Week 23-27 November 2020
Price changes week on week.
Grain and oilseed complex closed marginally higher in the short trading week due to the US’s Thanksgiving holiday.
The fundamental remain, persistant dryness in south America, continued deamand from China, and expected USD weakness.
In our view, there is more potential price upside in both the Corn and oilseed complex.
However, if there is a change in weather pattern towards colder and higher precipitation, , then upside from current levels is limited.
US carryout in soybeans in the face of continued demand from China will depend on the Brazilian crop size.
Our Grain & Price Weekly Report have not a delayed release this week due to the American Thanksgiving holiday.
We do not expect any significant change in managed money positions, where funds will remain mostly long across the products.
Wheat futures rallied earlier in the week, only trade back lower by the end of the week.
US wheat futures rallied higher on the news that china purchased few cargos of wheat.
Adequate supply from Australia is factored into current prices.
In our view, wheat is the least bullish of the commodities we cover in the report.
Growing conditions for the Russian wheat crop continue to be an issue and will impact the supply of the new crop.
However, the market still has to go through the current supply from both the Northern hemisphere and southern hemisphere.
Black sea prices were mostly unchanged over the week.
For wheat prices to turn significantly lower, there needs to be a continued slowdown in demand; persistent demand from emerging markets supports the black sea market.
Fundamentals for standalone wheat are not bullish enough to result in a continued price rally, and the strength in corn prices usually would result in higher wheat prices.
Corn prices again closed higher over the week.
Prices action higher will be a function of how the weather develops in South America and the size and pace of the Chinese demand for US corn.
US Corn is still competitive in the world export market, and the US likely estimated carryout would continue to reduce, acting as a support for corn prices.
Soybean had limited weekly price movement, though the prices still closed the higher week on week.
Soybean and oilseed complex fundamentals remained the same over last week.
Chinese demand continues to support the US prices; however, there were some rumors of washouts last week on the back of negative crush margins in China.
Soybean oil is currently at 38 cents.
As long a crude oil prices remain in a range or trade higher, soybean oil can potentially trade a lot higher from current levels.
In our view, the US soybean carry out will be below 150, so it have a good chance of even trading up to $13, depending on how the weather develops from here.
Trade suggestion:
– Soybeans: Beans are quite likely to go to push beyond $12 if current fundamentals persist.
– Corn: Corn established at 390, may will have a stop loss at 420 levels.
– Wheat: it’s better stay out, if don’t own.
