Commentary
Two more flash soybean sales were reported this morning, including 132k tonnes of new-crop beans to “unknown” and 198k to China. This marks the 9th trading day in a row Chins has been in buying. Day two of the 2021 Pro Farmer Crop Tour today has the western leg of the tour checking out irrigated and no irrigated crops in Nebraska, while the eastern leg moves into Indiana. Last night crop ratings surprised many in my view as the good to excellent condition rating fell three points to 57 percent good to excellent. Iowa dropped 2 points, Illinois down 7, Minnesota dropped 5 points, while South Dakota fell to 22 percent good to excellent. With strong demand from China and declining crop conditions it only made sense that November soybeans closed down 6 3/4 cents at $13.61 1/2 today and near the session low. Prices scored a technically bearish “outside day” down on the daily chart today. The soybean market fell in sympathy with the corn and wheat futures markets’ losses today. Profit taking from recent gains was featured in my view but more importantly is that temps in the NW quadrant of the grain belt receive timely wide spread rains in the updated 1 to 5 day forecast into this weekend, while the 6 to 10 day offers more rain chances in Nebraska, the Dakotas, Iowa, and Southern Minnesota. The weather after all is 90 percent of our pricing influence and a wetter outlook is offered through month end. Its debatable how much it will help in some areas stricken by drought but at this point it cant hurt and I think a big reason for the drop in futures prices today. I included a Nov 21/22 bean chart. Under normal conditions, I’ve seen this spread trade to a 60 cent carry. This year, which is about as far from normal as you can get on many fronts, had the spread (ZSX21/ZSX22), settling today at 100.4, Nov 21 over. We have seen recent buying interest wane between 1.10/1.12 Nov 21 over. Selling runs dry on recent pushes below 75 cents Nov 21 over. this spread has been inverted foe awhile. I’m looking for any signs of a rally back to the Spring highs or deeper correction to the recent lows. I’m not suggesting a course of action yet, but I’m intrigued here with 5.60 corn and 13.60 beans in that we aren’t going to hang around range bound for much longer. The last six weeks has seen volatility sucked out of the options market as corn has traded between 5.30 and 5.80 and beans for the most part between 13.20 and 1.380. We get past one of the more important crop tours this week and inch closer to month end and into harvest, I think a move out of the recent ranges may occur sooner rather than later in my opinion.
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