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Afternoon Market Recap for Oct. 26, 2020

Wheat takes a double-digit hit.

Corn also down moderately to start the week, with soybeans up slightly

Grain prices were mixed but mostly lower to start the week. Wheat saw the most downside, with some contracts spilling more than 3% lower on a round of profit-taking and technical selling after some drought-quenching rains fell on Russia, the world’s No. 1 exporter. Corn saw a moderate decline of around 0.5%, partly due to some ensuing spillover weakness. But soybeans held on for modest gains after more signals that Chinese demand is still red-hot.

Following a widespread round of rain and snow across the central U.S. this past weekend, the upper Midwest and Northern Plains aren’t expected to see any measurable accumulations between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. However, a large area farther south, stretching from Kansas through Ohio, could pick up another 2” or more during this time. Next week, NOAA’s 8-to-14-day outlook predicts seasonally warm, dry weather for most of the U.S. between November 2 and 8.

Signs of surging coronavirus cases across the nation put Wall St. in a general state of anxiety Monday, with the Dow tumbling 770 points in afternoon trading to 27,564. The latest seven-day caseload is at an average of 68,767 daily infections, a record high. Energy futures also had a bearish reaction to the news, with crude oil down more than 3% this afternoon to fall back below $39 per barrel. Gasoline and diesel each dropped around 2.5%. The U.S. Dollar firmed moderately.

Last Friday, commodity funds were net buyers of all major grain contracts, including corn (+9,000), soybeans (+8,000), soymeal (+4,000), soyoil (+2,500) and CBOT wheat (+6,500).

Corn

Corn prices sputtered Monday, falling around 0.5% lower on a round of technical selling partly spurred by spillover weakness from wheat. December futures closed down 2 cents to $4.1725, with March futures dropping 2.5 cents to $4.1775.

Corn basis bids were mostly steady to firm across the central U.S. after moving 4 to 10 cents higher at a handful of midwestern locations today. An Iowa processor bucked the overall trend after sliding 3 cents lower.

Corn export inspections saw a week-over-week decline of nearly one-third, sliding to 25.0 million bushels. Mexico accounted for a third of that total, with 8.4 million bushels. But the 2020/21 marketing year overall remains off to a much better start than last year, trending 75% above last year’s pace to 239.9 million bushels since September 1.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to show the 2020 corn harvest at 73% complete through October 25, up from 60% a week earlier. With more than half of this year’s harvest complete, USDA no longer provides crop quality updates.

Ukraine’s 2020 corn harvest could drop 8.3% from a year ago to 1.299 billion bushels, per the country’s economy ministry, with some traders expecting an even bigger year-over-year decline. Nearly 79% of that total is likely to be exported.

Taiwan issued an international tender to purchase 2.6 million bushels of animal feed corn from the United States, South America or South Africa, which closes on Tuesday. The grain is for shipment in January or February, depending on origin.

Preliminary volume estimates were for 334,607 contracts, moving slightly higher than Friday’s final count of 322,277.

Soybeans

Soybean prices overcame moderate overnight losses in a choppy session to close modestly higher, as export sentiment remains stubbornly optimistic after another large sale was reported this morning, and after a bullish set of export inspection data from USDA. November futures added 3 cents to $10.8675, while January futures picked up 1.75 cents to $10.8275.

Soybean basis bids were steady to firm across multiple locations Monday – especially at interior river terminals and midwestern processors. Bids rose as much as 10 cents higher today as some locations attempted to drum up more farmer sales.

Private exporters reported to USDA the sale of 4.4 million bushels of soybeans for delivery to unknown destinations for delivery during the 2020/21 marketing year, which began September 1. Exports also reported the sale of 135,000 metric tons of soymeal for delivery to the Philippines, also for delivery in 2020/21 (the marketing year for soymeal began October 1).

Soybean export inspections firmed another 15% from a week ago to reach 97.9 million bushels for the week ending October 22. That was also significantly above the same week a year ago, when export inspections topped 58.0 million bushels. In fact, cumulative totals for the 2020/21 marketing year are now nearly 78% ahead of last year’s pace, with 526.9 million bushels since September 1.

Ahead of the next weekly crop progress report from USDA, out later this afternoon, analysts expect to see the 2020 soybean harvest move from 75% completion a week ago up to 86% through October 25.

A resurgence in exports to China is largely driving this huge year-over-year increase. Last week, the country’s export inspections accounted for another 74.3 million bushels, which was 76% of the total volume.

Brazil’s AgRural consultancy says the country’s farmers planted 13.8 million acres of soybeans this past week. Southern state Paraná leads the way, with planting progress of 51% so far, although AgRural adds it “needs widespread rainfall in the coming days to ensure good conditions for germination and initial crop development.” The country’s largest production state, Mato Grosso, is still behind last year’s planting pace due to drought delays.

Preliminary volume estimates were for 256,046 contracts, drifting moderately below Friday’s final count of 315,810.

Wheat

Wheat prices tilted significantly lower Monday after improving weather conditions for some overseas competitors (most notably Russia) sparked a round of technical selling and profit-taking. December Chicago SRW futures fell 13.25 cents to $6.1950, December Kansas City HRW futures tumbled 18.75 cents to $5.51, and December MGEX spring wheat futures lost 12 cents to $5.6550.

Wheat export inspections firmed week-over-week, improving 51% to reach 13.4 million bushels. Japan led all destinations, with 3.9 million bushels. Cumulative totals for the 2020/21 marketing year are holding onto a modest lead over last year’s pace, with 405.8 million bushels since June 1.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to show 2020/21 winter wheat plantings at 86% completion through October 25, up from 77% the prior week. Analysts also provided an average guess of 52% of the crop rated in good-to-excellent condition, although individual estimates varied widely, from 42% to 65%.

Russian consultancy Sovecon reported that recent rains in some key production regions could bolster the country’s 2020/21 wheat production. Planting pace has been slightly ahead of normal this fall, with 94% of winter grains now in the ground. Russia has struggled with some drought conditions seen earlier this fall.

Ukraine’s government has elected to hold steady its 2020/21 wheat export quota, set at 643 million bushels, which was set to protect domestic supplies. However, the country’s economy ministry says Ukraine has already used 57.4% of that total since July 1.

Pakistan issued an international tender to purchase 11.8 million bushels of wheat from optional origins, which closes November 3. The grain is for arrival by the end of January.

Syria issued an international tender to purchase 7.3 million bushels of soft wheat from the Black Sea region. Offers must be submitted by Wednesday, and the country seeks shipment 60 days after the order has been placed and confirmed.

A South Korean feed group issued has purchased 1.8 million bushels of animal feed wheat from optional origins, for shipment in March.

Preliminary volume estimates were for 96,010 CBOT contracts, coming in slightly above Friday’s final count of 95,889.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 419.75 412.75 417.75 -2
21-Mar 420 414.25 418.5 -2.5
Soybeans        
20-Nov 1089.75 1078 1087.75 3
21-Jan 1087.75 1075.25 1083.5 1.75
Soymeal                $/ton        
21-Jan 383.5 375.6 383.1 3
Soyoil                    cents/lb        
21-Jan 34.64 33.87 34.24 0.24
Wheat                    $/bushel        
20-Dec 633 616 620 -13.25
21-Mar 632.75 616.25 620.25 -13
KC Wheat        
20-Dec 569.5 548.25 552 -18.75
21-Mar 576 555.25 559.5 -19
MPLS Wheat        
20-Dec 577.25 563.75 565 -12
21-Mar 586 572.75 574.75 -12
Live Cattle             cents/lb        
20-Oct 104.275 103.15 104.175 0.825
Feeder Cattle         cents/lb        
20-Nov 131.15 129.025 131.15 1.5
Lean Hogs             cents/lb        
21-Feb 67.775 65.65 67.725 0.8
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Dec 39.74 38.28 38.62 -1.23
Diesel        
20-Nov 1.1488 1.1119 1.1241 -0.0272
Unleaded Gasoline   $/gallon        
20-Nov 1.1335 1.1067 1.1113 -0.0276
Natural Gas        
20-Dec 3.293 3.159 3.257 0.062
Ethanol Futures        
20-Nov 1.57 1.54 1.57 0.05
U.S. Dollar Index        
20-Dec 93.11 92.73 93.045 0.28
Gold                      $/ounce        
20-Nov 1908 1890.8 1900.2 -1.8
Copper        
20-Oct 3.109 3.0915 3.0915 -0.034
Fertilizer Swaps     (as of 10/16)  
DAP Tampa-index              355.0 0
DAP-New Orleans              390.2 -4
Urea-New Orleans              237.6 -2
Urea-Middle East              255.5 -3
Urea-Black Sea              240.0 -1
UAN (32%) New Orleans              132.3 0
 
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