Grain Markets Search for Support as Black Sea Talks Approach

Fear remains the constant factor in recent trade as the funds are fleeing their net long bean position as their losses mount while the grain traders remain heavily on the sell side as the fear of the Black Sea shipping corridor re-opening continues to drive corn to new 4-month lows with wheat testing significant psychological support. Today’s election results will not have much if there is any impact on the ag markets, as the entire grain and soy complex landscape are crowded with bearish leaning news with no apparent bright spots emerging.

News and Notes:

• There are no domestic or world weather concerns which have allowed the bearish trends to dominate the news. SA weather will not become a market moving factor until Thanksgiving to early February.
• The monthly spot wheat chart is on Page 2 and highlights then price collapse when the Black Sea export corridor initially opened in June/July 2022  (1) and what has happened to price (2) since the November 10^th meeting with Russia and Ukraine to discuss reopening shipping. While the price loss in 2022 was larger, the percentage of loss to total price was roughly the same in the 25-30% range. The only weekly technical support that remains is the 20-DMA (red line) at $6 which was breached in today’s trade. Corn will not be able to rally without wheat finding a bottom. Coincidently, the monthly spot 100-DMA is the last layer of technical support and is also right at $6. December wheat holding $6 is very important as there is no underlying technical support until the low-$5 area.
• Last week’s open harvest window helped harvest speed along with corn harvest up to 74% (+14%) with beans advancing to 88% (+9%). Both paces are slightly behind the 5YA due to the wet start and downed corn in many of the WCB states. The US winter wheat crop was rated 44% G/E (50% expected), but initial condition ratings have little correlation to final yield. While we are harvesting, Brazil is busy planting with their total bean crop 53% planted (+13%) with their corn crop 63% (+5%) planted. Both of Brazil’s totals are slightly ahead of last year’s pace.
• Today saw more daily flash sales reported with Mexico on the board again today for 12 MBU of corn, 5 MBU of corn to S Korea and a small 5 MBU sale of beans to Unknown. The corn business is normal and expected and the bean purchase is not enough to move the needle.
• A footnote on my note yesterday about control of the Senate and house Ag committees. Senator Klobuchar (D-MN) is running for Governor of Minnesota and leading in the polls. The Senate Ag website is not clear who would be the ranking Democrat if the Democrats win the Senate. Rep Angie Craig will be the ranking Democrat on the House Ag committee.
• The final October average insurance revenue prices are $4.76 for corn and $12.64 for beans. The February revenue insurance averages were $4.62 and $11.09 which means any insurance payment based on revenue loss will favor beans unless there was significant yield loss. Please check with your insurance agent to see if your coverage will payout out this year.

Election day is always a busy and nerve-wracking day of news, but little of it will affect grain and soy price for eh rest of the week. There are opinions on what President Trump may or may not do regarding China trade policy after the election, but no one knows for sure. The scheduled peace negotiations on November 10^th and 11^th to reopen the Black Sea have put the grain trade in a state of panic while the bean collapse is much more tied to the funds holding a 1 BBU long when the grain markets collapsed. The funds were a great friend on the August rally and are an unbeatable foe in the 2-month-old collapse. The USDA “found” an extra 500 MBU +/- in the last 6-weeks, which normally would force a 40-50 cent market break instead of a $1 break. Always know what the funds are doing when you are making marketing decisions.