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Afternoon Market Recap for Sept. 28, 2020

Has harvest pressure arrived?

Soybeans continue to slump, while corn and wheat move higher

Grain prices were mixed but mostly higher today, with corn picking up moderate gains and some wheat contracts moving nearly 1.5% higher. Soybeans slumped about 0.75% lower, meantime, as harvest pressure mounts. Traders shrugged off another large soybean sale announced this morning, although two large corn sales incentivized some technical buying today.

Parts of the central U.S. saw some wet weather over the weekend, but get ready for drier weather ahead, with almost no measurable rainfall anywhere in the Midwest or Plains between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts much drier-than-normal conditions to prevail between October 5 and October 11, with seasonally cool weather also likely for the eastern Corn Belt.

On Wall St., hot-performing bank and tech stocks helped the Dow climb 500 points higher in afternoon trading to 27,674. Energy futures were also in the green this afternoon. Crude oil moved 0.75% higher, staying above $40 per barrel. Gasoline jumped more than 2% higher, meantime, with diesel up around 1%. The U.S. Dollar softened moderately.

On Friday, commodity funds were net buyers of most grain contracts, including corn (+15,000), soybeans (+2,500), soymeal (+2,500) and soyoil (+4,000) but were net sellers of CBOT wheat (-6,500). Through September 22, investors were holding the largest net long position for soybeans (211,143 contracts) since 2012.

Corn

Corn prices made modest inroads Monday after two more large corn sales were announced this morning. Prices closed around 0.5% on the ensuing round of technical buying. Harvest pressure limited gains, however. December futures moved 2 cents higher to $3.6725, while March futures rose 2.5 cents to $3.7575.

Corn basis bids were steady to mixed on Monday, moving as much as 4 cents lower at an Illinois ethanol plant while firming as much as 5 cents at a Nebraska elevator today.

Private exporters announced two large corn sales to USDA. The first was 4.4 million bushels to Japan, and the second was 8.2 million bushels to unknown destinations. Both sales are for delivery during the 2020/21 marketing year, which began September 1.

Corn export inspections tracked 5% above last week’s tally, moving to 31.8 million bushels. That total was on the upper end of trade estimates, which ranged between 25.6 million and 35.4 million bushels. Mexico and China topped all destinations last week, with 11.9 million bushels and 10.6 million bushels, respectively. Cumulative totals for the 2020/21 marketing year have reached 109.6 million bushels.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts anticipate the agency will show 17% of this year’s corn crop has been harvested through September 27. Analysts expect USDA to hold quality ratings steady, with 61% of the crop rated in good-to-excellent condition.

USDA’s Farm Service Agency is reminding farmers of a fast-approaching September 30 deadline to update Price Loss Coverage program yields for covered commodities. “This is a one-time opportunity for producers to update yields, which are used to calculate 2020 through 2023 payments,” according to an FSA statement. Contact your local office for more details.

European Union corn imports in 2020/21 are down 18% year-over-year after reaching 160.6 million bushels through September 27, per the latest data from the European Commission.

Iran issued an international tender to purchase 7.9 million bushels of animal feed corn from optional origins that closes on Wednesday. The grain is for shipment between October and December.

Preliminary volume estimates were for 233,476 contracts, moving ahead of Friday’s final count of 189,635.

Soybeans

Soybean prices spilled moderately lower on a round of technical selling to start the week, as a large export sale this morning wasn’t enough to override concerns about harvest pressure (it’s assumed farmers will store most of their corn and sell most of their soybeans this fall). November futures dropped 7.5 cents to $9.95, with January futures down 7 cents to $9.9925.

Soybean basis bids fell 5 to 7 cents at two Midwestern processors and firmed 1 to 5 cents at two interior river terminals Monday. Bids held steady elsewhere across the central U.S. today.

Private exporters reported to USDA the sale of 8.0 million bushels of soybeans for delivery to unknown destinations during the 2020/21 marketing year, which began September 1.

Soybean export inspections saw a modest week-over-week drop, moving to 44.5 million bushels. That tally was within the scope of trade estimates, which ranged between 40.4 million and 51.4 million bushels. China took 73% of the total, with 32.5 million bushels. Cumulative totals for the 2020/21 marketing year are moderately outpacing year-over-year totals, with 178.2 million bushels.

Ahead of the next weekly crop progress report from USDA, out later this afternoon, analysts expect the agency to make no changes to soybean quality ratings, with 63% of the crop rated in good-to-excellent conditions. Analysts also expect USDA to report harvest progress of 18% through September 27.

European Union soybean imports for 2020/21 are trending fractionally higher from a year ago after reaching 123.5 million bushels through Sunday. EU canola imports are down 25%, in contrast, with EU soymeal imports down 19% year-over-year.

Iran issued an international tender to purchase 200,000 metric tons of soymeal from India, Brazil or Argentina, which closes September 30. The grain is for shipment between October and December.

“I believe farmers do a better job of marketing when they avoid price bias,” asserts Dave Fogel, vice president at Advance Trading, Inc. That’s especially true as harvest pace picks up and more farmers are left with an age-old dilemma: sell grain now, or hold onto it and wait for prices to improve? Fogel walks through some scenarios in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 171,177 contracts, falling slightly below Friday’s final count of 181,345.

Wheat

Wheat prices were mixed but mostly higher on some bargain buying and concerns about dry weather in Russia. December Chicago SRW futures rose 5.5 cents to $5.4975, while December Kansas City HRW futures gained 7 cents to $4.8225. Spring wheat futures bucked the overall trend, easing slightly today. December MGEX spring wheat futures tracked half a penny lower, to $5.2925.

Wheat export inspections saw moderate week-over-week gains, climbing to 20.7 million bushels. That was in the middle of trade estimates, which ranged between 14.7 million and 23.9 million bushels. China was the No. 1 destination, with 6.9 million bushels. Cumulative totals for the 2020/21 marketing year are still maintaining a modest lead over last year’s pace after reaching 338.8 million bushels.

This year’s spring wheat harvest is virtually complete, and winter wheat planting continues. Analysts expect USDA to show 35% planting progress through September 27, up from 20% a week ago, when the agency releases its next weekly crop progress report later this afternoon.

European Union soft wheat exports for 2020/21 have reached 160.6 million bushels through September 27, according to official EU data. That volume is 39% slower than last year’s pace so far. EU barley exports are also down 14% year-over-year.

Russia’s SovEcon consultancy reports that farmers are facing overly dry conditions as 60% of its winter grain crops have now been planted. “The topsoil is dry, and crops are running out of time needed for their development before winter,” SovEcon noted in a recent report. “It is a bad setup for the 2021 crop but not a disastrous one as of yet.”

Jordan purchased 4.4 million bushels of hard milling wheat from optional origins in a tender that closed earlier today. The grain is for shipment in December.

Pakistan issued an international tender to purchase up to 11.0 million bushels of wheat from optional origins, which closes October 5. The grain is for arrival by mid-January.

Preliminary volume estimates were for 89,625 CBOT contracts, tracking moderately above Friday’s final count of 64,027.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 369.75 360.5 367.25 2
21-Mar 378 369 375.75 2.5
Soybeans        
20-Nov 1007.5 991.5 995 -7.5
21-Jan 1011.25 995 999.25 -7
Soymeal                $/ton        
20-Dec 340.7 331.1 333.9 -4.9
Soyoil                    cents/lb        
20-Dec 33.17 32.45 33.11 0.27
Wheat                    $/bushel        
20-Dec 551.75 537.75 549.75 5.5
21-Mar 558.25 545.25 556.75 5.25
KC Wheat        
20-Dec 483.5 469.5 482.25 7
21-Mar 493.5 479.75 492.5 7.25
MPLS Wheat        
20-Dec 532 525 529.25 -0.5
21-Mar 543.5 537.5 541.75 -0.75
Live Cattle             cents/lb        
20-Oct 108.2 106.8 108.175 0.6
Feeder Cattle         cents/lb        
20-Oct 141.2 139.05 141.2 1.05
Lean Hogs             cents/lb        
20-Dec 64.45 63.2 64.075 -0.35
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Oct 40.79 39.78 40.73 0.48
Diesel        
20-Oct 1.1453 1.1155 1.1447 0.0185
Unleaded Gasoline   $/gallon        
20-Oct 1.2516 1.2042 1.2507 0.0365
Natural Gas        
20-Nov 2.823 2.704 2.799 -0.008
Ethanol Futures        
20-Nov 1.35 1.282 1.33 0.02
U.S. Dollar Index        
  94.67 94.175 94.275 -0.407
Gold                      $/ounce        
20-Oct 1880.1 1848 1878 20.2
Copper        
20-Sep 2.985 2.9705 2.9705 -0.0025
Fertilizer Swaps     (as of 9/28)  
DAP Tampa-index              345.0 3
DAP-New Orleans              394.1 0
Urea-New Orleans              242.0 -7
Urea-Middle East              256.0 -4
Urea-Black Sea              240.0 -3
UAN (32%) New Orleans              132.3 0

 

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