Play Turner’s Take Ag Marketing Podcast Episode 255
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In this podcast we go over why the grain and oilseed markets will continue to be elevated for the rest of the year and well into 2021. We look at the export pace and why the USDA will most likely increase exports for corn and soybeans and decrease ending stocks. We also talk about soybean oil and why it is the most bullish market in the grain and oilseed complex. If you want to know more then take a listen to this week’s Turner’s Take Podcast!
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Exports
Below is a table for export sales progress. The highlighted areas show how current US exports for corn and soybeans are outpacing the USDA estimates according to the WASDE report. Corn and soybean exports are so strong that we expect the USDA to increase old crop corn exports by at least 200mm bushels and 50 to 100mm bushels for soybeans in the coming WASDE reports.
Below the Export Sales table I also have an updated Turner’s Take corn and soybean supply and demand table. For soybeans you will notice we don’t have enough available stocks to meet the current pace of exports. Stocks are already tight. We are on pace to export 2.8 billion beans and the USDA has us pegged at 2.2 billion. Ending stocks are already sub 200mm so at best we can export 100mm unless prices get so high the crush comes down. The crush tends to be highly inelastic so most price rationing usually is done at the export level. I’ve included the 2013-2014 marketing year when soybean ending stocks were sub 100 and a stock/usage ratio of 2.66%! Prices ranged $12 to $15.50 during that period. If South America has sub trend production and demand stays strong, I think we will see “beans in the teens”.
As for corn, an extra 200 to 400mm bushels of exports brings the corn carryout between 1.5 and 1.3 billion bushels.. That would suggest front month corn trades in the mid to high $4s. New crop trades to $4.20 or $4.30. If the market should get close to $5 there are a lot of reasons for corn to hit resistance. Feed corn can be substituted for feed wheat. Ethanol margins are not favorable and corn usage declines. Feed for livestock declines as meat production is discouraged. There are a lot of reasons for corn to stall out the closer we get to $5 (if that should even happen). For corn to go over $5 we need serious reduction in corn yields in South America this winter or the US this spring/summer.
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Export Sales Progress Analysis
Soybean Ending Stocks with Increased Export Pace
Corn Ending Stocks with Increased Export Pace
Soybean Oil
Soybean Oil closed above the 2016 highs today. Vegetable oil is tight around the world as Palm, Sun, and Canola are in short supply. Soybean Oil is the cheapest and most plentiful alternative currently in the global vegetable oil market. We expect demand to be strong even as prices charge to 40 cents a pound and higher. Next major resistance level on weekly and month charts is 45 cents per pound. Call me at 312-706-7610 or email cturner@danielstrading.com for trade ideas. We have been buying futures, buying calls, selling puts, and bull spreads. I have an idea to get long bean oil for any trader or hedger.
If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account. If you are a speculative or online trader then please click here.
Weekly Continuous Soybean Oil Chart
South American Weather
South American weather over the next one to two weeks does not look great. There will be rain in the northern and central parts of Brazil but southern Brazil and Argentina sill look dry. The area overall looks to have less precipitation than normal for the next two weeks. This should continue to be positive for the CBOT.
If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account. If you are a speculative or online trader then please click here.
About Turner’s Take Podcast and Newsletter
If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! Craig Turner – Commodity Futures Broker 312-706-7610 cturner@danielstrading.com Turner’s Take Ag Marketing: https://www.turnerstakeag.com Turner’s Take Spec: https://www.turnerstake.com Twitter: @Turners_Take Contact Craig Turner
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Turner’s Take Newsletter & Podcast - Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.
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