Afternoon Market Recap for Dec. 4, 2020

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Grains tilt lower in Friday’s session.

Technical selling pushes corn, soybeans and wheat prices down to end the week

Grain prices drifted moderately lower Friday. Corn prices lost more than 1%, with soybeans down around 0.5%, on a round of technical selling partly prompted by improving production prospects in South America. Wheat prices continued to struggle today, with some contracts down more than 1% on some technical selling and profit-taking as traders remain focused on large domestic supplies and stiff competition from multiple overseas competitors.

Drought has a stranglehold on the western U.S. and is creeping into key production regions of the Plains and Midwest, per the latest data from the U.S. Drought Monitor. Nationwide, 66.9% of the country is afflicted by some level of drought – the largest footprint since February 2018. In the Midwest, 36.2% of the region is affected by drought, with 96.8% of the Plains in duress. NOAA’s three-month outlook for January to March shows the potential for some seasonally wet weather this winter in parts of the eastern Corn Belt, upper Midwest and Northern Plains.

On Wall St., the Dow rose 181 points in afternoon trading to 30,150, despite a batch of relatively disappointing employment data. Energy and construction stocks led the charge. Energy prices moved moderate higher, with crude oil up about 1% to clear $46 per barrel. Gasoline and diesel were each up around 0.5% this afternoon. The U.S. Dollar softened fractionally, while copper (often seen as a bellwether for the global economy) saw gains of around 1%.

House Agriculture Committee Chair Collin Peterson (D-MN) announced yesterday the introduction of H.R. 8843, which intends to add another 25 million acres over the next five years to the Conservation Reserve Program. The bill removes the current cap and sets a minimum floor of 50 million CRP acres, if it passes.

On Thursday, commodity funds were net buyers of most grain contracts, including corn (+10,000), soybeans (+13,500), soymeal (+4,000) and soyoil (+7,000) but were net sellers of CBOT wheat (-3,500).

NOTE: Please take a few minutes to fill out this survey about acres, yield, input purchases, storage strategies and more. The results will help inform future coverage for Farm Futures and is greatly appreciated!

Corn

Corn prices faded more than 1% lower Friday as traders continue to unwind their net long position as they await more positive export news, especially in regards to new China sales. Nearby contracts lost nearly 2.5% since Monday’s open. Today, December futures dropped 5.5 cents to $4.17, while March futures fell 6.25 cents to $4.2025.

Corn basis bids held mostly steady across the central U.S. Movements of note included a 6-cent drop at an Illinois ethanol plant and a 3-cent increase at an Iowa processor today.

Private exporters announced to USDA the sale of 7.2 million bushels of corn for delivery to Mexico during the 2020/21 marketing year, which began September 1.

Brazilian consultancy AgRural has once again trimmed its forecast for 2020/21 summer corn production (which represents about 20% of Brazil’s total corn production) due to dry weather persisting in the state of Rio Grande do Sul. AgRural estimates fell by 6.3% to 763.7 million bushels. The country’s second corn (safrinha) crop will be planted early next year.

Ukraine’s 2020/21 corn exports are down nearly 26% below last year’s pace so far, with 237.4 million bushels. A lot of that trend is due to a smaller harvest this fall versus 2019’s record-breaking production.

South Korea purchased 2.7 million bushels of corn from optional origins in a private deal today. The grain is for arrival by mid-May.

Algeria purchased 1.4 million bushels of animal feed corn in an international tender that closed yesterday. The grain is for shipment in early January.

Preliminary volume estimates were for 244,344 contracts, falling short of Thursday’s final count of 272,685.

Soybeans

Soybean prices saw another round of moderate cuts today, as traders still anticipate a potentially record-breaking production in Brazil. Since opening just 2 cents shy of $12 per bushel on Monday morning, nearby contracts shifted 3% lower by Friday’s close. Today, January futures dropped 6.75 cents to $11.6150, while March futures lost 7 cents to $11.6375.

Soybean basis bids remained flat across Midwestern locations Friday. Farmer sales have been generally slow as the week wraps up.

A group of 13 analysts polled by Reuters still thinks Brazil’s 2020/21 soybean production could rewrite the record books this year, despite a dry start to the season. The average trade guess was for a total production of 4.842 billion bushels. That would be a 5.6% increase from last year, if realized.

Two South Korean feed groups purchased a total of 185,000 metric tons of soymeal in private deals. The grain is likely sourced from South America and is for arrival in late June.

What will it take for soybean prices to move above the $12 benchmark? A combination of several factors will probably need to come into play, according to Naomi Blohm, senior market adviser with Stewart Peterson. Blohm elaborates in her latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 173,663 contracts, shifting 11% below Thursday’s final count of 195,078.

Wheat

Wheat prices fell once again Friday, with lingering worries over an expected boost in Canadian and Australian production and fierce competition from the Black Sea region triggering another round of technical selling today. December Chicago SRW futures fell 5.25 cents to $5.6650, December Kansas City HRW futures dipped a penny lower to $5.44, and December MGEX spring wheat futures dropped 1.25 cents to $5.3925

Ukraine’s 2020/21 wheat exports are down 11.5% from the same time a year ago, with 447.1 million bushels since July 1. Ukraine accounts for approximately 16% of the world’s total grain exports.

Turkey purchased 14.7 million bushels of red milling wheat from optional origins in an international tender that closed earlier today. A large portion of the sale was expected to be sourced from Russia. The grain is for shipment in January.

French exports of soft wheat outside of the European Union hit seasonal highs in November, climbing to 32.2 million bushels last month. China took nearly half of that total, with Algeria and Morocco rounding out the top three.

France’s 2020/21 wheat crop is in stellar condition, meantime, with 96% rated in good-to-excellent condition through November 30. The country’s barley crop is also in great shape, with 94% rated in good-to-excellent condition. FranceAgriMer won’t offer additional crop updates until February, taking into account winter dormancy until that time.

Preliminary volume estimates were for an anemic 65,298 CBOT contracts, falling moderately below Thursday’s final count of 80,709.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 422.75 415.75 417 -5.5
21-Mar 426.75 419.25 420.5 -6.25
Soybeans        
21-Jan 1172.5 1157.75 1163 -6.75
21-Mar 1174.5 1160 1165 -7
Soymeal                $/ton        
21-Jan 390.3 384.7 385.5 -5.1
Soyoil                    cents/lb        
21-Jan 38.6 37.52 38.41 0.7
Wheat                    $/bushel        
20-Dec 564.75 563.75 566.5 -5.25
21-Mar 585.5 575.25 575.5 -7.75
KC Wheat        
20-Dec 544 540 541.25 -1
21-Mar 551.5 541 542.75 -7.5
MPLS Wheat        
20-Dec 539.25 539 536 -1.25
21-Mar 555.5 550 550.5 0.75
Live Cattle             cents/lb        
20-Dec 109.4 107.975 108.575 -1.025
Feeder Cattle         cents/lb        
21-Mar 139.8 138.075 139.225 -0.1
Lean Hogs             cents/lb        
21-Feb 66.7 64.6 66.45 -0.475
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Jan 46.68 45.61 46.06 0.42
Diesel        
21-Jan 1.4201 1.3884 1.3991 0.0058
Unleaded Gasoline   $/gallon        
21-Jan 1.288 1.2588 1.2642 0.0025
Natural Gas        
21-Feb 2.632 2.475 2.565 0.05
Ethanol Futures        
21-Jan 1.3   1.32  
U.S. Dollar Index        
20-Dec 90.765 90.47 90.69 -0.028
Gold                      $/ounce        
21-Jan 1850.1 1830.2 1836.5 -0.3
Copper        
20-Dec 3.524 3.4725 3.515 0.036
Fertilizer Swaps     (as of 12/04)  
DAP Tampa-index              364.0 0
DAP-New Orleans              418.9 11
Urea-New Orleans              274.5 4
Urea-Middle East              282.5 3
Urea-Black Sea              252.5 5
UAN (32%) New Orleans              132.3 0

 

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