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Afternoon Market Recap for May 28, 2020

Corn grabs 2% gains today.

Wheat also tracked significantly higher, with soybeans down slightly

Grains were mixed but mostly higher Thursday as traders eyed weather forecasts and found renewed optimism in rising ethanol production. Corn prices climbed about 2% today, with some wheat contracts rising more than 2.5%. Soybeans bucked the overall trend, trending slightly lower as tension between the U.S. and China remain high right now, with each country accusing the other of mishandling the coronavirus pandemic.

Some more wet weather will be moving through the Midwest and Plains later this week, with NOAA’s latest 72-hour cumulative precipitation map predicting as much as 1” in parts of the eastern Corn Belt between today and Sunday. Further out, the agency’s latest 8-to-14-day outlook calls for much warmer, drier weather across most of the central U.S. from June 4 to June 10.

On Wall St., the Dow is on day three of its current rally, moving another 102 points higher in afternoon trading to 25,650. Stocks are still nearly 4,000 points lower than all-time highs reached this winter of more than 29,000 but have made significant inroads since briefly dropping below 19,000 in late March. Energy futures are also on the road to recovery but were mixed in afternoon trading. Crude oil was up around 2.5% to just below $34 per barrel, while diesel tumbled nearly 5%. The U.S. Dollar softened moderately.

On Wednesday, commodity funds were net sellers of corn (+4,500), soybeans (+2,000) and soyoil (+2,500) contracts but were net sellers of soymeal (-2,000) and CBOT wheat (-2,500).

Corn prices trended 2% higher Thursday on a round of short-covering and technical buying, with ethanol production ramping back up and forecasts pointing to hot, dry weather next week in the western Corn Belt. Spillover strength from surging wheat prices lent additional support. July futures gained 7 cents to $3.2750, with September futures up 6.25 cents to $4.4150.

Corn basis bids were steady to firm across the central U.S. Thursday, rising 1 to 7 cents higher at a handful of Midwestern locations today. Farmer sales have been generally slow so far this holiday week.

For the fourth consecutive week, ethanol production remains on the rise, with domestic output averaging 724,000 barrels per day for the week ending May 22. That’s up from the prior week’s tally of 663,000 daily barrels and an all-time low of 537,000 daily barrels for the week ending April 24. July ethanol futures were up nearly 1.2% this afternoon, to $1.116.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show corn sales ranging between 21.7 million and 51.2 million for the week ending May 21. Corn exports a week ago totaled 33.7 million bushels.

The International Grains council upped its forecast for global corn production in 2020/21 to 1.169 billion metric tons, primarily due to expected increased for the United States and China. But IGC also anticipates a rise in global corn consumption, leaving world stocks dropping to 11.338 billion bushels.

A Ukrainian traders union is bracing for a potential record corn harvest this fall, with production estimates of 1.457 billion bushels. Ukraine is one of the world’s top corn exporters each year.

What factors should farmers be monitoring as spring gives way to summer? Naomi Blohm, senior market adviser with Stewart Peterson, says there are four things in particular that will be worth monitoring in June. Click here to read the latest Ag Marketing IQ blog and find out what to watch for next month.

Fuel and fertilizer prices have been especially volatile so far this year. But where will they head next? Farm Futures grain market analyst Jacquie Holland takes a closer look in the latest Fertilizer & Economic Outlook – click here to learn more.

Preliminary volume estimates were for 396,368 contracts, more than tripling Wednesday’s final count of 109,554.

Soybean prices eased Thursday as worries over U.S.-China tensions triggered some technical selling. Spillover strength from corn and wheat limited losses, however. July futures dropped 2 cents to $8.4650, with August futures down 1.75 cents to $8.4850.

Soybean basis bids were slightly mixed at Midwestern processors but held steady across most other locations in the central U.S. on Thursday.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show soybean sales ranging between 22.0 million and 51.4 million bushels for the week ending May 21. Analysts also think the agency will report 100,000 to 400,000 metric tons of soymeal sales last week, plus another 5,000 to 35,000 MT of soyoil sales.

Due to an “upgrade for Brazil outweighed by reductions for minor producers,” the International Grains Council slightly lowered its estimates for global soybean production in 2020/21, moving to 13.338 billion bushels.

Preliminary volume estimates were for 154,908 contracts, which nearly mirrored Wednesday’s final count of 154,590.

Wheat prices jumped higher Thursday on technical buying and short-covering after forecasts hint at hotter, drier weather across the Plains next week. Some contracts were up more than 2.5% today. July Chicago SRW futures gained 10 cents to $5.1450, July Kansas City HRW futures climbed 11.75 cents to $4.6350, and July MGEX spring wheat futures added 6 cents to $5.1875.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show wheat sales ranging between 5.5 million and 22.0 million bushels for the week ending May 21. Actuals will need to land at least in the middle of those estimates to surpass the prior week’s tally of 12.1 million bushels.

The International Grains Council slightly upped its estimates for 2020/21 global wheat production to 28.146 billion bushels. IGC also projects higher global wheat stocks from prior estimates, moving up to 10.656 billion bushels.

The European Commission slashed its EU wheat production estimates for 2020/21 by 3.4% from a month ago to land at 4.464 billion bushels. Overly dry and warm weather earlier this spring was the likely culprit for the reduction, although the European Commission did not cite specific reasons for its cuts. The forecast for EU wheat exports for 2020/21 was also lowered to 973.7 million bushels.

Russian consultancy SovEcon expects its wheat exports for the 2020/21 marketing year, which begins in July, to improve 110 million bushels above this year’s totals to reach 1.352 billion bushels. The consultancy is expecting bin-busting yields in Russia and reduced competition from major rivals such as Ukraine and the European Union. Russia is the world’s No. 1 wheat exporter.

A Ukrainian traders union expects the country’s 2020 wheat production to slide 5.7% below 2019’s harvest to approximately 981 million bushels.

Japan purchased 4.1 million bushels of food-quality wheat from the United States, Canada and Australia in a regular tender that closed earlier today. Of the total, around 59% was sourced from the U.S.

Jordan again made no purchases in its latest international tender to buy 4.4 million bushels of milling wheat, which closed earlier today. The country has struggled to close similar deals in recent weeks but is likely to issue a new tender that closes next Wednesday.

Preliminary volume estimates were for 106,028 CBOT contracts, moving moderately ahead of Wednesday’s final count of 68,541.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 330.75 319.5 327.5 7
20-Sep 334 323.75 331.75 6.25
Soybeans        
20-Jul 852.25 838.75 847 -2
20-Sep 853 841.5 850.5 -0.75
Soymeal                $/ton        
20-Aug 287 283.9 286.3 2
Soyoil                    cents/lb        
20-Aug 27.85 27.18 27.57 -0.28
Wheat                    $/bushel        
20-Jul 518.75 503.75 514.5 10
20-Sep 521.5 507.25 517.75 9.25
KC Wheat        
20-Jul 468.25 450.5 464 11.75
20-Sep 474.25 457 470.5 11.5
MPLS Wheat        
20-Jul 522.25   519.25 6
20-Sep 533.75 523.75 530.75 6.25
Live Cattle             cents/lb        
20-Jun 101.6 100.4 101.6 0.8
Feeder Cattle         cents/lb        
20-Sep 136.675 134.35 136.525 1.45
Lean Hogs             cents/lb        
20-Jul 58 55.55 55.55 -3.75
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Jun 34.21 31.14 33.86 1.05
Diesel        
20-Jun 0.9643 0.9225 0.9327 -0.0394
Unleaded Gasoline   $/gallon        
20-Jun 1.0171 0.961 1.0073 0.014
Natural Gas        
20-Aug 1.978 1.91 1.926 -0.046
Ethanol Futures        
20-Jun 1.131 1.117 1.117 -0.033
U.S. Dollar Index        
  99.095 98.355 98.355 -0.703
Gold                      $/ounce        
20-Jun 1734.5 1714 1713 2.3
Copper        
20-Jun 2.421 2.385 2.421 0.038
Fertilizer Swaps     (as of 5/22)  
DAP Tampa-index              290.0 -11
DAP-New Orleans              282.2 -2
Urea-New Orleans              201.2 -25
Urea-Middle East              217.5 10
Urea-Black Sea              205.0 4
UAN (32%) New Orleans              141.7 -8.82
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