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Afternoon Market Recap for July 9, 2020

Soybean prices stay green, but …

Corn and most wheat contracts also trend higher Thursday

What will it take for soybean contracts to move above $9 per bushel? July and August futures were again tantalizingly close but still closed below that benchmark amid gains of about 0.5% Thursday. Technical buying also lifted corn prices around 0.9% today, and most wheat contracts also finished the session higher after several overseas competitors recently downgraded their harvest expectations after suffering ample in-season drought.

As much as 1” of additional rainfall could land on the I States between today and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. The Northern and Central Plains could also receive some measurable rainfall during this time, although not likely as much. Later in the month, NOAA predicts largely drier-than-normal conditions in the western Corn Belt and Central/Southern Plains between July 16 and July 22, with wetter-than-normal conditions more likely across the upper fifth of the country during this time. The agency’s 8-to-14-day outlook also predicts much hotter-than-normal conditions for most of the country next week.

U.S. climate forecasters are also predicting with 50-55% certainty that ENSO conditions could shift to a developing La Niña pattern this fall, with a 50% chance that pattern could sustain through the winter months. Click here to learn more about how this weather phenomenon can affect grain production around the world.

On Wall St., stocks steered into the red, with the Dow down 306 points in afternoon trading to 25,760. Worries linger over a resurgence in coronavirus cases in several hotspots across the nation. Tech stocks like Microsoft, Apple, Amazon and others have been largely immune to this downturn, however, with stay-at-home orders not negatively affecting their product usage.

Energy futures also took a dip Thursday. Crude oil dropped 3% this afternoon to fall back below $40 per barrel. Gasoline was down a similar amount, with diesel trending about 0.9% lower in afternoon trading. The U.S. Dollar firmed moderately.

On Wednesday, commodity funds were net buyers of corn (+10,000) and CBOT wheat (+15,000) contracts but were net sellers of soybeans (-4,500), soymeal (-1,000) and soyoil (-3,500).

Corn prices continued to rise Thursday on lingering concerns about upcoming hot, dry forecasts across large portions of the Corn Belt, which triggered another round of technical selling that pushed prices about 0.9% higher today. July futures closed up 3 cents to $3.5125, with September futures up 3.25 cents to $3.4950.

Corn basis bids held steady across most Midwestern locations Thursday but did tick 2 cents higher at an Iowa processor today. Farmer sales have improved overall this week on the heels of rising futures prices.

Corn exports saw 23.6 million bushels in old crop sales, plus another 16.1 million bushels in new crop sales, for a total of 39.7 million bushels for the week ending July 2. Old crop sales climbed 30% above the prior four-week average, and total sales were on the high end of trade estimates, which ranged between 17.7 million and 43.3 million bushels. Cumulative totals for the 2019/20 marketing year are still more than 350 million bushels behind last year’s pace, at 1.377 billion bushels.

Corn export shipments were for 42.7 million bushels, sliding 11% below the prior four-week average. Mexico was the No. 1 destination, with 14.1 million bushels.

Ahead of tomorrow morning’s WASDE report from USDA, analysts think the agency will significantly lower its estimates for 2020 corn production, falling from 15.995 billion bushels in June down to 15.036 billion bushels. Yield is expected to remain stable from a month ago, however, at an average 178.5 bushels per acre. And ending stocks for 2019/20 are expected to rise from June’s 2.103 billion bushels up to 2.227 billion bushels.

China sold another big batch of its state corn reserves at auction earlier today. The latest tally – 156.3 million bushels – was the entire amount available for sale.

Preliminary volume estimates were for 392,120 contracts, moving moderately ahead of Wednesday’s final count of 28,106.

Soybean prices tested solid gains this morning before fading late in the session. But prices still finished moderately higher compared to Wednesday’s close on a round of technical buying, chalking up gains of around 0.5% today. July futures rose 3.5 cents to $8.9825, with August futures up 4 cents to $8.9650. (Note: It has now been 165 days since July futures closed above $9 per bushel.)

Soybean basis bids inched a penny higher at an Iowa river terminal Thursday while holding steady elsewhere across the central U.S. today.

Old crop soybean sales jumped 60% above the prior four-week average, with 35.0 million bushels. New crop sales added another 14.0 million bushels, for a total of 49.0 million bushels last week. Analysts had predicted a tally landing somewhere between 25.7 million and 66.1 million bushels. China accounted for nearly half of the total, with 24.0 million bushels. Cumulative totals for the 2019/20 marketing year are slightly behind last year’s pace, with 1.388 billion bushels.

Soybean export shipments gained some momentum, moving 20% higher week-over-week and 36% above the prior four-week average, with 17.2 million bushels. Mexico was the No. 1 destination, with 5.3 million bushels.

Ahead of tomorrow morning’s WASDE report from USDA, analysts think the agency will make a slight upward revision in soybean yields, moving from a June projection of 49.8 bushels per acre up to 50.0 bpa for a total production of 4.152 billion bushels. Ending stocks are expected to ease fractionally, from 585 million bushels last month down to 584 million bushels.

Readers reporting to Feedback From The Field show some mounting concerns with this year’s corn crop, but some crop stress is still apparent in some places. “Large cracks starting in soil 7/7/20. Plants stressed on eroded soil and compacted areas,” writes a Central Illinois farmer. A Kentucky grower has been “fighting poor stands all year,” after a cool and wet May. “[It’s] very dry…need rain soon,” laments a Michigan reader. Click here to participate in our reader survey and view the interactive map to learn more from farmers in your area.

Preliminary volume estimates were for 181,556 contracts, trending slightly ahead of Wednesday’s final count of 174,472.

Wheat prices were mixed but mostly higher, as traders remain focused on lower production reports coming from several overseas competitors, which prompted another round of technical buying Thursday. September Chicago SRW futures gained 7.25 cents to $5.2375, September Kansas City HRW futures slipped a penny lower to $4.5575, and September MGEX spring wheat futures picked up 1.75 cents to $5.25.

Wheat sales gathered 12.0 million bushels in sales for the 2020/21 marketing year this past week but also noted a reduction of 2.8 million bushels for 2021/22. Analysts generally thought old crop sales would be more robust, with trade guesses ranging between 7.3 million and 20.2 million bushels. Marketing-year totals have started off relatively slow, now at 82.9 million bushels.

Wheat export shipments fared somewhat better, with 15.1 million bushels. Mexico was the No. 1 destination, with 4.1 million bushels.

Argentina’s Rosario Grain Exchange noted yesterday afternoon that the country’s 2020/21 wheat harvest could come in lower than previously expected if dry weather limits planted acres. The group’s current production estimates range between 661.4 million and 698.1 million bushels.

France, Russia and Ukrainian consultancies also recently lowered their production estimates this coming season. Naomi Blohm walks through some of these updates in greater detail in the latest Ag Marketing IQ blog, while crossing her fingers that the current rally doesn’t soon run out of steam. Click here to learn more.

Traders think the Philippines passed on all offers to purchase 4.0 million bushels of animal feed wheat in a tender that closed earlier today, with prices regarded as being too high.

Preliminary volume estimates were for 217,950 CBOT contracts, moving slightly ahead of Wednesday’s final count of 185,253.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 356.5 348.25 351.25 3
20-Sep 355 345.75 348.75 3.25
20-Jul 907 899.5 898.25 3.5
20-Sep 902.75 890.5 895.25 4.75
Soymeal                $/ton        
20-Aug 298.6 293.9 297.3 3.4
Soyoil                    cents/lb        
20-Aug 28.77 28.23 28.29 -0.26
Wheat                    $/bushel        
20-Jul 537.75 520.75 526.25 8.75
20-Sep 531.25 515.75 525 7.25
KC Wheat        
20-Jul 458.5 455 452 6.5
20-Sep 464.25 454.75 456.75 -1
MPLS Wheat        
20-Jul 506.25   514.75  
20-Sep 530.5 519.5 526 1.75
Live Cattle             cents/lb        
20-Aug 100.425 99 99.75 0.6
Feeder Cattle         cents/lb        
20-Sep 136.9 135.275 135.975 0.3
Lean Hogs             cents/lb        
20-Aug 51.175 48.75 50.525 2.575
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Aug 40.99 39.27 39.47 -1.43
20-Aug 1.2426 1.2107 1.2219 -0.0125
Unleaded Gasoline   $/gallon        
20-Aug 1.2954 1.2474 1.2484 -0.0425
Natural Gas        
20-Sep 1.934 1.816 1.828 -0.048
Ethanol Futures        
20-Aug 1.395 1.388 1.395 0.035
U.S. Dollar Index        
  96.755 96.18 96.68 0.312
Gold                      $/ounce        
20-Aug 1825.5 1799.6 1812.4 -3.1
20-Jul 2.86 2.8145 2.8325 0.018
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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