9/11/2020

Markets traded higher overnight as beans broke through the 9.8275 resistance area and was trading up 7-8 at the coffee break.  We got a couple bean sales announced this morning of 222,000 mt of beans to Unknown and 262,000 mt of beans to China.  That was enough to get the markets to new highs ahead of the report up 12-13.  Then the report happened.  Overall, the report itself was not bullish, but there is a bullish spin to the story.  The market knows this recent frost is not figured in this report, so yields in the future reports have a lower bias.  Bean export demand is still very strong as sales continue almost daily and the USDA did not adjust exports higher like many thought they should, so bias going forward is that exports need to be higher.  So, the USDA gave us a carryout of 460 million and it would not be hard to argue that between a yield drop and an export adjustment we could drop that carryout by 100 million additional bushels.  10.04 November futures is the new target, which is the high from December 2017.  The report for corn was slightly bearish, but with beans higher corn felt like it had to follow.  Corn yield was pegged at 178.5 bpa, down 3.3 bushel from Aug, but right near the 178.3 avg guess.  Carryout was put at 2.503 billion down 253 million from Aug, but 50 million more than the average guess. 2.503 billion is still a rather healthy carryout, but it’s a far cry from the near 3 billion carryout we were looking at in July.  Corn exports were raised by 100 million, ethanol was lowered by 100 million, and feed was lowered by 100 million on this report.  Harvested acres, which was a big question after the Derecho, was put at 83.5 million vs 84 million in August.  For the week corn was up 10 and beans were up 28.  Have a good weekend!