Early Market Talk September 23, 2021

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Overnight trade with corn lower and soybeans higher, arguably what’s needed in the big picture. As is often the case however, the story we tell ourselves in six months will no doubt not be the story of today. Truism of a futures market; it’s not what we know, it’s what we don’t know and discover that drives price.

At 0530 CZ21 trading 2¢ lower at $5.23 1⁄2 in a tight 2 3⁄4¢ range. Volume lite ay just under 10K contracts to this pt. SX21 4¢ higher at $12.86 3⁄4 in a 12 3⁄4 range on vol of just under 16K. 

Dow futures up 173 pts at 34,309. Just under the open chart gap left on Monday’s trade between 34,665 and 33,478. Gaps get filled? 

December oat contract locked limit-up yesterday. Oat production in the US down 37% this year. Canada’s crop failure more impacting. Oats knows? 

Fed kept benchmark interest rates anchored near zero. Indicated they expect to begin reducing monthly asset purchases “soon,” but did not say when. Economic projections point to slower overall growth this year but higher inflation than previously projected. 

Fed committee sees GDP rising just 5.9% this year, compared with a 7% forecast in June. However, 2022 growth is now set at 3.8%, compared with 3.3% previously, and 2.5% in 2023. Somebody right this down to see once the parade moves by, how close was this forecast. The “Story we tell ourselves” comment above fits here too. 

Last year corn price driven in large part by surging Chinese corn demand. Their futures rallied near 40% from Jan ’20 to Jan ’21. Have dropped near 15% since then. Cursory chart look suggests another decline of at least 10% Which would be the US $ equivalent of near 50¢. That level would make a 62% Fibonacci retracement. 

Weekly corn grind for ethanol totaled 93.4 mln bu, 6.5 mln bu below what is needed to keep pace with and hit the USDA’s 5.2 billion bu corn use forecast. 

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