I have been searching for the appropriate phrase this morning. “A day late and a dollar short,” or how about, “better late than never.” Either would seem appropriate to describe the long-awaited moisture that has returned to Northern Illinois over the past 48 hours or so. Right where I sit, we have received a bit over 2” during that time frame and it continues to accumulate. By no means am I complaining, but unfortunately, it also brings to mind another old saying, “too little, too late,” as most crops in this area appear to be in various stages of maturation. I did notice one field of beans over the weekend that was completely green, but that was the exception, not the rule.
This extended dry spell, as well as a few other weather anomalies, most specifically the derecho storm in Iowa, did accomplish one thing, and that was to turn the larges spec from bear to bull, or almost bull in most grain and soy markets. Last week that group was buyers of over 46,000 contracts of Chicago and KC wheat, 49,500 soybeans, 28,000 contracts of meal and oil, and 49,500 corn. The only two markets they are not net long in are KC wheat, where they hold an insignificant short of 1,300 contracts, and corn, where they remain short just under 28,000 contracts. Needless to say, this is a far cry from the 260,000+ short position they held back in July. Actually, if you dig just a bit deeper into only the “Managed Money” crowd, we find that after buying over 80,000 contracts of corn last week, they are now net long just over 18,000 contracts, and in beans, this group has accumulated long positions of just over 162,000 contracts.
The Upper Midwest is not the only place to experience rains as of late as the East coast of Australia reports beneficial moisture as well, and this has been timely enough to prompt ABARES to boost crop estimates. They bumped the wheat production estimate from 26.67 MMT to 28.91, barley from 10.6 to 11.2 MMT, and canola was increased from 3.2 MMT to 3.4. If there were ever a country that deserved a rebound in output, it would be Australia. Unfortunately for farmers down there, the relationship with China appears to be moving from bad to worse. As reported previously, China has basically nixed trade after the Aussie government had the nerve to suggest that the handling of the coronavirus by Beijing should be looked into and evidently, over the weekend, two Australian business journalists were rushed out of the country after Chinese police visited their homes last week and told them they were to be questioned over a “national security issue.” This follows an episode last month in which another Australian journalist was “detained” for questioning.
Back here in the US, it is report week again with the “word of gov” scheduled to be released on Friday. Here are some of the trade survey estimates to set the stage; For corn, the average estimate for yield came through at 178.3 bpa (-3.5 from Aug.), giving us a total production estimate of 14.89 billion bushels. The 2019/20 carryout estimate stands at 2.234 billion and 2020/21, 2.456 billion. The average bean yield estimate is 51.8 (-1.5 from Aug.), with the estimated production coming through at 4.294 billion. 2019/20 carryout is expected to slip to 603 million bushels and the 2020/21 number down to 467 million. The 2020/21 wheat carryout is expected to change little at 925.5 million. Looking at the world ending stocks, corn for 2019/20 is expected to total 310.9 MMT and for 2020/21, 311.11. Beans for the 19/20 at 95.7 and 20/21, 93.11, and finally wheat in 19/20 at 300.46, the rising to 315.81 in 20/21.
As we begin the week in the macros, we find energies and metals under pressure, the equity trade extending the break from last week, and the dollar surging to the upside.
