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3 Big Things Today, October 27, 2021

Soybeans, Grains Lower Overnight; European Wheat Price Nears Record.

1. Soybeans, Grains Fall in Overnight Trading

Soybeans and grains fell in overnight trading amid harvest pressure and some profit-taking.

Almost three-fourths of the U.S. soybean crop was harvested as of Sunday, up from 60% a week earlier and ahead of the prior five-year average of 70%, the Department of Agriculture said in a report this week.

Corn collection was 66% finished at the start of this week compared with 52% a week earlier and the average of 53% for this time of the year, the USDA said.

Wheat futures, meanwhile, were lower on some profit-taking as investors who were long the market, or bet on rising prices, likely sold come contracts and liquidated their positions after prices earlier this week hit the highest in two months.

Winter wheat planting was 80% complete as of Sunday, up from 70% a week earlier but on par with the five-year average, the government said. About 55% of the crop has emerged, up from 44% a week earlier but behind the prior five-year average of 59%.

About 46% of the U.S. winter crop was in good or excellent condition, up from 41% at the same point last year.

Despite the bearish tone in wheat, global inventories are expected to shrink year-over-year amid strong demand.

Stockpiles of the grain at the end of the 2021-2022 marketing year were forecast by the USDA earlier this month at 277.2 million metric tons. That’s down from the September outlook for 283.2 million tons.

Inventories at the end of the previous marketing year totaled 288.4 million metric tons.

Production worldwide is now forecast at 775.9 million metric tons, up slightly from the previous year’s 774.7 million tons, but demand will lead to the decline in global stockpiles.

Consumption, however, is forecast at 787.1 million metric tons, up from 781.2 million a year earlier, the USDA said.

Soybean futures for November delivery fell 6¾¢ to $12.40¾ a bushel overnight on the Chicago Board of Trade. Soymeal lost $1.20 to $325.70 a short ton, while soy oil was down 0.24¢ to 62.07¢ a pound.

Corn futures for December delivery lost 2¼¢ to $5.41¼ a bushel.

Wheat futures for December delivery fell 2¢ to $7.50¼ a bushel, while Kansas City futures dropped 3¼¢ to $7.74 a bushel.

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2. European Wheat Driven Near Records by Demand

Wheat prices globally have been driven up by strong demand in recent weeks, and nowhere is that more true than in Europe.

Wheat on the Euronext in Paris is sharply higher and yesterday rose to the highest level for a second-month price since 2008, Commerzbank economist Carsten Fritsch said in a note to clients.

“Prices are being driven up by the tight supply – with low and still falling inventories in the key export countries – and the mixed assessment of the U.S. winter wheat that has now emerged,” he said.

European wheat prices in September 2007 reached a record 300 euros per metric ton, a level that’s within reach, Fritsch said.

Whether that will happen remains to be seen and will depend on several factors, including if European wheat can compete at its lofty price levels, Commerzbank said.

U.S. wheat is priced about 40 euros-per-metric-ton less at the moment, Fritsch said. Instead of looking strictly at price, however, market-watchers should keep an eye on what Egypt does.

The North African country’s General Authority for Supply Commodities, or GASC, announced a tender in which it plans to buy an unspecified amount of wheat for delivery in the first 10 days of December.

“All key export countries will be contacted, including the U.S., Canada, Australia, Russia, Ukraine, and a number of European countries,” Fritsch said in his report. “At the current high price level, the latter may find it difficult to be considered. If this indeed turns out to be the case, the high-flying EU wheat price may run out of steam and begin correcting.”

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3. Strong Winds Lead to Fire Danger in Southern Plains

Strong winds and low humidity are creating tinderbox-like conditions in the Southern Plains, according to the National Weather Service.

Red-flag warnings, high-wind warnings, and wind advisories have been issued for the region.

Wind speeds are expected to be sustained from 25 to 40 mph today with gusts of up to 60 mph in the Oklahoma and Texas panhandles.

The strong winds will continue tomorrow and will be sustained from 25 to 35 mph with gusts of up to 55 mph, the NWS said in a report early this morning.

Farther north, a frost advisory is in effect for Indiana and parts of southern Michigan and northern Ohio.

Temperatures dropped into the lower 30s (°F.) overnight, leaving a layer of frost in some areas, the NWS said. The advisory is in effect until 9 a.m. Central.

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