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Afternoon Market Recap for Aug. 6, 2020

Grains struggle to find traction.

Corn edges slightly higher, but soybeans and wheat spill into the red Thursday

Grain prices were mixed but trended mostly lower Thursday. Corn was the lone bright spot, but there wasn’t much to brag about when prices closed less than 0.2% higher today. Soybean prices eased slightly, meantime, and wheat prices took another moderate hit, with most contracts down around 1% to 1.5% on a round of technical selling over worries about large global supplies and stiff overseas competition.

Drought’s footprint across the U.S. retreated slightly through August 4 but still covers 54% of the country, according to the latest data from the U.S. Drought Monitor. The Midwest is in relatively better shape overall, with 33.8% of that region afflicted. However, there are some significant problem areas – most notably, western Iowa. Parts of Ohio and Michigan are also battling overly dry conditions as well.

On Wall St., tech stocks pushed the Dow 142 points higher in afternoon trading to 27,343 as investors await more news on a new coronavirus stimulus package that’s currently being negotiated. Energy futures were mixed but mostly lower, with crude oil down almost 0.5% to $42 per barrel. Diesel was down around 1% this afternoon, with gasoline trending more than 0.5% higher. The U.S. Dollar softened fractionally.

On Wednesday, commodity funds were net buyers of some grain contracts, including corn (+7,500), soyoil (+1,000) and CBOT wheat (+2,000) but were net sellers of soybeans (-3,500) and soymeal (-1,500).

Corn prices closed fractionally higher Thursday as some bargain buyers tested the waters. However, favorable forecasts that could be setting the table for record or near-record crops this fall have kept rally potential low so far this month. September and December futures each picked up half a penny to close at $3.1150 and $3.2375, respectively.

Corn basis bids ticked a penny higher at an Illinois river terminal while holding steady elsewhere across the Midwest today. Futures prices are so close to contract lows that farmers have been reluctant to book sales this week.

Corn old crop sales were relatively muted last week after only turning in 4.0 million bushels, which was 70% below the prior four-week average. But the tally for 2020/21 sales climbed to 102.4 million bushels, bringing the total to 106.4 million bushels. That was on the higher end of trade estimates, which ranged between 82.7 million and 126.0 million bushels. Cumulative sales for the 2019/20 marketing year will almost certainly fail to match last year’s pace, at 1.523 billion bushels.

Corn export shipments were down 29% week-over-week and 34% below the prior four-week average, with 27.0 million bushels. Japan was the No. 1 destination, with 11.7 million bushels.

Ukrainian consultancy ProAgro slightly raised its estimates for the country’s 2020/21 corn exports, to 1.311 billion bushels, thanks in part to a better than previously expected harvest.

China continues to significantly draw down its state corn reserves with another massive auction earlier today. All the available grain on offer was sold, for a total of 157.2 million bushels.

Preliminary volume estimates were for 302,983 contracts, moving slightly ahead of Wednesday’s final count of 284,347.

Soybean prices slid slightly lower Thursday, despite a solid round of export sales reported by USDA this morning – further evidence that traders are still focused on favorable weather forecasts that are expected to deliver bin-busting yields this fall. August futures fell 1.25 cents to $8.8075, with September futures down a penny to $8.7525.

Soybean basis bids were steady to mixed across the central U.S. Thursday, dropping 3 cents lower at two Midwestern processors while firming 1 to 4 cents higher at two interior river terminals.

For the third time this week, private exporters reported a large soybean sale to USDA. Today’s announcement was for 4.6 million bushels for delivery to China during the 2020/21 marketing year, which begins September 1.

Old crop soybean sales jumped 72% higher from a week ago as the 2019/20 marketing year winds down, reaching 12.7 million bushels. New crop sales added another 51.6 million bushels, for a total haul of 64.3 million bushels. That matched the high end of trade guesses, which ranged between 29.4 million and 64.3 million bushels. Cumulative sales for the 2019/20 marketing year have fallen behind last year’s pace, meantime, with 1.468 billion bushels.

Soybean export shipments boosted 57% above the prior four-week average, with 29.9 million bushels. Germany was the top destination, with 6.7 million bushels.

Preliminary volume estimates were for 178,687 contracts, fading slightly below Wednesday’s final count of 186,925.

Wheat prices continued to get hammered Thursday on another round of technical selling spurred by fears of large global stocks and fierce overseas competition. That’s been a major theme this week, as nearby CBOT contracts have lost 4.6% of their value since Monday’s open. Today, September Chicago SRW futures dropped 7.75 cents to $5.03, September Kansas City HRW futures fell 8.25 cents to $4.1825, and September MGEX spring wheat futures lost 4.5 cents to $4.97.

Wheat export sales inched 2% above the prior four-week average, with 22.2 million bushels. That tally was on the higher end of trade estimates, which ranged between 7.3 million and 29.4 million bushels. Cumulative totals for the 2020/21 marketing year are about 13 million bushels ahead of last year’s pace, with 166.4 million bushels.

Wheat export shipments stayed 15% ahead of the prior four-week average, with 22.0 million bushels. Indonesia was the No. 1 destination, with 4.2 million bushels.

Ukrainian consultancy ProAgro raised its 2020/21 wheat export expectations 3.4% above its July forecast to reach 676.1 million bushels. Ukraine is one of the world’s top wheat exporters.

South Korean flour mills bought 2.1 million bushels of wheat from the United States in a tender that closed earlier this week. The grain is for shipment in November and includes soft white wheat, hard red winter wheat and northern spring wheat.

Japan also bought wheat from the United States in a regular tender that closed earlier today. Of the total 4.8 million bushels sold, just over half was sourced from the U.S., with the remainder coming from Canada and Australia.

Pakistan importers purchased 2.2 million bushels of wheat earlier this week from optional origins for shipment in early September. This latest round follows a spate of sales in late July that totaled 11.0 million bushels.

Egypt purchased 15.1 million bushels of wheat from Russia and Ukraine in an international tender that closed earlier this week. That grain will be shipped in September.

Preliminary volume estimates were for 167,185 CBOT contracts, climbing 19% above Wednesday’s final count of 141,046.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Sep 312.75 309.5 311.25 0.5
20-Dec 324.75 321.25 323.75 0.5
Soybeans        
20-Aug 886 880 880.75 -1.25
20-Sep 880.5 872.5 874.75 -1
Soymeal                $/ton        
20-Sep 285.2 283 283.2 -1.3
Soyoil                    cents/lb        
20-Sep 31.55 30.87 31.22 0.15
Wheat                    $/bushel        
20-Sep 515 500.75 501.25 -7.75
20-Dec 520.75 507.75 508.25 -8
KC Wheat        
20-Sep 426.25 414.75 417.25 -8.25
20-Dec 437.25 425.5 428.25 -8
MPLS Wheat        
20-Sep 503.25 495.5 496 -4.5
20-Dec 517 510.5 510.75 -4.75
Live Cattle             cents/lb        
20-Aug 103.425 102.25 102.575 0.275
Feeder Cattle         cents/lb        
20-Sep 148.875 145.7 145.875 -0.6
Lean Hogs             cents/lb        
20-Oct 49.75 48.925 49.35 0.05
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Sep 42.65 41.61 42.14 -0.05
Diesel        
20-Sep 1.2723 1.2465 1.2566 -0.0065
Unleaded Gasoline   $/gallon        
20-Sep 1.2496 1.2139 1.2374 0.0146
Natural Gas        
20-Oct 2.422 2.289 2.302 -0.029
Ethanol Futures        
20-Sep 1.16 1.139 1.16 0.055
U.S. Dollar Index        
  93.085 92.475 92.775 -0.075
Gold                      $/ounce        
20-Sep 2065.1 2033.6 2052.1 21
Copper        
20-Aug 2.9075 2.8925 2.9075 -0.004
Fertilizer Swaps     (as of 7/24)  
DAP Tampa-index              316.5 0
DAP-New Orleans              357.2 6
Urea-New Orleans              229.3 2
Urea-Middle East              245.0 9
Urea-Black Sea              222.0 7
UAN (32%) New Orleans              129.0 0
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