Afternoon Market Recap for Dec. 1, 2020

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Corn prices crumble again.

Soybean and wheat contracts also finish Tuesday’s session in the red

Grain prices couldn’t hold onto modest overnight gains, with traders regressing back to a round of technical selling that eroded prices throughout the day, landing corn, soybean and wheat contracts into the red by the close. Chicago SRW futures were hit the hardest, with nearby contracts losing more than 2.5%. Corn prices also stumbled more than 1% lower, with soybean prices sliding nearly 0.5% lower today.

Wet weather later this week will be mostly relegated to the southern U.S., with little to no additional moisture expected for most of the Midwest and Plains between Wednesday and Saturday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts seasonally warm weather for the central U.S. between December 8 and December 14, with drier-than-normal conditions likely for the eastern half of the country.

On Wall St., the Dow jumped 290 points higher in afternoon trading to 29,929, with the S&P and Nasdaq clawing out record highs today. Financial and communication services stocks led the way. Energy prices continued to erode, in contrast, with crude oil spilling 1.75% lower to fall back below $45 per barrel. Gasoline and diesel also dropped around 1.75% this afternoon. The U.S. Dollar softened moderately.

On Monday, commodity funds were significant sellers of all major grain contracts, including corn (-27,500), soybeans (-17,500), soymeal (-5,000), soyoil (-7,000) and CBOT wheat (-13,000).

Corn

Corn prices eroded throughout Tuesday’s session, erasing modest overnight gains and spilling moderately into the red by the close as traders resumed with another round of technical selling. December and March futures each lost 5.75 cents to finish at $4.14 and $4.2025, respectively.

Corn basis bids moved 2 to 3 cents higher at three Midwestern locations Tuesday while holding steady elsewhere across the central U.S. today.

Under federal law, the EPA needed to finalize its decision on annual biofuel blending volume requirements for 2021 by November 30 but failed to do so. “At this point, it likely makes more sense to let the new administration handle the 2021 Renewable Volume Obligations rulemaking process entirely,” according to Geoff Cooper, president of the Renewable Fuels Association. Lawsuits to require immediate action from the Trump Administration may also be forthcoming.

For the week ending November 20, weekly ethanol production reached the highest levels since the global coronavirus pandemic struck, with a daily average of 990,000 barrels. The next round of data comes out tomorrow morning, with production unlikely to match the prior week’s tally due to the Thanksgiving holiday.

Brazil’s corn exports reached 192.8 million bushels in November, according to governmental data. That’s a year-over-year increase of 19%.

Ukraine has planted 97% of its winter grain crops and completed 98% of its fall harvest, including 1.055 billion bushels of corn across 12.602 million acres.

“Whether they’re true believers or skeptics, there’s no doubt a lot of folks watch charts for clues about where markets are headed,” according to grain market analyst Bryce Knorr. “Whichever camp you side with in the debate over the merits of technical analysis, it’s time to pay close attention.” Knorr elaborates in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 285,583 contracts, drifting moderately lower than Monday’s final count of 332,632.

Soybeans

Soybean prices tested moderate gains through mid-morning before ultimately spilling into the red on another round of technical selling. Forecasted rains in South America hammered prices on Monday and continued to weigh on prices today. Despite a dry start to the season in Brazil, some are still bracing for a potential record-breaking crop there if weather becomes more cooperative. January futures dropped 5 cents to $11.6350, with March futures down 5.75 cents to $11.6375.

Soybean basis bids were steady to firm across the central U.S. Tuesday after rising 5 to 13 cents higher at four Midwestern locations today.

Ahead of a USDA report Thursday morning, analysts expect the agency to show an October soybean crush totaling 175.4 million bushels. That would move well above September’s crush of 138.3 million bushels, if realized.

Brazil’s soybean exports in November fell to 54 million bushels, according to recently released governmental data. That’s well below last November’s tally of 181.8 million bushels.

In Argentina, a strike in some key grain ports halted work in those locations over wage disputes. The strikes are centered in the state of Rosario, which accounts for about 80% of Argentina’s total grain exports.

Vietnam issued a tender to purchase 68,000 metric tons of soymeal sourced either from the United States or South America, closing today. The grain is for shipment between December 2020 and July 2021.

Preliminary volume estimates were for 207,498 contracts, falling moderately short of Monday’s final count of 243,596.

Wheat

Wheat prices spilled into the red again on Tuesday, as traders continue to worry about the potential for bin-busting crops in Australia and an uptick in exports from Russia, while U.S. exports are struggling to outpace last year’s effort so far. March Chicago SRW futures dropped 7 cents to $5.78, March Kansas City HRW futures lost 7.5 cents to $5.3950, and March MGEX spring wheat futures fell 4.5 cents to $5.4850.

Nearly all (92%) of the 2020/21 winter wheat crop is now emerged, according to USDA’s latest crop progress report, out Monday afternoon. That’s up from 89% a week ago and just ahead of the prior five-year average of 91%.

Winter wheat quality ratings jumped three points higher, with 46% of the crop now rated in good-to-excellent condition. Analysts expected USDA to hold those ratings steady. Another 36% is rated fair (unchanged from last week), with the remaining 18% rated poor or very poor (down three points from last week).

Egypt purchased 6.2 million bushels of wheat from Russia and Ukraine in an international tender that recently closed. The grain is for shipment between late January and early February.

Japan issued a regular tender to purchase 4.7 million bushels of food-quality wheat from the United States, Canada and Australia, for arrival in early March. Of the total, 69% is expected to be sourced from the U.S.

Thailand issued an international tender to purchase 3.9 million bushels of animal feed wheat, which closes December 2. The grain is for shipment in February and March.

Preliminary volume estimates were for 148,031 CBOT contracts, trending slightly above Monday’s final count of 132,675.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 423 414 414.75 -5.75
21-Mar 429 420.25 420.75 -5.75
Soybeans        
21-Jan 1176 1161.25 1162 -5
21-Mar 1177 1162.25 1163 -5.75
Soymeal                $/ton        
21-Jan 394.3 389.2 390.2 0
Soyoil                    cents/lb        
21-Jan 37.97 36.96 37.01 -0.42
Wheat                    $/bushel        
20-Dec 580.75 563.5 565.5 -14.75
21-Mar 589 574 577.25 -7
KC Wheat        
20-Dec 548 537.5 537.5 -2.5
21-Mar 551 536.75 539 -7.5
MPLS Wheat        
20-Dec 536.75   534.5  
21-Mar 556.5 546.25 549.25 -4.5
Live Cattle             cents/lb        
20-Dec 110.875 110.25 110.65 0.475
Feeder Cattle         cents/lb        
21-Mar 142 139.925 140.925 0.95
Lean Hogs             cents/lb        
21-Feb 69.6 68.05 68.875 0.3
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Jan 45.7 44.12 44.6 -0.74
Diesel        
21-Jan 1.3884 1.3417 1.3479 -0.0235
Unleaded Gasoline   $/gallon        
21-Jan 1.2541 1.2114 1.2216 -0.02
Natural Gas        
21-Feb 2.95 2.819 2.871 0.006
Ethanol Futures        
21-Jan 1.38 1.35 1.35  
U.S. Dollar Index        
20-Dec 91.915 91.25 91.295 -0.563
Gold                      $/ounce        
21-Jan 1818.3 1776.4 1814.3 38.6
Copper        
20-Dec 3.501 3.432 3.49 0.0695
Fertilizer Swaps     (as of 11/27)  
DAP Tampa-index              264.0 3
DAP-New Orleans              407.9 12
Urea-New Orleans              270.6 8
Urea-Middle East              280.0 15
Urea-Black Sea              247.5 8
UAN (32%) New Orleans              132.3 0
 
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