Latest / Professional Ag Marketing Podcast / Wheat leads, corn follows, bulls win the week

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Wheat leads, corn follows, bulls win the week · Professional Ag Marketing Podcast

• 0:00
  SPEAKER_00: I got you're locked in to the Grain Market Talk Podcast.
• 0:07
  SPEAKER_00: Fast updates, market movers, and the grain news you need right now.
• 0:12
  SPEAKER_00: Trading commodity futures and options involves substantial risk of loss and is not suitable for all investors.
• 0:22
  SPEAKER_02: Today is August 14th.
• 0:24
  SPEAKER_02: I've got Jaden with us here today.
• 0:25
  SPEAKER_02: We're going to talk about the grain markets.
• 0:27
  SPEAKER_02: How's it going, Jaden?
• 0:28
  SPEAKER_02: It's going good, Mike.
• 0:29
  SPEAKER_02: Awesome.
• 0:30
  SPEAKER_02: Well, let's get started just with a little weekly recap.
• 0:33
  SPEAKER_02: We had a lot going on this week.
• 0:35
  SPEAKER_02: Uh I really want to start with just a couple things.
• 0:38
  SPEAKER_02: We had quite a bit of rainfall, eastern cornbelt, that flooded out a few areas.
• 0:43
  SPEAKER_02: What can you tell me about some of the weather that we saw in Indiana, et cetera, here over the week?
• 0:48
  SPEAKER_01: Yeah, Mike.
• 0:48
  SPEAKER_01: So the rainfall returned to the eastern part of the cornbelt like it did in early June there.
• 0:53
  SPEAKER_01: So some of those spots, uh, eastern Indiana, uh, western Ohio, uh, like you said, got a lot of rain.
• 1:00
  SPEAKER_01: Some spots 11 to 12 inches.
• 1:02
  SPEAKER_01: So it'll be interesting to see how that's gonna impact the crop over there and if the USDA will recognize it or not.
• 1:09
  SPEAKER_02: Yeah, it's some nasty spots.
• 1:10
  SPEAKER_02: I would probably say tough luck for the guys out east that had to experience it.
• 1:14
  SPEAKER_02: Gonna be pretty hard for that to actually hit the market level, other than their local basis at those spots.
• 1:21
  SPEAKER_02: But nonetheless, the east keeps getting some rain, Iowa's getting some rain, Western Corn Belt keeps feeling and looking like it's gonna rain, but kind of struggling to actually rain, it seems like out here.
• 1:30
  SPEAKER_02: We are getting awfully dry.
• 1:32
  SPEAKER_02: But it would appear, if you look at some of the data that's been provided to us here, it would look like early dent is still only about 60 to 75 percent of the final yield.
• 1:45
  SPEAKER_02: So August will still be the largest, um, a very large portion of how this yield will end up on corn in that weight and kernel fill uh as this crop figures itself out here, Jaden Mulnut.
• 1:59
  SPEAKER_01: Right, Mike.
• 2:00
  SPEAKER_01: And looking at the forecast too, that eastern part of the corn belt is not gonna slow down with rainfall.
• 2:05
  SPEAKER_01: So it'll be interesting to see.
• 2:07
  SPEAKER_01: I mean, if they keep getting this rainfall as Pearl Farmer goes on their crop tour next week, what are they gonna say about all that rain?
• 2:14
  SPEAKER_02: Yeah, I would probably say they're gonna find some pretty poor crops out and about with where their route is going through.
• 2:21
  SPEAKER_02: I would uh I would be surprised if they didn't find some pretty ugly samples out there to say the least, and especially as they kind of start off in the Western Corn Belt, too.
• 2:29
  SPEAKER_02: Uh some of what they're gonna see in the Dakotas is gonna look pretty rough.
• 2:33
  SPEAKER_02: But one other thing we did see this week was uh, well, let's start at the Wazd airport.
• 2:38
  SPEAKER_02: Now, the day of the WASD Airport was interesting because we were up quite a bit on the wheat market ahead of the Wazd airport, which we'll get to in a second, but uh we had a pretty strong day.
• 2:48
  SPEAKER_02: And uh what we saw was really they shifted a significant portion of their attention to the WASD Airport starting on uh Wednesday there, and uh we we impacted those balance sheets quite a bit.
• 3:00
  SPEAKER_02: It looked like the USDA went down to a 180.7 yield from their 183 trend line average.
• 3:06
  SPEAKER_02: Your range was from the 180s up to about 184 uh point eight.
• 3:10
  SPEAKER_02: So we were at the very bottom end of that range.
• 3:12
  SPEAKER_02: They're expecting 182.4.
• 3:15
  SPEAKER_02: Balance sheet tightened up quite a bit because of that.
• 3:18
  SPEAKER_02: But one of the things we did see, they increased acres on both corn and soybeans planted.
• 3:23
  SPEAKER_02: So that mainly offset anything that we were going to gain or lose from production.
• 3:29
  SPEAKER_02: So not too much of a change between the two of them.
• 3:32
  SPEAKER_02: Old crop, they increased exports just a wee bit, so we did have a few less carry-in bushels.
• 3:37
  SPEAKER_02: But the combined combination of lower than expected yields, strong export demand, uh ended up with some reduced ending stocks really gave us some support in the corn market this week, didn't it?
• 3:47
  SPEAKER_01: Yeah, right, Mike.
• 3:48
  SPEAKER_01: So if you look at that balance sheet on the corn side of things, 1.65 carry out, 10.1 stocks to use.
• 3:54
  SPEAKER_01: And historically, if you get much below that 10% stocks to use ratio, you know, that that means higher elevated prices above that five dollar level.
• 4:02
  SPEAKER_01: And normally when you're lower than that 10% stocks to use, there's a pretty good floor at uh 450 level.
• 4:08
  SPEAKER_01: So that's really interesting to see that that lower yield come in on the lower uh range estimates there.
• 4:14
  SPEAKER_02: To go against kind of the numbers you and I had out of the crop tour, I noticed our yields by state from what we went through were pretty close to their yield estimates, really.
• 4:24
  SPEAKER_02: Uh one of the ways we think that yield could go up a little bit would be in Minnesota and Iowa.
• 4:29
  SPEAKER_02: I think they're lacking a little bit there.
• 4:31
  SPEAKER_02: Those yields could come in a little higher, but we noticed those outside states, Kansas, Oklahoma, Texas, they just wrecked those numbers, didn't they, to bring that yield down to 180.
• 4:41
  SPEAKER_01: Right.
• 4:41
  SPEAKER_01: And like you said about Minnesota, they came in at a 197, records of 201, we would argue.
• 4:46
  SPEAKER_01: And we get around the office here, the local where we're from here, it looks pretty rough the southwest corner.
• 4:51
  SPEAKER_01: But the rest of the state looks looks pretty good.
• 4:53
  SPEAKER_01: Out east, they've been receiving a lot more rainfalls and up north as well, north of Marshall, Minnesota, there, where there was a quite a big hole there last year.
• 5:01
  SPEAKER_01: Um we're not seeing that this year.
• 5:03
  SPEAKER_01: And a lot of farmers in that area are expecting big yields.
• 5:05
  SPEAKER_01: So really we were pretty close on the Iowa, but the Minnesota one we we think can come up some more.
• 5:10
  SPEAKER_02: On the soybean side, let's switch over to that a little bit here.
• 5:13
  SPEAKER_02: Soybeans benefited from uh trimming yield estimates as well.
• 5:17
  SPEAKER_02: 52.7 on the soybeans, so not very big of a decrease from that 53 trend line.
• 5:23
  SPEAKER_02: Uh, they were estimated just above uh 52.9 on the average trade guess.
• 5:28
  SPEAKER_02: So we came in at 320 million ending stocks, up just 10 million from the prior report with that increase in acres.
• 5:35
  SPEAKER_02: Uh, not a whole lot of changes out of soybeans, but at the same time, we've had pretty okay weather for the soybean crop.
• 5:41
  SPEAKER_02: So uh not really expecting much uh out of the soybean market here, are we?
• 5:45
  SPEAKER_01: Right, Mike.
• 5:46
  SPEAKER_01: And I I think that soybean yield number can come up.
• 5:48
  SPEAKER_01: We're getting a lot of August rains through most of the corn belt there, so it'll be interesting to see what Pearl Farmer kind of finds there next week.
• 5:55
  SPEAKER_02: So a few of the key takeaways 180.7 yield on the corn, 52.7 on the soybean, so a little bit lighter than expected there.
• 6:02
  SPEAKER_02: We've had strong exports on the corn side that are continuing.
• 6:05
  SPEAKER_02: Uh China's been picking up pretty strong uh exports as well as of late for new crop corn uh soybeans.
• 6:12
  SPEAKER_02: Crush demand's pretty strong, ethanol grind is pretty strong.
• 6:15
  SPEAKER_02: Uh you saw innings docs trimmed a little bit on the corn side, and we found some bullish price action there.
• 6:21
  SPEAKER_02: But really, it wasn't just WASDA drivers.
• 6:24
  SPEAKER_02: Wheat, I think, helped corn out a lot here.
• 6:26
  SPEAKER_02: So a few of the things really helping corn uh on the wheat side was the European wheat and production concerns there.
• 6:33
  SPEAKER_02: It's just very hot drought across a lot of Europe.
• 6:36
  SPEAKER_02: So we've had short covering on grains in those markets.
• 6:39
  SPEAKER_02: Black Sea uncertainty seemed to be the main driver this week in the grain markets.
• 6:45
  SPEAKER_02: Uh the wheat market's just been hot.
• 6:47
  SPEAKER_02: We had a really hot close today.
• 6:49
  SPEAKER_02: We traded most of the day up 30 cents on the front month of Kansas City wheat.
• 6:53
  SPEAKER_02: Uh, just a lot of strength kind of moving in from that Black Sea uncertainty.
• 6:57
  SPEAKER_02: What is going on in Russia and Ukraine that kind of forced the wheat market to have this recovery at the end of the week?
• 7:03
  SPEAKER_01: Yeah, Mike.
• 7:04
  SPEAKER_01: So Russia, Ukraine have been bombing each other's grain terminals.
• 7:07
  SPEAKER_01: And as we know, that they're two of the largest wheat exporters there, so that kind of bottlenecks that region.
• 7:12
  SPEAKER_01: And this is kind of a key time of the year for Russia to export some wheat, so that's impacting the wheat market there.
• 7:18
  SPEAKER_01: And then money flow has just been flowing into the grain markets, and wheat has been leading the way.
• 7:22
  SPEAKER_01: And and if you look at the corn managed money, we were pretty long last Tuesday, and I would expect we've added, you know, around 80,000 this week of long positions.
• 7:31
  SPEAKER_01: So it'll be interesting to see what kind of position we hold in this corn market and in a time of year where we normally don't hold very long.
• 7:37
  SPEAKER_01: So if if that Russia-Ukraine war conflict, whatever you eases a little bit, it'll be interesting to see how it really impacts the corn market going forward.
• 7:46
  SPEAKER_02: Yesterday there were reports that uh Ukraine had sent a letter to Russia about a truce.
• 7:53
  SPEAKER_02: Uh it fell on deaf ears.
• 7:54
  SPEAKER_02: Russia basically said they have no basically no reason to give them a ceasefire at this point.
• 8:03
  SPEAKER_02: Uh so they kept going.
• 8:04
  SPEAKER_02: And basically that gave us quite a bit of strength going into the end of the week here.
• 8:08
  SPEAKER_02: So a lot of the Russia-Ukraine news, definitely one of the main reasons we saw this row crop market trade higher at the end of the week, and really throughout the week, too.
• 8:16
  SPEAKER_02: Like I said, Wednesday, we were higher on Russian Ukraine news on wheat as well.
• 8:20
  SPEAKER_02: So if that was a main, main driver through these markets throughout this week, Jaden.
• 8:26
  SPEAKER_02: Where do you think we're sitting now on these grain markets on corn and soybeans?
• 8:32
  SPEAKER_02: We got through a very key week here with the August Wazday report.
• 8:36
  SPEAKER_02: We had a big shift in yields.
• 8:38
  SPEAKER_02: How do you think the markets are sitting?
• 8:39
  SPEAKER_02: Fundamentals, trend, momentum.
• 8:42
  SPEAKER_01: Yeah, when I look at the corn chart, you know, we're kind of in a wedge pattern there, hanging around that 483 level.
• 8:47
  SPEAKER_01: I'd say our next spot of resistance is around that 490 level, but it's going to be really hard to rally any further, I think.
• 8:55
  SPEAKER_01: Um, for this time of the year, as we got harvest pressure in front of us, but like we said earlier, if that that war keeps, you know, tacking onto this wheat market, I would expect corn to follow.
• 9:06
  SPEAKER_01: But I think the trade really here is going to be looking at the pro farmer crop tour this next week uh for near-term news.
• 9:13
  SPEAKER_01: But overall, the big picture, I would say demand is leading the way.
• 9:17
  SPEAKER_01: We're we're continuing to see really good exports on both corn and soy, and with the tight balance sheets from the world perspective on corn, um, uh I think the long-term pitcher is pretty bullish, Mike.
• 9:28
  SPEAKER_02: We had a high on December corn in that chart there that Cades got up on Wednesday at 481 and a half.
• 9:35
  SPEAKER_02: We were holding that high level almost throughout the entirety of this day.
• 9:39
  SPEAKER_02: Then all of a sudden, at 107 today, going into the close, we rallied rapidly, about three cents higher to close out our trading today.
• 9:48
  SPEAKER_02: Uh, a very, very strong close in that corn market.
• 9:51
  SPEAKER_02: So I know the bulls loved to see that old high taken out, close above that Wednesday high, uh, kind of a break in that downward channel that we've been looking at as uh many were looking for that to try to hold.
• 10:03
  SPEAKER_02: So we'll see with that bullish price action.
• 10:06
  SPEAKER_02: We floated down to the 20 and 100 day moving average the last couple days as well and found pretty good support as those are crossing over.
• 10:14
  SPEAKER_02: 20 days going to be above the 100 day now.
• 10:17
  SPEAKER_02: Uh a few technical reasons there that you keep finding support around 470.
• 10:21
  SPEAKER_02: Uh, we'll see what next week brings here.
• 10:24
  SPEAKER_02: But at this point, that was a very strong close, Jaden.
• 10:27
  SPEAKER_02: So a little surprised there uh with how the action treated uh treated itself going into the weekend.
• 10:33
  SPEAKER_02: Normally, when you see a report day come out Wednesday, for example, you saw a big up day, when you immediately see lack of follow-through, you see a big sell-off.
• 10:41
  SPEAKER_02: Normally that's not a very good sign, is it?
• 10:43
  SPEAKER_02: It's usually a bearish indicator.
• 10:44
  SPEAKER_02: So today's price action, mainly from the wheat, again, trading that, uh, giving the corn market a little bit of uh support that maybe some of these technicals weren't looking for.
• 10:55
  SPEAKER_01: Right, Mike.
• 10:55
  SPEAKER_01: I would say there's maybe 10 cents of Laz Day premium in there, but also another 15 cents of wheat premium in there.
• 11:01
  SPEAKER_01: So it'll be interesting to see how the market reacts to headlines and the wheat coming forward.
• 11:06
  SPEAKER_01: Absolutely.
• 11:06
  SPEAKER_02: All right, thank you for tuning in today.
• 11:09
  SPEAKER_02: Please click the link on the description below.
• 11:11
  SPEAKER_02: You can get our daily market commentary, you can get some other cool market research as well.
• 11:15
  SPEAKER_02: Go back through our crop tour data, kind of play around with your yield estimates as well compared to the USDA and ours.
• 11:22
  SPEAKER_02: We will see you next week.
• 11:24
  SPEAKER_02: Thank you, Jaden, for joining us.
• 11:25
  SPEAKER_02: Thanks for having me on, Mike.