Early Market Talk October 12, 2020

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USDA showing a bean carryout south of 300 mln bu Friday and the catalyst for sharp price reaction. Moving forward, all eyes on South American weather and Chinese export pace. Corn carryout at 2,167 mln bu and more than adequate 14.9 stocks use ratio.

At 0630 CZ20 trading 2 ¼¢ higher at $3.97 ¼ and making a new high for the move. SX20 up ¾ of a cent at $10.66 ¼ and unable to breach Friday’s $10.79 ¾ high. Vol totals so far at 28K on CZ and 34K on SX.

Dow futures just into positive territory this morning at 28,539. Crude off half a buck at $40.05.

Corn open interest up 16K Friday on volume of 496K contracts. Soybean OI up 27K on vol of 531K.

Must go back to June of 2016 to find a month USDA estimated soybean carryout below the 290 mln bu shown Friday. SX16 futures topped out at $11.86 ¼ back. then. About a buck higher than SX20 high to date.

Last October report we had a soybean stocks use ratio tighter than the 6.4 shown Friday was a 4.8 ration in ’13. SX13 topped out a scratch over the $14 mark then. Different times and not suggesting a repeat of these lofty levels without additional help. However, scatter study would suggest more upside room on soybean price.

CFTC data Friday showed Funds not as long as suspected. Through Friday and after buying 40K corn and 15K soybeans, we guesstimate Funds long a net 167K corn and a record 252K soybeans.

Soybean spreads way ahead of themselves last week gave back a chunk Friday and weaker again this morning. FND on SX two weeks from this Friday.

Showers across Brazil expected to be more widespread this week

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