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Afternoon Market Recap for July 6, 2020

Is a weather rally heating up?

Seasonally hot, dry weather pushes grain prices higher Monday

A bounty of hot, dry weather in the latest forecasts gave grain markets an excuse to engage in another round of short-covering and technical buying Monday. Corn finished today’s session around 1% higher, with soybeans up around 0.5% and some wheat contracts tracking more than 1.5% higher. A mostly disappointing grain export inspection report from USDA was released later than normal, leaving little time to affect prices before the close. Two large grain sales to Mexico and China early this morning lent additional support, meantime.

Most of the central U.S. will see some measurable precipitation between Tuesday and Friday, and a band stretching from eastern Kansas through northeastern Minnesota could gather as much as 1” or more total rainfall during this time, per the latest 72-hour cumulative precipitation map from NOAA. Next week, the agency’s 8-to-14-day outlook predicts seasonally hot, dry weather for much of the country from July 13 to July 19.

Red-hot tech stocks kept Wall St. feeling bullish Monday, with the Dow up another 356 points in afternoon trading to reach 26,183. Energy futures were mixed, with crude oil down fractionally to stay just above $40 per barrel. Diesel jumped up nearly 1% this afternoon, while gasoline dropped more than 1.5%. The U.S. Dollar softened moderately.

Last Thursday, commodity funds were net sellers of most grain contracts, including corn (-20,000), soybeans (-3,000), soyoil (-2,000) and CBOT wheat (-7,000). Grain markets were closed last Friday in observance of Independence Day.

Corn prices continued to rise Monday on another round of technical buying prompted by hot, dry forecasts for the Midwest later this week and next, as traders continue to digest last week’s acreage shocker from USDA. Traders also mostly shrugged off a lackluster round of export inspection data earlier today. July futures added 4 cents to $3.4650, with September futures up 3.25 cents to $3.4675.

Corn basis bids were narrowly mixed at two Midwestern ethanol plants Monday while holding steady elsewhere across the central U.S. today.

Ahead of this afternoon’s crop progress report from USDA, analysts expect the agency to show corn quality dropping a point, with 72% of the crop rated in good-to-excellent condition through July 5.

Private exporters reported to USDA the sale of 8 million bushels of corn for delivery to China during the 2020/21 marketing year, which begins September 1. Private exporters also reported a separate large sale to Mexico totaling 7.2 million bushels. Of that, 4.8 million bushels is for delivery during the 2020/21 marketing year, with the remainder for delivery in 2021/22.

Corn export inspections for the week ending July 2 fell moderately below the prior week’s tally and beneath all trade estimates, to 37.9 million bushels. Mexico, Japan and Colombia were the top three destinations. Cumulative totals for the 2019/20 marketing year are still well behind last year’s pace, with 1.347 billion bushels.

Russia is primarily a wheat exporter, but the country’s corn exports since last July boosted 44% higher year-over-year after reaching 151.6 million bushels.

December corn futures climbed more than 28 cents higher last week, notes Bill Biedermann in the latest Ag Marketing IQ blog – in part, because last week’s quarterly stocks and acreage report from “USDA changed the dynamics of supply and demand equilibrium,” he argues. Click here to read about some other headlines that have helped grain prices make positive inroads in recent sessions.

Preliminary volume estimates were for 299,150 contracts, sliding slightly below Thursday’s final tally of 319,975.

Soybean prices moved around 0.5% higher Monday on a round of technical buying spurred by hot, dry weather forecasts, worries over declining crop quality and another large sale to China reported this morning. July futures gained 6 cents to $8.9850, with August futures climbing 7 cents to $8.9825. July futures have not closed higher than $9 per bushel since mid-January.

Soybean basis bids fell 4 cents at an Iowa river terminal and 5 cents at a Nebraska processor Monday while holding steady elsewhere across the Midwest today.

Analysts expect USDA to dock soybean crop quality another point this week, moving to 70% rated in good-to-excellent condition through July 5. USDA’s next weekly crop progress report comes out later this afternoon.

Private exporters reported to USDA the sale of 9.7 million bushels of soybeans for delivery to China during the 2019/20 marketing year, which ends on August 31.

Soybean export inspections for the week ending July 2 tracked moderately higher week-over-week, climbing to 19.2 million bushels and rising above all trade estimates (the highest of which was for 16.5 million bushels). Mexico, China and Indonesia were the top three destinations. Cumulative totals for the 2019/20 marketing year are fractionally behind last year’s pace, with 1.372 billion bushels.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 349 345.25 346.5 4
20-Sep 350 345.5 346.5 3.25
Soybeans        
20-Jul 901.5 897 898.5 6
20-Sep 905 895.25 899 8.5
Soymeal                $/ton        
20-Aug 299.4 296.5 297.8 1.6
Soyoil                    cents/lb        
20-Aug 28.7 28.18 28.54 0.43
Wheat                    $/bushel        
20-Jul 489.25 485.75 489.5 -0.5
20-Sep 496.5 487.75 493.25 1.5
KC Wheat        
20-Jul 434.25 428.5 432.75 7
20-Sep 440.5 433.25 438.5 5.5
MPLS Wheat        
20-Jul 501.5   499  
20-Sep 516.5 511.25 512.75 1.75
Live Cattle             cents/lb        
20-Jun 101.425 99.725 100.275 0.875
Feeder Cattle         cents/lb        
20-Sep 137.7 135.95 137.175 1.325
Lean Hogs             cents/lb        
20-Aug 50.35 49.2 49.225 0.025
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Aug 41.08 40.15 40.63 -0.02
Diesel        
20-Aug 1.2583 1.2285 1.2449 0.0138
Unleaded Gasoline   $/gallon        
20-Aug 1.2792 1.2334 1.2408 -0.0184
Natural Gas        
20-Sep 1.903 1.781 1.891 0.106
Ethanol Futures        
20-Aug 1.319 1.319 1.319 0.024
U.S. Dollar Index        
  97.19 96.5 96.695 -0.606
Gold                      $/ounce        
20-Aug 1799 1779.2 1789.1 5.1
Copper        
20-Jul 2.7675 2.7175 2.766 0.0325
Fertilizer Swaps     (as of 7/6)  
DAP Tampa-index              310.0 5
DAP-New Orleans              314.7 13
Urea-New Orleans              217.2 -3
Urea-Middle East              240.0 -3
Urea-Black Sea              211.0 0
UAN (32%) New Orleans              130.6 -1.65
 
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