December corn prices were down 6.75¢ and November soybean prices were down 5¢. December wheat prices were down 37. 5¢.
While the USDA crop report was not bullish is apparently was not bearish enough for the trade versus their anticipation reflected by the price collapses recently into the report. There were in fact technical key reversals higher for both corn and soybeans from below $5 Decembers futures and the $12.60 November futures theoretical support. This should give a new line in the sand from which a “giving up” of any potential gains will be measured.
Corn and soybeans both saw increases in ending stocks in spite of increasing exports and some other demand line items. On the surface the carryover for soybeans in particular reflects merely a 1 bu. change lower would mean 85 million bushels less and an ending stock picture of 100 million bushels versus the projection today of 185; those two are worlds apart in price discovery. Even 2022 November soybeans posted a reversal suggesting just how important South America will be for 2022 and perhaps concerns over acreage mix in 2022. We will need more hrsw acres and soybean acres in order to build stocks to comfortable levels.
The global outlook saw corn saw rise 7 mmt, soybeans 1.6 mmt, and wheat 4 mmt, all in part to other countries seeing increase carryover stocks from 2020/21 which were carried into this new marketing year. Even the U.S. carry-in to this year was raised 70 million bushels by lowering usage of ethanol and exports from expectations which begs the question on the accuracy again on usage.
Technically a lot of damage has been done to prices ever since May 2021 and the timing and price was right to lift (take profits) on hedges and roll the risk into cheap put options which I did for clients booking some good profits and taking on known risk just in case. So far so good. It would be impressive to see an early bottom posted and soybeans seem to suggest that is the case. Short term stocks are tight and once the farmer moves the anticipated 50% of sale in the cash market, we’ll see just how good demand is during the second half-way point of harvest. If exporters haven’t gotten their book filled, it could be an interesting winter once again.
911 Remembered: Like most people, I remember where I was on 911 in 2001. Ironically I am at the same spot today as I was then, right at my desk at the farm office near Rockford, IL contemplating markets. It seems like such a short time ago!
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Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.
