Major S&D revisions coming Oct. 9USDA’s Sept. 1 stocks for corn, soybeans and wheat were all lower than anticipated (see News page 4). For corn and soybeans, Sept. 1 stocks marked final 2019-20 carryover (new-crop beginning stocks). USDA is also expected to reduce its corn and soybean crop estimates from last month, which should lead to significant cuts to new-crop ending stocks. Given the slightly smaller wheat crop esti-mate (see News page 2), new-crop wheat ending stocks are also likely to be trimmed from last month.

Perspective on June 1 corn stocksUSDA surprisingly slashed 205 million bu. from its initially reported June 1 corn stocks estimate. Over the past 10 years, the next biggest revision to June 1 corn stocks in the September report was 11 million bu. in 2016. This year’s revision was 18 times the 2016 adjustment. The June 1 on-farm stocks estimate was slashed 158 million bu. — 77% of the 205-million-bu. cut. National Agricultural Statistics Service Crop Branch Chief Lance Honig told us there wasn’t a reporting error in the June report, nor was there a change to the agency’s sampling procedure or methodolo-gy, “but rather getting the September data in gave us more insight into where June should be.”

The “easy” explanation would be that last year’s poor- quality crop meant producers didn’t have as much in the bin as they thought on June 1. But there have been poor quality crops plenty of times in the past. That also wouldn’t explain what appeared to be a systematic miscounting in June 1 corn stocks in nearly all the Midwest states. Hmmm... it’s still a head scratcher on how all that corn disappeared.

Initial Pro Farmer Harvest ReportEarly corn harvest data from the Farmobile Index™ is on News page 3. You will notice that at this early stage, some of the yields look representative of what is expected for the state, while others are well off of anticipated yields. As har-vest increases and more data comes in, we anticipate quite a bit of change from these initial yields in some states.

Heightened market uncertainty — News that President Donald Trump tested positive for Covid-19 could create increased market volatility during what was already likely to be a chaotic month ahead of the U.S. elections. Markets don’t like uncertainty, which could lead to risk aversion. Some of that was seen in outside markets Friday, though grain and livestock futures held up well. Corn futures surged to their highest level on the continuation chart since March last week after USDA’s bullish Grain Stocks Report. Soybean futures rallied but failed to clear their mid-September high. Wheat futures also rallied, with front-month HRW contracts hitting their highest price since January 2019. Cattle futures softened, despite firm-er cash prices again last week. Hogs held in their two-week-plus sideways range.

CR includes funding for USDA’s CCCLawmakers approved a continuing resolution (CR) to keep the government funded through Dec. 11. The measure provides USDA $20 billion in Commodity Credit Corporation (CCC) borrowing authority to make “regular” farm program-related payments, including for Conservation Reserve Program (CRP) contracts, Agriculture Risk Coverage (ARC), Price Loss Coverage (PLC) and ARC Individual Option Contracts.

Waiting on additional Covid aid The House passed a $2.2-trillion Covid relief bill after nego-tiations with the White House on additional aid stalled. But Republicans roundly panned the House bill as did some Democrats, giving it no chance of getting through the GOP-controlled Senate. Negotiations between House Speaker Nancy Pelosi (D-Calif.) and the Trump administration con-tinue, with both sides saying they want a deal soon. But some Democrats sense a sweep in the November elections and want to wait on more aid.

Jobs growth slower than expectedThe U.S. economy added 661,000 non-farm payrolls in September and the unemployment rated dropped to 7.9%. Jobs growth was 139,000 less than expected but July and August payrolls were a combined 145,000 more than previ-ously reported. Payrolls have risen 12 million since mid-March — 55% of the jobs lost due to the Covid-19 pandemic.

Chinese manufacturing expandingChina’s official manufacturing purchasing managers index (PMI) rose 0.5 points to a reading of 51.5 in September, top-ping the 50.0-point expansion threshold for a seventh straight month. The sub-index for new orders climbed 0.8 points to 52.8 points, while the sub-index for production rose 0.5 points to 54.0 points. China’s Caixin/Markit PMI edged down a tenth of a point to 53.0 points in September.

The World Bank forecasts China’s economic growth at 2% this year. Government spending is helping combat the Covid pandemic, but domestic consumption remains slow.

News this week...2 — Slightly lower corn, soybean yields likely on Oct. 9. 3 — Feedlots actively placed cattle on feed in August. 4 — USDA’s shocking Sept. 1 corn stocks a game-changer.

October 3, 2020 Vol. 48, No. 40

Go to ProFarmer.com

October 3, 2020 / News page 2

Follow us on Twitter:@ProFarmer@BGrete

@ChipFlory@JWilson29

@DavisMichaelsen@MeghanVick

U.S. wheat crop smaller than thoughtUSDA’s final U.S. all-wheat production estimate at 1.826 billion bu. was down 12 million bu. from August and is the smallest crop since 2017. USDA cut its all-wheat yield esti-mate by 0.4 bu. to 49.7 bu. per acre. It raised harvested area by 68,000 acres to 36.746 million acres.

USDA low-ered its winter wheat produc-tion estimate by 27 million bu. from last month. USDA trimmed its winter wheat yield by 0.2 bu.

to 50.9 bu. per acre and cut harvested acres by 415,000 from August. The HRW crop was cut 36 million bu., the SRW crop was lowered 11 million bu. and the white winter wheat crop was raised 20 million bu. from last month.

USDA increased its other spring wheat crop estimate by 9 million bu. from August after raising harvested acres by 256,000 and trimming the yield by 0.4 bu. per acre.

USDA raised its durum crop estimate by 7 million bu. from last month. A 1.4-bu. cut to the durum yield was more than offset by a 218,000-acre increase to harvested acres.

Ukraine struggling with fall drynessWinter wheat seeding is running at the slowest pace in the past decade due to severe drought in key production areas. As a result, the country’s ag ministry expects winter wheat plantings to drop 9% from last year to 6.1 million hectares. As of Sept. 28, only one-quarter of the expected winter wheat area had been seeded.

Russia actively exporting wheatRussia exported a record of nearly 6 million metric tons (MMT) of grain (mostly wheat) in September, according to the head of the Russian Grain Union. For 2020-21, he expects Russia to export 38 MMT of wheat. The Russian ag ministry forecasts 2020-21 wheat exports at 35 MMT, but that could be raised as the ag ministry increased its 2020 wheat crop esti-mate by 7 MMT. Despite big supplies, Russia’s ag ministry says it could set a grain export quota for January-June 2021 if there is a need to retain supplies for domestic millers.

Aussie wheat to receive ample rainsThe Australian Bureau of Meteorology declared La Niña an “active event,” with weather models signaling it will continue through at least year-end. La Niñas typically produce above-normal rainfall for northern and eastern areas of Australia.

Corn, bean ratings signal lower yields USDA’s corn crop condition ratings were unchanged in the week ended Sept. 27, with 61% of the crop rated “good” to “excellent.” Soybean ratings improved a point to 64% “good” to “excellent.” The “poor” to “very poor” ratings for both crops were unchanged at 14% for corn and 10% for soybeans.

During September, USDA’s “good” to “excellent” ratings declined one point for corn and two points for soybeans. Historical correlations for the decline in crop ratings during September would shave 0.6 bu. per acre off the corn yield and 0.2 bu. off the soybean yield from USDA’s August esti-mates of 178.5 bu. per acre and 51.9 bu. per acre, respectively.

Soybean harvest accelerates Soybean harvest advanced 14 percentage points to 20% complete as of Sept. 27, which was five points ahead of the five-year average. In the Corn Belt, only Illinois (11% har-vested vs. 16% on average) and Missouri (1% vs. 6%) were running behind their five-year averages.

Corn harvest advanced seven points during the week to 15% complete, which was a point behind normal. Corn harvest was ahead of the respective five-year averages in many of the western Corn Belt states but behind across most of the eastern Belt.

Soybean basis faces harvest risk The national average soybean basis has weakened 8 1/2¢ since mid-September as harvest got underway (see chart on Analysis page 3). Strong export demand, driven by aggressive Chinese purchases, should keep basis well above the three-year average through harvest. But with the lack of carry in soybean futures discouraging farmers from storing soybeans, there’s more basis risk through fall.

Corn basis has firmed a little since the start of harvest. With partial (not full) carry built into futures, there is some incentive to store corn. Therefore, exporters may have to work a little harder with cash bids to source supplies they need to fulfill aggressive export commitments.

Argentina plans soy export tax cut Argentina plans to temporarily cut soybean and soy product export taxes by three percentage points to 30%. The tax is expected to be restored to 33% in January. While the soy export tax cut would give Argentine farmers a roughly 30¢ boost in prices, that’s not nearly enough to encourage sales given hyperinflation, the weak peso and economic uncertainty.

U.S. Wheat Production Mil. Bu.

October 3, 2020 / News page 3

ACTUAL DOANE FORECASTS*YearAgo

LastWeek

ThisWeek Nov. Dec. Jan.-

Mar. (Monthly & quarterly avg.)

CORN Central Illinois, bushel 3.60 3.49 3.60 3.70 3.75 3.80 Omaha, NE, bushel 3.66 3.56 3.67 3.75 3.80 3.85 Dried Distillers Grain, IA, $/ton 131.70 140.88 145.67 -- -- --SOYBEANS Central Illinois, bushel 8.50 9.90 9.93 10.00 10.05 10.10 Memphis, TN, bushel 8.62 10.37 10.45 10.70 10.75 10.80 Soymeal, 48% Decatur, ton 293.30 334.00 338.80 340 340 335WHEAT Kansas City, HRW, bushel 4.21 5.02 5.20 5.20 5.25 5.30 Minneapolis, 14% DNS, bushel 7.09 6.67 6.73 6.80 6.90 7.00 St. Louis, SRW, bushel 4.74 5.69 5.86 5.90 5.95 6.00 Portland, Soft White, bushel 5.90 5.53 5.68 5.75 5.80 5.80 Durum, NE MT HAD, 13%, bu. 5.75 5.40 5.40 5.40 5.50 5.60SORGHUM, Kansas City, cwt. 5.92 7.35 7.31 7.75 7.80 7.85COTTON, 11/16 SLM, 7 area, ¢/lb. 57.71 59.93 60.08 60.00 61.00 62.00RICE, nearby futures, cwt. 12.08 12.52 12.48 12.75 12.90 12.95BARLEY, MT, G.T., malting, cwt. 8.55 7.25 7.25 7.30 7.35 7.40OATS, Minneapolis No. 2 heavy, bu. 3.02 3.05 3.04 3.10 3.10 3.20ALFALFA, NW Iowa, lg. sq. prem., ton -- 131.25 172.40 175 175 180SUNFLOWERS, Fargo, ND, cwt. 18.60 16.75 16.75 16.75 16.75 17.15HOGS, Nat’l carcass 51%-52% cwt. 52.38 69.88 73.33 68.00 70.00 75.00FEEDER PIGS, 40 lbs., Nat. avg, head 39.71 34.57 41.47 43.00 45.00 50.00CHOICE STEERS, feedlots, cwt. 105.95 103.54 105.05 105.00 107.00 111.00FEEDER CATTLE, Oklahoma City

Steers, 700-800 pounds, cwt. 145.17 137.09 138.18 139.00 141.00 145.00Steers, 500-550 pounds, cwt. 151.57 148.04 147.51 162.00 167.00 172.00Heifers, 450-500 pounds, cwt. 138.36 135.57 128.32 136.00 134.00 136.00

COWS, utility, Sioux Falls, SD, cwt. 65.17 67.03 66.64 58.00 59.00 61.00MILK, Class III, CME spot month, cwt. 18.28 18.42 18.85 17.50 16.50 16.00LAMBS, Slg., San Angelo, TX, cwt. 128.00 130.00 134.00 -- -- --ENERGY

Ethanol, IA, gallon 1.37 1.33 1.29 -- -- --Farm diesel, U.S., gallon 2.34 1.79 1.76 1.79 1.75 1.77

*Average prices expected for the indicated time periods based on available information. Forecasts will be revised as necessary to reflect changing market conditions. Diesel prices are from Inputs Monitor.

The Farmobile Index™ aggregates daily state-by-state corn yields adjusted to 15.5% moisture based on harvest data. The yields below are based on preliminary data as of Sept. 30. Note: These weekly cumulative yields will be updated throughout harvest as more data is obtained. We hope to have enough soybean data to include those yields as of Oct. 7.

Illinois: 215 bu. per acre Kentucky: 186 bu. per acreIndiana: 205 bu. per acre Minnesota:178 bu. per acreIowa: 132 bu. per acre Missouri: 157 bu. per acreKansas: 137 bu. per acre

Producer Crop Comments...Please send crop comments to editors@profarmer.com.Southwest Minnesota:“Our area is now over 50% complete with soybean har-vest and yields have been a MAJOR surprise following our extremely dry August. While there have been a few yields reported in the 38-bu. to 40-bu.-per-acre range, the majority are 55 bu. per acre-plus, with isolated reports of 70-plus yields. The soybean seed size is EXTREMELY small, but there are LOTS of them! Our corn harvest is just getting started, but the initial reports are also showing better-than-expected yields.”

South-central Nebraska:“First time ever done with beans in September. Record bean crop on our farm as a whole.”

Madison Co. (central) Indiana:“So far have ran four corn fields and one bean field. All record yields. Hoping the trend continues!”

Record feedlot numbersUSDA estimated there were nearly 11.4 million head of cattle in large feedlots (1,000-plus head) as of Sept. 1, which was a record for the date and up 3.8% from year-ago. The number of cattle placed into feedlots last month increased 9.2% from

last year, while mar-k e t i n g s d r o p p e d 3.1%.

The supply of cattle on feed at least 150 days is dwindling, but was still nearly 2.5 million head as of Sept. 1, up 20% from last year. Combined with a 9.3% increase in the placement of cattle weighing 800-plus lbs. in August, the supply of market-ready cat-tle is going to remain hefty through winter.

New pork cutout contractsCME Group plans to launch new pork cutout futures and options on Nov. 9. The contracts will be cash settled against the five-day average of the CME Pork Cutout Index and 40,000 lbs. in size. Contract months: February, April, May, June, July, August, October and December. Perspective: This offers a new risk man-

agement tool for the hog industry. But the pork cutout can be influenced by big price moves in individual cuts and is also prone to seasonal price moves by some cuts.

USDA Average actual estimate (% of year-ago)

On Feed Sept. 1 103.8 103.3Placed in Aug. 109.2 105.8Mkted in Aug. 96.9 96.6

Cattle on Feed Report

October 3, 2020 / News page 4

USDA’s Quarterly Grain Stocks Report has often includ-ed surprises, especially for the corn market. Last

week’s report was no exception, with corn, soybean and wheat stocks as of Sept. 1 all much lower than expected.

Revised June 1 figure fuels corn stocks shockerUSDA estimated corn stocks as of Sept. 1 at 1.995 billion

bu., down 10.2% from year-ago and 255 million bu. below the average p r e - r e p o r t e s t i m a t e . USDA slashed its June 1 stocks figure by 205 million bu. from its prior estimate.

Of total stocks, 751 million bu.

were stored on-farm, down 7.8% from a year earlier. Off-farm stocks at 1.244 billion bu. were down 11.5% from year-ago. On-farm supplies represented 37.6% of the total, which was up from 36.7% on Sept. 1, 2019.

Implied disappearance of corn in the final quarter of the 2019-20 marketing year was 3.02 billion bu., up 1.3% from the same quarter last year.

Head scratcher on Sept. 1 soybean stocksSept. 1 soybean stocks at 523 million bu. were 53 mil-

lion bu. below the average pre-report trade estimate. Implied disappearance in the final quarter of the 2019-20 marketing year was 858 million bu., down 2% from the

same quarter last year. The stocks imply s u m m e r residual use of 6 million bu., which would be the first positive residual use during the s u m m e r

quarter since 1994-95. The five-year average for residual use is -80 million bu. and the 10-year average is -86 mil-lion bu. during the summer, with the least negative being -48 million bu. in 2016-17. Perhaps some of this is due to China’s aggressive purchases of soybeans during the summer and what is likely to be record exports for September. That could have resulted in more soybeans being in transit and not accounted for as of Sept. 1. That usually happens between the first and second quarters of the marketing year when exports are the strongest. If that is what happened, eventually more bushels will eventu-ally be “found.”

First-quarter wheat use up from year-agoAll wheat stocks at the end of the first quarter of the

2020-21 marketing year totaled 2.159 billion bushels. Sept. 1 stocks were 83 million bu. below the average pre-report

trade esti-mate. On-farm wheat stocks were estimat-ed at 705 mil-lion bu., down 4% from the same time last year. Off-farm stocks at 1.453 billion bu. were down

9.8% from a year ago. Implied disappearance in the first quarter of the 2020-21 marketing year was 657 million bu., up 4% from the same quarter last year.

2019 corn crop revised up, bean crop unexpectedly cut USDA increased the 2019 crop by 2.67 million bu. from

its prior estimate. Planted area was revised to 89.7 million acres, and area harvested for grain was revised to 81.3 million acres. The 2019 corn yield at 167.5 bu. per acre was inched up 0.1 bu. from the previous estimate.

USDA lowered its 2019 soybean crop estimate by 333,000 bu., whereas traders expected a 23-million-bu. increase. Planted area was unchanged at 76.1 million acres, but harvested acres were revised lower to 74.9 million acres. The 2019 yield at 47.4 bu. per acre was unchanged from the previous estimate.

Grain Stocks Report provides bullish surprisesby Editor Brian Grete, Sr. Market Analyst Jeff Wilson and Chief Economist Bill Nelson

News alert and analysis exclusively for Members of Professional Farmers of America® 402 1/2 Main St. Cedar Falls, Iowa 50613-9985General Manager Joel Jaeger • Editor Brian Grete • Editor Emeritus Chip Flory • Sr. Market Analyst Jeff Wilson • Chief Economist Bill Nelson

Washington Policy Analyst Jim Wiesemeyer • Digital Managing Editor Meghan Vick • Inputs Monitor Editor Davis MichaelsenSubscription Services: 1-800-772-0023 • Editorial: 1-888-698-0487

©2020 Professional Farmers of America, Inc. • E-mail address: editors@profarmer.comFarm Journal CEO, Andrew Weber

June-Aug. Corn Use

June-Aug. Soybean Use

June-Aug. Wheat Use

Bil. Bu.

Mil. Bu.

Mil. Bu.

Feed MonitorFEED

Corn Game Plan: You should remain hand-to-mouth on corn-for-feed needs. We do not want to chase the rally. Be pre-pared to be a buyer on harvest weakness later this fall. Meal Game Plan: Cash coverage has ex-pired and you should go hand-to-mouth on soybean meal needs. Stay patient on increasing forward coverage unless there is a sharp price pullback.

Corn IV’20 0% I’20 0% II’21 0% III’21 0%

Meal IV’20 0% I’21 0% II’21 0% III’21 0%

Analysis page 1

DAILY DECEMBER MEAL

$308.90

$349.60

$328.00

DAILY DECEMBER LEAN HOGS

Position Monitor

HOGS - Fundamental AnalysisThe strengthening CME Lean Hog Index and surging wholesale pork prices provide strong underlying support to futures. The pork cutout value averaged nearly $85 in September, up from an average of $71 a year ago. That’s the best signal of stronger domestic and export demand, as slaughter supplies are running about 4% ahead of last year. Packer margins remain elevated at more than $40 a hog, supporting the firming trend in cash market bids. Germany is finding wild boars with African swine fever in new areas, supporting a robust U.S. export outlook to offset the seasonal rise in hog supplies into November.

Game Plan: Make sure you’re caught up on advice to hedge 25% of fourth-quarter sales in December futures and 25% of first-quarter in February hogs. Be ready to add on further strength.

CHOICE BEEF CUTOUT ($/CWT.)

PORK CUTOUT VALUE ($/CWT.)

Position MonitorGame Plan:Fed cattle h e d g e r s should be patient as downside risk is limited. Be prepared to hedge after a chal-lenge of the August highs.

Feds Feeders IV’20 0% 0% I’21 0% 0% II’21 0% 0% III’21 0% 0%

The Sept. 14 high at $67.10 is initial resistance. Above that there’s a heavy layer of resistance from $68.00 to $72.00 (not marked) from last fall and winter.

DAILY DECEMBER LIVE CATTLECATTLE - Fundamental AnalysisCash and futures quickly shook off the bearish Cattle on Feed report on stronger domestic and export demand. Buoyant wholesale beef demand in September amid the largest slaughter in nine years turned sentiment. Surging pork prices have likely inspired retailers to turn to more beef in the meat case. Packers are not balking at having to pay higher prices as margins remain near $300 per animal. Cash prices and wholesale beef prices may continue to firm into November on strong consumer demand. But the record number of cattle on feed as of Sept. 1 means rising supplies into the second quarter of 2021.

A close above the August high at $114.025 would target resistance layered from $115.00 to $119.00(not shown).

Initial support at the 40-day moving average

(green line) near $111.00 is backed by the uptrend line and horizontal support at $109.825.

$114.025

$109.825

$59.98

$67.10

Initial support is at the uptrend

line near $61.25. Key support is at $59.98.

October 3, 2020ANALYSIS

Lean Hogs IV’20 25% I’21 25% II’21 0% III’21 0%

The move to a new high at $349.60 last week pushed the market to grossly overbought levels. Look for a pullback now that U.S. export prices are above South American quotes.

October 3, 2020 / Analysis page 2

$5.87

$5.54 3/4

DAILY DECEMBER SRW WHEAT

WHEAT - Fundamental AnalysisSRW — Futures jumped to eight-month highs when USDA unexpectedly cut its U.S. wheat crop forecast and dry weather threatened planting and early development in Ukraine, Russia and the U.S. Export sales have improved, but U.S. prices remain well above competitor offers, capping rallies.

Position Monitor

Game Plan: Use periods of price strength to get current with advised old- and new-crop sales. Given our sales levels, we can wait on addition-al cash sales. Maintain the hedge in December SRW futures as downside protection.

Initial resistance is the Sept. 30 spike highat $5.87. Strong resistance is the Januaryhigh at $5.99 1/2 (not shown).

Initial support is at $5.54 3/4.Stronger support is the

40-day moving average (green line) near $5.40.

CORN EXPORT BOOKINGS (MMT)AVERAGE CORN BASIS (DECEMBER)

CORN - Fundamental AnalysisThe supply driven rally extended after USDA cut Sept. 1 stocks far more than traders expected. Smaller beginning supplies increase the importance of the Oct. 9 crop output update from USDA. Prices the next several weeks will be driven by U.S. yield results, export business to China and regular customers, and South America’s weather pattern. Delayed soybean planting in Brazil because of dry weather may impact safrinha corn potential. Further price strength may be capped by the negative impact the virus will likely have on gasoline and ethanol demand into early 2021, with President Donald Trump’s positive test for Covid-19 adding to market unease.

Initial resistance is theOct. 1 high at $3.94.Stronger resistance is layered from $3.98 to $4.12 1/2.

Two closes below $3.73 3/4 may

open downside risk to $3.59 3/4.

DAILY MARCH CORN

$3.54

$3.59 3/4

$3.73 3/4

$3.94

DAILY DECEMBER CORNPosition Monitor

Game Plan: Use strength to get current with advised cash sales for the 2020-crop. Given the potential for even more aggressive Chinese purchases of U.S. corn, we will hold off on more sales for now. Futures have moved into the lower end of the of our price target range, so be prepared to make additional sales. We would also likely make initial 2021-crop sales at the same time.

Initial resistance is at the Oct. 1 high at $3.85 1/2. Stronger resistance is layered from $3.88 1/2 to $4.02 1/2 on the weekly continuation chart.

Old resistance at $3.63 is strong support. A

close below that level would open downside

risk to $3.48 1/2.

$3.43 3/4

$3.63

$3.48 1/2

$3.85 1/2 ’20 crop ’21 crop

Cash-only: 50% 0% Hedgers (cash sales): 50% 0% Futures/Options 20% 0%

’20 crop ’21 cropCash-only: 75% 30% Hedgers (cash sales): 75% 30% Futures/Options 20% 0%

October 3, 2020 / Analysis page 3

DAILY DECEMBER HRS WHEATDAILY DECEMBER HRW WHEAT

HRW — Price surged after USDA estimated Sept. 1 wheat stocks were down 8% from a year ago, increasing the concern about expanding dryness in the HRW belt. China buying has been quiet recently and other Asian buyers will be looking at buying more Australian wheat this year as rains are expected to boost its output to a four-year high.

DAILY MARCH SOYBEANS

HRS — Spring wheat has lagged winter wheat rallies and that has helped displace some HRW supplies in western U.S. flour mills. A higher spring wheat crop forecast signals ample HRS supplies are looking for a home. Importers will be looking to extend coverage, but U.S. export premiums may limit strong new sales.

Weekly resistance from Januaryis at $5.29 (not shown).

Initial supportis at $4.95.

$4.95

Strong resistance is $5.54 1/4.

The uptrend line near $5.23 is initial support.

$9.09 3/4

$5.54 1/4

$9.89 3/4

$10.41It will take a close above $10.41 to renew bullish sentiment.

Two closes under $9.89 3/4 would signal a deeper

retreat is coming.

SOYBEAN EXPORT BOOKINGS (MMT)AVERAGE SOYBEAN BASIS (NOVEMBER)

WHEAT EXPORT BOOKINGS (MMT)

AVERAGE WHEAT BASIS (DECEMBER)

SOYBEANS - Fundamental AnalysisFutures moved higher on the smaller USDA Sept. 1 stocks estimate. The market has experienced a dramatic supply change the past two months on adverse U.S. weather and stronger Chinese purchases. There is no shortage of supply, but dry weather trends in South America increase the threat for a further tightening in global supplies. Midwest yield reports are variable ahead of the Oct. 9 Crop Production Report, which many expect will show a smaller USDA forecast than last month. Exports remain robust, with Chinese commitments nearly double the level seen three years ago before the trade tensions. Soymeal sales are also strong, pushing that market to new contract highs last week.

Initial support is the uptrend line near $10.16.

Stronger support is at $9.85

$9.12 1/2

$10.46 3/4

$9.85

Position Monitor ’20 crop ’21 crop

Cash-only: 75% 0% Hedgers (cash sales): 75% 0% Futures/Options 0% 0%

Game Plan: Get current with advised sales on price strength. Nearby premiums are a strong signal the market wants your beans now and is unwilling to pay for later delivery. Hedgers should be prepared to finish 2020-crop sales this fall and potentially re-own some bushels in fu-tures/options. Cash-only marketers can’t be as aggressive with cash sales until more is known about the South American growing season.

DAILY NOVEMBER SOYBEANS

Initial resistance is the contract high at $10.46 3/4. The next layer of weekly chart resistance is from $10.50 to $10.70, followed by the $10.80 level.

October 3, 2020 / Analysis page 4

’20 crop ’21 cropCash-only: 40% 0% Hedgers (cash sales): 40% 0% Futures/Options 0% 0%

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market and policy news and analysis.

USDA Supply & Demand Tightening grain, soy stocks.

FRI 10/911:00 a.m. CT

5

USDA Crop ProductionExpecting smaller corn, soy crops.

FRI 10/911:00 a.m. CT

4

USDA Weekly Export SalesFocus remains on China purchases.

THUR 10/87:30 a.m. CT

3

Census August Export DataFocus is on shipments to China.

2

USDA Crop Progress ReportCorn, soybean harvests accelerate.

MON 10/53:00 p.m. CT

1

WATCH LIST

TUE 10/610:00 a.m. CT

while the livestock industry capacity for feed use expanded just 2.2%.

Normally, increased feed and residu-al use is caused by a larger crop, but USDA said last year’s crop was just 3 million bu. bigger. The credible answer is lower test weights last year led to farmers overestimating crops in storage.

The impact of the 1.995-billion-bu. Sept. 1 stocks forecast and expected smaller 2021 crop mean USDA will likely cut total 2020-21 supplies about 400 million bu. on Oct. 9. That signals new-crop carryover may fall below 2.1 billion bu. from 2.5 billion bu. forecast on Sept. 11. With supplies falling to a four-year low, that increases the impor-tance of South American production.

USDA launched bullish fireworks for the corn market by estimating Sept. 1 stocks at the lowest level in four years instead of rising to a three-year high.

Corn supplies to end the 2019-20 crop year fell more than 10% from a year ear-lier and were 255 million bu. below trade estimates due to some unusual revisions.

In June, USDA said June 1 stocks were 270 million bu. larger than expected and last week the agency revised that esti-mate down 205 million bu., mostly on a 158-million-bu. cut in on-farm supplies.

The June stocks estimate should be beyond revision since the crop is already in the bin and there is no mixing of new-crop supplies. The new estimate implies feed use jumped 8.8% from a year earlier

By Sr. Market Analyst Jeff WilsonFROM THE BULLPEN

Stock market volatility: The CBOE Volatility Index, or VIX, trended lower since reaching a record in March during the height of the Covid-19 pandemic.

The index, sometimes called the “fear gauge,” has been rising since touching a six-month low in August on concerns about a contested presidential election and the failure of Congress to pass addi-tional Covid-19 aid programs.

The VIX hit a 10-week high in early

GENERAL OUTLOOKSeptember, just as the S&P 500 Index hit a record. That tandem move hasn’t occurred since the dot-com bubble in 2000.

But, futures tied to the VIX show deferred contracts much lower than a projected peak in November. That’s a sign that investors are betting on a viable Covid-19 vaccine and that the economy will improve once the elections are past, boosting corporate earnings, employ-ment and stock prices.

DAILY DECEMBER COTTON

Game Plan: Use market strength to make catch-up cash sales. Plan for new sales at 68.00¢ to 70.00¢ or on a close be-low 64.00¢ in December futures.

Position Monitor AVERAGE COTTON BASIS (DECEMBER)

COTTON - Fundamental AnalysisFutures continue to chop sideways in a narrow range. Worries about a second wave of Covid-19 slowing demand off-set the 24% jump in cotton export ship-ments to start the year. However, unshipped sales are 17% behind last year. Weather is improving for harvest.

COTTON EXPORT BOOKINGS (’000 BALES)

WEEKLY CBOT VOLATILITY INDEX

Two closes below 64.90¢ and the 40-day moving

average (green line) would point to a test of

the summer uptrend.

The contract is struggling to find sustained buying above the August high at 66.45¢. A push above that level would target resistance in the 68.00¢ to 70.00¢ range (not marked).

64.90¢64.90¢

The VIX remains elevated, The VIX remains elevated, a sign that the stock market a sign that the stock market will be volatile until the will be volatile until the November elections. But November elections. But the fear factor is well below the fear factor is well below levels reached during the levels reached during the height of the Covid panic.height of the Covid panic.

44.4444.44

66.45¢66.45¢

24.8124.81

18.2118.21