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Afternoon Market Recap for Aug. 11, 2020

Wild weather boosts grain prices.

Corn and soybeans finish Tuesday’s session slightly higher

After damaging storms raked through the central U.S. yesterday, traders handed out small gains for corn and soybeans Tuesday on a light round of technical buying. USDA’s latest crop progress report also factored into the mix, with corn quality declining while soybean quality firmed. Another large sale to China failed to move the needle on soybean prices, however. For wheat, bargain buyers entered the fray, moving prices moderately higher today.

A deadly Midwestern derecho pushed through the Midwest yesterday, blowing down crops, damaging grain silos and knocking out power for more than a million homes. Nine states, from South Dakota to Ohio, were affected. More rain is likely across the Corn Belt later this week, according to the latest 72-hour cumulative precipitation map from NOAA – especially in western Iowa and all of Minnesota. NOAA’s 8-to-14-day outlook predicts drier weather will return to the Midwest and Plains between August 18 and August 24, with seasonally cool weather spreading across much of the Corn Belt during this time.

On Wall St., “reopening stocks” (think airlines, cruises, etc.) are on an upward swing, helping the Dow trend 229 points higher in afternoon trading to make it back over 28,000. Energy prices were mixed. Crude oil was near even, at just under $42 per barrel. Gasoline was down more than 1%, while diesel moved about 0.75% higher. The U.S. Dollar softened slightly. Copper, which is sometimes seen as a bellwether for the global economy, firmed by nearly 0.5%.

Yesterday, commodity funds were net buyers of several major grain contracts, including corn (+9,000), soybeans (+8,500) and soymeal (+2,500) but were net sellers of CBOT wheat (-4,500).

Corn prices trended slightly higher Tuesday on eroding crop conditions and a round of severe weather yesterday that caused substantial damage in some fields. September futures picked up 1.25 cents to $3.1175, while December futures inched ahead 0.75 cents to $3.2375.

Corn basis bids jumped 10 cents higher at an Indiana processor and an Illinois ethanol plant Tuesday while showing steady to narrowly mixed results elsewhere across the central U.S. today.

Through Sunday, 71% of this year’s corn crop is now rated in good-to-excellent condition, down from 72% a week ago. Another 21% is rated fair (steady from last week), with the remaining 8% rated poor or very poor (up a point from last week).

Physiologically, nearly all (97%) of the crop has reached the silking stage, which is mostly in line with the prior five-year average of 95%. More than half (59%) is now at dough stage, versus 39% a week ago and moderately ahead of the prior five-year average of 52%. Eleven percent of the crop is dented, which is slightly behind the prior five-year average of 12%, meantime.

Argentina’s corn footprint for 2020/21 is expected to be similar to last year’s total of 15.568 million acres. This year’s production almost reached record levels, with 1.968 billion bushels. Argentina’s is the world’s No. 3 corn exporter.

Brazil’s Conab expects the country’s total 2019/20 corn production to reach 4.021 billion bushels, which was moderately higher than the group’s prior estimate of 3.959 billion bushels. Exports are expected to top 1.358 billion bushels.

As of this morning, we had received very few responses from farmers suffering damage from yesterday’s Midwestern storms. We will highlight those responses in next week’s Feedback from the Field recap, which will inevitably feature declining crop conditions. Click here to participate, read the latest round of farmer anecdotes and view our interactive map.

Iranian feed importers issued an international tender to purchase 9.8 million bushels of animal feed corn that closes today. The grain is for shipment in September or October.

Taiwan issued an international tender to purchase 2.6 million bushels of corn either from the United States, South America or South Africa, which closes Thursday. Shipment is between late October and early December, depending on origin.

Preliminary volume estimates were for 380,211 contracts, drifting slightly below Monday’s final count of 389,996.

Soybean prices moved slightly higher in a somewhat choppy session Tuesday as traders attempted to balance another export sale to China with better-than-expected crop quality. August futures added 1.5 cents to $8.78, while September futures inched ahead 0.75 cents to $8.7075.

Soybean basis bids firmed 1 to 4 cents higher at two interior river terminals Tuesday while holding steady elsewhere across the central U.S. today.

China remains an active buyer of U.S. soybeans, as private exporters reported to USDA another sale of 4.9 million bushels for delivery during the 2020/21 marketing year, which begins September 1. There have been multiple similar announcements throughout July and August – click here for the latest rundown.

As for trade tensions between the U.S. and China, White House economic adviser Larry Kudlow told reporters trade between the two countries “is fine right now.” The two countries plan to get together this weekend via video conference to review how the phase one trade agreement has gone so far.

Soybean quality ratings moved higher – bucking expectations – going from 73% rated in good-to-excellent condition up to 74% by August 9. Another 21% is rated fair (unchanged from last week), with the remaining 5% rated poor or very poor (down a point from last week).

Crop maturity is progressing a bit faster than it has in recent years. Ninety-two percent of the crop is now blooming, versus the prior five-year average of 89%. And 75% of the crop is now setting pods, also besting the prior five-year average of 68%.

Brazil’s Conab now estimates the country’s 2019/20 soybean production at 4.444 billion bushels, which would be an increase of 5.1% above last year’s crop, if realized. Exports are now estimated at 3.013 billion bushels.

Preliminary volume estimates were for 127,136 contracts, dropping below Monday’s final count of 151,639.

Wheat prices finally attracted some bargain buyers after getting hammered earlier this month, but overall concerns about large domestic stocks and fierce overseas competition still lingers. September Chicago SRW futures gained 4 cents to $4.95, September Kanas City HRW futures added 3.25 cents to $4.1725, and September MGEX spring wheat futures picked up 1.5 cents to $4.9225.

Spring wheat quality ratings took a spill, moving from 73% rated in good-to-excellent condition a week ago down to 69% this past week. Another 24% is rated fair (up two points from last week), with the remaining 7% rated poor or very poor (also up two points from last week). Harvest pace is progressing slower than usual, at 15% complete. The prior five-year average is 25%.

Winter wheat harvest is also slightly behind the prior five-year average of 95%, reaching 90% completion through Sunday. That is up from 85% a week ago and slightly ahead of 2019’s pace of 87%.

Ukraine’s economy ministry expects the country’s wheat exports during the 2020/21 marketing year will reach 632 million bushels.

Egypt purchased 4.4 million bushels of wheat from Russia in an international tender that closed earlier this week. The grain is for shipment between late September and early October.

Syria issued an international tender to purchase 7.3 million bushels of soft wheat from Russia, with a deadline of September 14. Shipment will be for 60 days after a purchase is confirmed.

Preliminary volume estimates were for 160,272 CBOT contracts, moving slightly above Monday’s final count of 153,594.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Sep 315 310.25 311.5 1.25
20-Dec 327.5 322.5 323.5 0.75
Soybeans        
20-Aug 879.5 878 878 1.5
20-Sep 874.25 867.75 870.5 0.75
Soymeal                $/ton        
20-Sep 287 283.7 284.1 -0.1
Soyoil                    cents/lb        
20-Sep 30.94 30.49 30.62 -0.08
Wheat                    $/bushel        
20-Sep 498.75 490.5 495 4
20-Dec 507 499 503.75 3.75
KC Wheat        
20-Sep 421.5 413.25 416.75 3.25
20-Dec 432.25 425 428.25 2.75
MPLS Wheat        
20-Sep 496 490.75 492.75 1.5
20-Dec 511.75 507 508.75 1.5
Live Cattle             cents/lb        
20-Aug 104.9 103.6 104.75 1.15
Feeder Cattle         cents/lb        
20-Sep 147.125 145.025 146.775 1.375
Lean Hogs             cents/lb        
20-Oct 54.025 51.775 51.825 -2
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Sep 42.94 41.52 41.78 -0.16
Diesel        
20-Sep 1.2671 1.2335 1.242 0.0051
Unleaded Gasoline   $/gallon        
20-Sep 1.2606 1.2023 1.2085 -0.0208
Natural Gas        
20-Oct 2.356 2.27 2.302 0.015
Ethanol Futures        
20-Sep 1.22 1.2 1.22 0.04
U.S. Dollar Index        
  93.71 93.14 93.6 0.031
Gold                      $/ounce        
20-Sep 2027 1911.2 1912.8 -111.6
Copper        
20-Aug 2.8735 2.8475 2.872 0.0135
Fertilizer Swaps     (as of 8/7)  
DAP Tampa-index              325.0 9
DAP-New Orleans              358.3 2
Urea-New Orleans              263.5 23
Urea-Middle East              271.5 12
Urea-Black Sea              235.0 10
UAN (32%) New Orleans              130.6 1.1

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