Weekly Market Update 10/21/2021

Here is your weekly market update from the Garden City Co-op Grain Origination Team.

Trivia

1. What world famous magician died on Halloween?

2. About how many apples does it take to make one gallon of apple cider?

Answers at the bottom.

Market News

• Stock markets are mixed today, still hovering slightly below all-time highs after a line of strong earnings results had stocks higher on the week. Many analysts indicate that high earnings will need to be maintained to keep stocks where they are, with tapering by the Fed on the horizon. Many goods-producing companies are highlighting concerns about rising input costs and ongoing supply chain issues, but investors have been able to look past that at least for now.

• Energy markets are lower today, after gains yesterday. Profit taking is the major driver behind today's pullback after oil hit multi-year highs. Gasoline demand over the past four weeks was at 9.41 million barrels per day, an increase of 9.8% from this time last year. 

• The U.S. Department of Labor reported initial unemployment claims for the week ending October 16th was 290,000, a decrease of 6,000 from last week and the lowest level for initial claims since March 14, 2020.

Weather

Make sure you are dressing in layers because big temperature swings are the name of the game this week! Nighttime lows are mostly going to hang out in the 40s, with daytime highs in the 60s and 70s. It looks like it should be a big week for harvest progress, as chances for moisture are slim in the extended forecast. This week's drought monitor didn't have any massive changes, but the northern plains did see some relief with recent rains pulling much of the Dakotas out of the extreme drought mark.
 

Corn

Corn has been mixed on the week and is feeling some pressure today, but the big story for the week was yesterday dealing with ethanol. Corn has a solid day of news yesterday with ethanol reaching a 28-month high. EIA data for the week ending 10/15/21 showed ethanol production at 1,096K barrels per day, up from the prior week’s 1,032K barrels per day and up from last year’s 913K barrels per day for the same week. Ethanol production used is also up from prior week’s 102.9 million bushels, estimated at 109.2 million bushels of corn used. Positive news out of Mexico with reports that they are NOT going to ban importing GMO corn. Very good news considering the U.S. is the number 1 exporter of corn to Mexico. Rumors of China buying corn were also in the air yesterday and a reported flash sale this morning confirmed just that. Corn is in the red today even after the flash sale was announced this morning, look for this to continue into the close today with no new fresh news. Export inspections were higher than trade estimates this week showing 38.4 million bushels shipped, Mexico was the top destination with 13.9 million bushels, then China with 5.7 million bushels. Exports sales were at the high end of trade guesses at 50.1 million bushels of corn sold, “unknown” is the top buyer with a net 18 million bushels. Funds showed corn as sellers along with most grains, selling 22,665 contracts lowering the long to 227,931 contracts. Crop progress reported this week corn being 52% harvested. This was below the trade guess by 2%. Harvest has been slowed by heavy rains crossing over the Midwest last week. Kansas is on last years pace at 75% complete with harvest.

Wheat

Wheat is pulling back today coming off the hot start to the week. Overall wheat is fundamentally back to not have a strong fall off and hang in there. KC wheat has been following strength from the MGEX this week and will keep KC wheat buoyed. Rumors yesterday of China kicking the tires on SRW also spurred yesterday’s rally and kept momentum in the green. Export inspections this week report 5.1 million bushels loaded with HRW leading the way at 3.5 million bushels. Export sales for wheat were towards the lower end of trade guesses with 13.3 million bushels sold, HRW led the way again at 7.6 million bushels. Export sales were impressive given how high U.S. exports for wheat are priced compared to worldwide prices. Last Friday’s CFTC report showed KC wheat funds reducing their long position by 1,660 contracts lowering their long to 48,286. Crop progress reported winter wheat planting at 70% complete for the U.S. Kansas was pegged at 75% complete behind last year’s pace of 83%, but ahead of the 5-year average of 68%.

Soybeans

After last week’s thumping beans are on the offensive this week rebounding well before today’s pressure. With the rally in the energy market this week soybeans have had a leg to stand on and have been supported. Yesterday the news of China being in the market for beans was well received. Soybeans are taking a break today as are most grains and energies across the complex. No flash sales reported today, and we are still well behind USDA’s bean export projections. Something to keep in mind if we keep seeing a lack of sales for soybeans the USDA will have to lower exports and create an even larger carryout number – meaning bean prices will keep trending lower. Export inspections were strong for beans, reporting 84.4 million bushels shipped. Export sales were also well received reported from 10/14/21 with 105.8 million bushels sold. Funds were sellers last week, reducing the long by 20,385 contracts to bring the current long to 29,068 contracts. Harvest is still chugging along at 60% complete for the U.S. still behind last year’s pace of 73% due mostly to harvest rains. Kansas reported in at 41% complete also behind last year’s pace of 61%, but ahead of the 5 year average of 35% harvested.

Milo 

Milo is yo-yoing this week, along for the volatile ride in corn futures. The most exciting thing in the milo world is a noticeable uptick in export sales in this morning's report: 10.3 million bushels. This is a marketing year high, blowing the 10-week average of 1.9 million bushels out of the water. These bushels were primarily to China and unknown destinations. The pace is still 19% below last year's book of sales, but ahead of the USDA export estimate. Export inspections were reported at 1.5 million bushels, down from last week at 2.8 million. USDA estimates the crop at 59% harvested, as harvest continues to roll on across our draw area.

Trivia Answers

1. Harry Houdini. He died Halloween 1926, after an over eager fan punched him in the stomach, causing his appendix to burst.

2. About 36 apples