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Afternoon Market Recap for Sept. 30, 2020

Grains grab double-digit gains.

Corn, soybeans and wheat soar following bullish USDA stocks data

USDA’s quarterly grain stocks report bucked historical norms and analyst expectations with lower-than-expected inventories, which helped spark a major rally that pushed corn, soybean and wheat contracts significantly higher Wednesday. Soybeans climbed back above $10 per bushel, with nearby corn contracts nearing $3.80. Wheat saw the highest percentage gains, with some contracts surging more than 6% higher today.

Light rains are possible across large portions of the Corn Belt between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. However, most areas won’t see much more than 0.1” during this time. Further out, the agency’s 8-to-14-day outlook predicts drier-than-normal conditions to remain across the central U.S. between October 7 and October 13, with seasonally warm weather likely for the entire U.S.

Hopes for a new coronavirus aid package left investors feeling optimistic on Wall St. today, with the Dow climbing 386 points in afternoon trading to 27,839. Energy futures also stayed in the green today, with crude oil up nearly 2% and back above $40 per barrel. Diesel grabbed 3% gains, meantime, while gasoline trended slightly higher. The U.S. Dollar softened slightly.

On Tuesday, commodity funds were net sellers of all major grain contracts, including corn (-10,000), soybeans (-4,000), soymeal (-2,000), soyoil (-4,500) and CBOT wheat (-2,000).

Corn

Corn prices bounced significantly higher Tuesday, closing with gains of nearly 4% on a wave of technical buying spurred by lower-than-expected domestic stocks. December futures gained 14.25 cents to $3.79, with March futures up 14 cents to $3.88.

Corn basis bids were mostly steady to weak across the central U.S., sliding 2 to 6 cents lower across a handful of Midwestern locations on Tuesday. An Iowa ethanol plant bucked the overall trend after bids rose 6 cents there today.

Old crop corn stocks were 10% lower than September 2019, according to USDA, dropping to 1.995 billion bushels. Analysts were expecting bigger numbers, with an average trade guess of 2.250 billion bushels. Of that total, 751 million bushels are being stored on the farm, with off-farm stocks at 1.24 billion bushels. Disappearance is 3.02 billion bushels between June and August, which is slightly higher year-over-year.

USDA made small upward revisions to its 2019 corn production estimates, adding 2.67 million bushels and pegging average yields slightly higher, at 167.5 bushels per acre across 81.3 million harvested acres. Click here to read more analysis on today’s quarterly stocks report.

Ahead of Thursday morning’s weekly export report from USDA, analysts expect the agency to show corn sales ranging between 31.5 million and 55.1 million bushels for the week ending September 24.

Weekly ethanol production fell for a third consecutive week. The U.S. Energy Information Administration’s latest data set indicates a daily average of 881,000 barrels for the week ending September 25. That’s the lowest weekly tally since mid-June. November ethanol futures were down 0.4% this afternoon, to $1.285.

Ukraine’s corn exports are down significantly year-over-year, reaching just 24.8 million bushels through September 30. The country’s wheat and barley exports are much closer in line with the prior year’s pace, meantime.

The No. 1 question every fall is: “Should I sell my harvested grain now or store it?” Ed Usset, marketing specialist with the University of Minnesota, walks through a decision tree that can make it easier to answer that question in his latest Advanced Marketing Class blog – click here for details.

Preliminary volume estimates were for 538,844 contracts, jumping nearly 150% above Tuesday’s final count of 215,953.

Soybeans

Soybean prices jumped nearly 3% higher after USDA reported a sharp year-over-year decline in domestic stocks, which triggered a round of technical buying that pushed prices back over $10 per bushel. November futures gained 29 cents to $10.22, while January futures climbed 28.75 cents higher to $10.2575.

Soybean basis bids were mostly steady across the central U.S. Tuesday, although an Illinois river terminal rose 6 cents while an Iowa processor dropped 5 cents today.

Private exporters reported to USDA the sale of 7.9 million bushels of soybeans for delivery to unknown destinations during the 2020/21 marketing year, which began September 1.

Old crop soybean stocks tumbled 42% lower year-over-year, to 523 million bushels. Analysts were expecting a moderately higher tally, with an average trade guess of 576 million bushels. Of the total, on-farm storage was 141 million bushels, with the remaining 382 million bushels stored off the farm. Disappearance between June and August totaled 858 million bushels, which was 2% lower compared to the same period last year.

USDA downgraded its 2019 soybean production estimates by 333 million bushels, based on estimates of 74.9 million harvested acres with average yields at 47.4 bushels per acre.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show soybean sales ranging between 55.1 million and 91.9 million bushels for the week ending September 24. Analysts are also anticipating soymeal sales between 100,000 and 450,000 metric tons last week, plus as much as 35,000 MT of soyoil sales.

Preliminary volume estimates were for 342,668 contracts, trending significantly higher than Tuesday’s final count of 175,737.

Wheat

Wheat prices climbed substantially higher Wednesday on a round of technical buying after USDA reported domestic stocks were 8% lower than a year ago. Spillover strength from corn and soybeans lent additional tailwinds today. December Chicago SRW futures rose 28.5 cents to $5.78, December Kansas City HRW futures soared 33.25 cents higher to $5.0925, and December MGEX spring wheat futures gained 14.5 cents to $5.39.

All-wheat stocks fell 8% year-over-year to 2.16 billion bushels. Of that, 705 million bushels are stored on the farm, with off-farm stocks at 1.45 billion bushels, according to USDA. Disappearance between June and August was 695 million bushels, trending 4% higher compared to the same period last year.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show wheat sales ranging between 7.3 million and 18.4 million bushels for the week ending September 24.

Russia’s agriculture minister reported that the country should produce 3.013 billion bushels of wheat this year, which is substantially higher than prior estimates of 2.756 billion bushels. Russia is the world’s No. 1 wheat exporter.

Ukraine has exported 302.8 million bushels of wheat so far in the 2020/21 marketing year. The country’s total grain exports are tracking 12.6% behind last year’s pace, due primarily to a significant drop in corn exports.

Thailand purchased 2.6 million bushels of animal feed wheat from optional origins (likely from Australia) in a tender that closed earlier today. The original tender was for roughly three times that amount. The grain is for shipment between November and January.

Jordan issued a new tender to purchase 4.4 million bushels of milling wheat from optional origins that closes October 77. The grain is for shipment between January and February.

Preliminary volume estimates were for 175,993 CBOT contracts, more than doubling Tuesday’s final count of 71,747.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 382.75 362 379 14.25
21-Mar 391.75 371.25 388 14
Soybeans        
20-Nov 1034.75 987.5 1022 29
21-Jan 1037.75 991.5 1025.75 28.75
Soymeal                $/ton        
20-Dec 349.6 330.3 342.8 10.7
Soyoil                    cents/lb        
20-Dec 33.38 32.14 33.13 0.48
Wheat                    $/bushel        
20-Dec 587 547 578 28.5
21-Mar 592.75 554 583.5 27
KC Wheat        
20-Dec 515.5 475 509.25 33.25
21-Mar 524.5 484.75 517.5 31.5
MPLS Wheat        
20-Dec 547.5 524.25 539 14.5
21-Mar 559.5 537.25 551.5 14.25
Live Cattle             cents/lb        
20-Oct 109.25 108.375 108.45 -0.45
Feeder Cattle         cents/lb        
20-Oct 144.35 140.725 141.925 -1.85
Lean Hogs             cents/lb        
20-Dec 63.55 61.8 63.2 1.225
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Oct 40.37 38.68 39.99 0.7
Diesel        
20-Oct 1.1509 1.1 1.147 0.038
Unleaded Gasoline   $/gallon        
20-Oct 1.2069 1.1741 1.204 0.0023
Natural Gas        
20-Nov 3.166 3.039 3.107 -0.011
Ethanol Futures        
20-Nov 1.39 1.386 1.39 0.023
U.S. Dollar Index        
  94.25 93.7 93.92 -0.007
Gold                      $/ounce        
20-Oct 1903.6 1882.1 1890 -4.3
Copper        
20-Sep 3.0305 2.975 3.025 0.0415
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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