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Funds are a Record Long on Corn · Professional Ag Marketing Podcast

• 0:03
  SPEAKER_00: 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.
• 0:21
  SPEAKER_02: All right, today is September 4th.
• 0:23
  SPEAKER_02: I've got Jaden here with us.
• 0:24
  SPEAKER_02: We're gonna talk a little bit about the grain markets.
• 0:27
  SPEAKER_02: We're gonna talk about wheat, oil, corn, soybeans, basis, wazdeerport, all of the things above.
• 0:34
  SPEAKER_02: So let's get after it.
• 0:35
  SPEAKER_02: Jaden, how's it going?
• 0:36
  SPEAKER_02: It's going good, Mike.
• 0:37
  SPEAKER_02: How about yourself?
• 0:38
  SPEAKER_02: Not too bad.
• 0:40
  SPEAKER_02: Let's start off with the wheat market.
• 0:42
  SPEAKER_02: Looks like uh Putin this week at the end of the week has been trying to push down the wheat market in a couple instances.
• 0:48
  SPEAKER_02: He's been talking the possibilities of peace where his quote seems like a little bit of a far stretch after being at war with each other for the last handful of years.
• 0:59
  SPEAKER_02: But uh that has put a little bit of downward pressure on the wheat market at the end of the week here.
• 1:04
  SPEAKER_02: That in turn has put some pressure on the corn market after seeing pretty substantial rallies up until this point.
• 1:11
  SPEAKER_02: Uh let's talk about the funds getting into this as well before we wrap up wheat, but corn, we're at a record long fund position as of today's WASD or uh CFTC report on futures and options at uh just by a smidge, it looks like here, aren't we, Jaden?
• 1:29
  SPEAKER_01: Right, Mike.
• 1:29
  SPEAKER_01: So we've been talking about that over the last couple weeks here.
• 1:32
  SPEAKER_01: We kind of knew the funds are pretty long, and as of Tuesday, they were a record long there on futures and options around 430,000.
• 1:39
  SPEAKER_01: So normally, historically, when when we look at that, it normally is a nice selling opportunity for a real crop producer.
• 1:46
  SPEAKER_01: So we would say over the near term here, with the Wazley report coming here next Friday, um, there's definitely some downside risk in this corn and soybean market as well.
• 1:55
  SPEAKER_02: That there are on the uh wheat market to wrap up uh just that as well.
• 1:59
  SPEAKER_02: We saw some weakness on the Black Sea export front.
• 2:02
  SPEAKER_02: Looks like Putin's trying to make it more available and uh a little bit cheaper in the Black Sea region for exports on wheat to try to cheapen wheat up to fund his war if need be for the time being.
• 2:15
  SPEAKER_02: That is not anything new.
• 2:17
  SPEAKER_02: He's been doing that the whole way along here to finance the war, and uh really that has kept global supplies more amp than uh ample than what they were maybe anticipated, because it kept wheat going out the door, uh, keeping them at pretty low levels.
• 2:32
  SPEAKER_02: So that's something worth mentioning.
• 2:34
  SPEAKER_02: But I I just want to say I mentioned wheat first because it seemed like corn has tight fundamentals, which we'll get to in a moment, which make it an easy buying opportunity for funds.
• 2:44
  SPEAKER_02: But it seems like day-to-day trading is being influenced heavily by wheat and oil trade.
• 2:49
  SPEAKER_02: And when wheat has an update and oil has an upday, it seems like corn follows.
• 2:54
  SPEAKER_02: But if there's pressure on wheat and oil, uh that's been putting pressure on the grain markets lately, specifically corn and soybeans.
• 3:00
  SPEAKER_02: So that's why I wanted to start with the wheat side.
• 3:02
  SPEAKER_02: I know we don't get to talk about it a whole lot, but um that has been a little bit of a bearish influence at the end of this week on very pushed, um, very, very uh forced methods to try to get wheat down from Putin there.
• 3:17
  SPEAKER_02: On oil as well, we've had a few different things.
• 3:20
  SPEAKER_02: You've had uh the Iran situation, the Iran conflict and Strait of Hormuz risks that uh escalated here a little bit this week.
• 3:27
  SPEAKER_02: So crude oil's been going up.
• 3:29
  SPEAKER_02: Diesel prices are basically at a record high in the United States right now, and tight supplies for both U.S.
• 3:35
  SPEAKER_02: crude and diesel as well has uh kept some tightness there.
• 3:39
  SPEAKER_02: Um obviously, other than going into harvest here, and this is when farmers use a lot of fuel, uh, the impacts on fertilizer has been substantial here as well the last week.
• 3:50
  SPEAKER_02: Uh, ample nights of uh of$30 type raises on urea is making that market more expensive as we speak here as well.
• 4:00
  SPEAKER_02: So that oil market not just having an impact directly on futures on corn, on buying opportunities and selling, but also on the fertilizer input side as well.
• 4:11
  SPEAKER_02: I want to talk a little bit just about the futures movement on corn and soybeans this week, Jaden.
• 4:17
  SPEAKER_02: What can you tell me about just what you noticed on week over week activity on December corn and November soybeans this week?
• 4:24
  SPEAKER_01: Yeah, if I look week over week, Mike, December corn actually unchanged on the week for December 26, December 27 up nine cents on the week there.
• 4:32
  SPEAKER_01: So that tells me uh this uh rally here isn't just a supply rally.
• 4:38
  SPEAKER_01: This is more maybe more of a longer-term demand-led uh problems with fertilizer type rally here.
• 4:45
  SPEAKER_01: And then looking at the soybeans here, we gained about 22 cents on the week there, and wheat lost about 50 there.
• 4:52
  SPEAKER_01: So it seemed like uh as we went throughout the week, you know, like you said, hard red winter wheat had some downward pressure on these grain markets.
• 4:59
  SPEAKER_01: Corn might be down 10 to 12 in the morning, and the funds just bought the dip every single morning around 9 a.m.
• 5:04
  SPEAKER_01: And we closed near green on the day or just a tad lower.
• 5:07
  SPEAKER_01: So the funds really want to own this corn market, and it's pretty important looking at this price action during the day.
• 5:14
  SPEAKER_02: Now, the uh the price action fundamentals, all this on corn so far, we've had really good demand.
• 5:21
  SPEAKER_02: Uh, you've had tight balance sheets, but it seems like yield, if we do have a below a 180 yield, that balance sheet gets really tight, which we can look at in a minute.
• 5:29
  SPEAKER_02: But we had a little bit more of a yield update this week.
• 5:32
  SPEAKER_02: Allendale came out, uh 178 and change there, I believe, on theirs.
• 5:37
  SPEAKER_02: Profarmer was 173, for example.
• 5:39
  SPEAKER_02: So when I start to look at some of these numbers that uh they're coming out with 178.7 on Allendale to be exact there.
• 5:47
  SPEAKER_02: You know, when you start to type in anything below 180 yield, I mean, it starts to tighten things up pretty quick, doesn't it, Jaden?
• 5:54
  SPEAKER_01: Right, Mike.
• 5:55
  SPEAKER_01: And if you kind of look at the balance sheet we have up there, so on the right side is that Allendale yield 178.7.
• 6:01
  SPEAKER_01: Then we also lowered beginning stocks for uh the new crop marketing year, as old crop exports are subject to increase in this next report running about 50 million there.
• 6:10
  SPEAKER_01: So I dropped beginning stocks there about 45 million bushels, but new crop exports are running about 30% below uh last year's level.
• 6:19
  SPEAKER_01: So new crop export pace probably needs to come down.
• 6:22
  SPEAKER_01: So even though you do drop two bushels, you maybe get a bushel or so credit back from the exports, lack of exports for new crop.
• 6:30
  SPEAKER_01: So really the ending stocks don't change too much, still around that 1.5.
• 6:34
  SPEAKER_01: But historically, under 10% stocks to use, that is a very tight stocks to use ratio looking over history, and we kind of gotta you know make up for that in higher prices.
• 6:44
  SPEAKER_02: I want to create a little bit of a timeline for you guys here.
• 6:47
  SPEAKER_02: Today's Friday.
• 6:48
  SPEAKER_02: You've got a three-day weekend, no trade on Monday, come back Monday night, open back up, and then immediately Friday at the end of next week, you're gonna have a WASD report.
• 6:56
  SPEAKER_02: It's gonna be a lot of moving, a lot of shaking ahead of that WASD report.
• 7:01
  SPEAKER_02: You're at a record now fund long position as of last Tuesday this week.
• 7:07
  SPEAKER_02: Uh very interesting setup going forward.
• 7:10
  SPEAKER_02: You've got a crop that is uh pretty much being microwaved at the end of its growing season here with 90 degree temps plus going into Labor Day.
• 7:18
  SPEAKER_02: Uh very odd there, drying down quick.
• 7:20
  SPEAKER_02: Harvest is starting here locally.
• 7:22
  SPEAKER_02: A lot of guys starting soybeans on some early beans today as we speak, I would argue.
• 7:28
  SPEAKER_02: And uh, we've seen some interesting action there.
• 7:31
  SPEAKER_02: So a few things I just wanted to cover there.
• 7:34
  SPEAKER_02: Uh, what else do you got to cover today on the grain markets, Jaden?
• 7:37
  SPEAKER_01: Yeah, soybeans in the teens,$13 plus.
• 7:40
  SPEAKER_01: Um, China supposedly bought about 33% of their pledge there.
• 7:44
  SPEAKER_01: Um, watch that market here closely as President Trump and G will meet at the end of September there.
• 7:50
  SPEAKER_01: It seems like this demand story on soybeans, well, you talk about crush or exports from China, is keeping a real good floor on this market.
• 7:57
  SPEAKER_02: Now, corn, tight balance sheet for the US, tight balance sheet for global, uh, demand strong, and basically we're relying upon if you have a 180 or higher yield, it sets that balance sheet.
• 8:08
  SPEAKER_02: Okay.
• 8:09
  SPEAKER_02: Soybeans, now, when you look at that, it looks comfortable face value on the balance sheet on soybeans.
• 8:16
  SPEAKER_02: But if China does buy all the soybeans they say they're going to buy, it tightens up very, very fast, if not turned negative.
• 8:22
  SPEAKER_02: And if we have anything under a record or trend line yield, let's just say a 53.3, like ProFarmer thinks or others, it starts to tighten up that balance sheet very tight as well.
• 8:33
  SPEAKER_02: So at this point, weather in August has looked somewhat conducive to okay soybean yields in the United States.
• 8:39
  SPEAKER_02: Uh, not quite a bad as yield of yield expectations for those locally here, a lot of 50s, it sounds like just on these early soybeans that's being harvested.
• 8:48
  SPEAKER_02: But uh at this point, it'll be very interesting to see on the soybeans how the balance sheet will react with uh that meeting at the end of September here.
• 8:56
  SPEAKER_02: And if China does get to somewhere around half sold or for half uh sold on their target for purchases of their 25 million metro tons for this next upcoming year.
• 9:07
  SPEAKER_02: Not that was the rumor that they were gonna try to get to by their September 24th meeting.
• 9:12
  SPEAKER_02: And they're what 33% of the target pretty much today, so had some more buying there this week.
• 9:17
  SPEAKER_02: All right, thank you everyone for tuning in.
• 9:19
  SPEAKER_02: Please catch us next week.
• 9:21
  SPEAKER_02: We're gonna have all three shows out yet again.
• 9:23
  SPEAKER_02: It was great to be back this week in the office, Jaden.
• 9:26
  SPEAKER_02: So catch us uh next time.
• 9:28
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• 9:32
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• 9:35
  SPEAKER_02: Thank you for joining me today.
• 9:37
  SPEAKER_01: Everyone, have a good Labor Day.