of South America main growing areas should help push soybean, soymeal and corn prices higher. Tightening global vegoil supply and increase India demand for palmoil should help push soyoil futures higher. Wheat remains a follower. Forecast of lower US Dollar could also help demand for US grain exports. Lack of December deliveries could also be supportive.
CRB Commodity Index traded higher last week and above the down trend line of resistance. Surge in energy prices and most commodity prices could now suggest a test of 500. A proven vaccine could increase demand for energy and raw material. Improving China economy could also help commodity prices. New Month could also bring in new commodity longs. US Dollar dropped below 92 support. Talk of higher US 2021 debt could send the Dollar down to 88.
March corn futures made new highs. Concern about South America and Ukraine weather lowering supplies there and increasing demand for US exports could tighten US corn balance sheet. Most look for a US 2020/21 corn carryout closer to 1,550 than USDA 1,702. US exports could be closer to 2,750 mil bu vs USDA 2,650. Some also hope demand for US ethanol will increase post US vaccine. Some are now estimating US 2021 corn crop near 15,200 mil bu but a 2021/22 carryout near 1,537.
Jan soybean futures are back near 12.00, SMF near 400 and BOF near 40. Number suggest a trade over those key levels of resistance. Some feel numbers suggest SF closer to 13.00 and a chance in January 2021, SH could test 15.00. Currently the total demand for US soybean exports suggest a 50-100 mil bu increase from USDA November guess. This could bring US 2020/21 carryout closer to 100 than USDA November guess of 190. Some are now estimating US 2021 soybean crop near 4,500 mil bu but a 2021/22 carryout near 135.
Wheat is wheat. US SRW futures tend to follow Russia prices. Back and forth Russia weather record high domestic prices and subsidizing domestic users to help export outlook keeps prices volatile at best. Tight EU feed grain supplies could reduce their wheat exports as they use wheat fir feeding. Drier than normal US south plains weather is supportive to KC.
On Friday, Managed funds were sellers of 6,000 contracts of SRW Wheat, 15,000 Corn; 7,000 Soybeans, 1,000 soymeal and bought 2,000 lots of soyoil. We estimate the funds are net long 24,000 wheat, 282,000 corn, 231,000 soybeans, 79,000 soymeal and 113,000 soyoil. CFTC report was delayed until Monday due to last weeks holiday.