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Afternoon Market Recap for Aug. 13, 2020

Corn prices jump 3% higher.

Soybeans climb nearly 2% higher, with most wheat contracts up 1% to 1.5%

Thursday was a good day for grain prices, with corn, soybeans and wheat all moving substantially higher as traders continue to assess the impact of damaging Midwestern storms earlier this week, which could have slashed total production by tens or even hundreds of millions of bushels. Export optimism lent further support. Corn and soybeans finished Thursday’s session with double-digit gains, with wheat also staying firmly in the green today.

Most of the Midwest will see some measurable rainfall between Friday and Monday, but no areas outside of Minnesota and Ohio should see much more than 0.25”, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook, covering August 20 to August 26, predicts seasonally cool weather for much of the Corn Belt, with drier-than-normal conditions emerging across the entire Midwest and Plains.

On Wall St., better-than-expected unemployment data was overridden by worries over a presumed “stalemate” in ongoing coronavirus stimulus negotiations for now. That left the Dow tilted 123 points lower in afternoon trading to 27,853. Energy futures also spilled into the red this afternoon, with crude oil down 1% but hanging just above $42 per barrel. Gasoline was down around 0.8%, with diesel dropping 1.5%. The U.S. Dollar softened slightly.

On Wednesday, commodity funds were net buyers of most grain contracts, including corn (+10,000), soybeans (+7,500), soymeal (+1,000) and soyoil (+8,500) but were net sellers of CBOT wheat (-4,000).

Corn prices moved noticeably higher Thursday on a wave of technical buying supported by export optimism and worries over damage caused by violent Midwestern storms earlier this week. September futures climbed 10.5 cents to $3.25, with December futures adding 11.25 cents to $3.3850.

Corn basis bids were steady to narrowly mixed across the central U.S. Thursday, moving as much as 3 cents higher at an Iowa river terminal and as much as 2 cents lower at an Illinois ethanol plant today.

Corn prices have seen significant support in the past two sessions, despite USDA’s very bullish yield prediction of 181.8 bushels per acre in yesterday’s WASDE report. “This was the most bullish price response from an August USDA report day since 2013,” notes Naomi Blohm. What happened? For starters, the deadly round of Midwestern storms earlier this week may have taken out between 200 million and 400 million bushels. Find out what else Blohm has been monitoring in the latest Ag Marketing IQ blog.

This morning, private exporters reported to USDA the sale of 4.3 million bushels of corn for delivery to unknown destinations. Of the total, 1.2 million bushels is for delivery during the 2019/20 marketing year, which ends August 30, with the remainder for delivery in 2020/21.

Corn export sales were muted in comparison, notching 14.8 million bushels in old crop sales plus another 21.8 million bushels in new crop sales for a total tally of 36.6 million bushels. That landed in middle of trade guesses, which ranged between 15.7 million and 55.1 million bushels. Cumulative totals for the 2019/20 marketing year are still well behind last year’s pace, with 1.576 billion bushels.

Corn export shipments boosted 43% above the prior four-week average, with 52.5 million bushels. China was the No. 1 destination, accounting for nearly a third of the total at 15.6 million bushels.

China continues to significantly draw down its older corn reserves, selling more than 157 million bushels on auction earlier today, which was 100% of the volume available for sale.

Consultancy Strategie Grains has slightly raised its estimates for European Union’s 2020 corn production, now at 2.653 billion bushels, citing “good” conditions in central Europe. The region is typically a net importer of corn.

Preliminary volume estimates were for 846,951 contracts, jumping 52% above Wednesday’s final count of 556,620.

Soybean prices enjoyed double-digit gains Thursday on another round of technical buying spurred by export optimism and worries over damaged crops from this week’s severe storms. August futures climbed 16.75 cents to $9.0725, while September futures rose 15.5 cents to $8.96.

Soybean basis bids firmed 2 to 3 cents higher at two interior river terminals and fell 4 cents lower at an Iowa processor while holding steady elsewhere across the Midwest today.

Private exporters reported to USDA two large soybean sales this morning. The first was for 7.2 million bushels for delivery to China, and the second was for 7.4 million bushels for delivery to unknown destinations. Both sales are for delivery during the 2020/21 marketing year, which begins September 1.

Old crop soybean sales jumped 96% above the prior four-week average, reaching 20.9 million bushels. New crop sales added another 104.3 million bushels, for a total haul of 125.2 million bushels. That bested all trade estimates, which ranged between 44.1 million and 86.3 million bushels. Cumulative totals for the 2019/20 marketing year are still moderately behind last year’s pace, with 1.509 billion bushels.

Soybean exports sales moved 36% higher week-over-week and bested the prior four-week average by 83%, with 40.6 million bushels. China was the No. 1 destination, with 23.1 million bushels.

U.S.-China trade talks are expected to continue via videoconference this weekend. Total Chinese imports from the U.S. is down 3.5% year-over-year between January and July, which is below its phase one trade targets so far. “Under the current situation, it is required that the both sides need to work together and step up cooperation to overcome the difficult times,” according to China’s assistant minister of commerce Ren Hongbin.

Ukraine is more known for growing corn and wheat, but the country does produce a modest amount of soybeans. But analyst APK-Inform has clipped its estimates for the country’s 2020 soybean harvest by 9.5% to 139.6 million bushels due to lower-than-expected planted acres. More than half of that total is likely to be exported.

Iran purchased an unknown amount of soymeal in an international tender that closed earlier this week after seeking offers for up to 250,00 metric tons. The grain is for shipment between September and October.

Preliminary volume estimates were for 305,844 contracts, moving well above Wednesday’s final count of 219,616.

Wheat prices followed corn and soybean prices higher, with contracts closing as much as 1.5% higher today. Dry conditions in Argentina lent further support. September Chicago SRW futures gained 4 cents to $4.9525, September Kansas City HRW futures added 6.5 cents to $4.2425, and September MGEX spring wheat futures picked up 4.5 cents to $4.9675.

Wheat export sales were lackluster, spilling 45% below the prior four-week average to 13.5 million bushels. That was also on the low end of trade estimates, which ranged between 9.2 million and 29.4 million bushels. Cumulative totals for the first five weeks of the 2020/21 marketing years reached 183.6 million bushels, which is a bit higher than last year’s pace so far.

Wheat export shipments slid 18% below the prior four-week average to 17.2 million bushels. The Philippines topped all destinations, with 3.3 million bushels.

European Union consultancy Strategie Grains has lowered the region’s outlook for 2020 wheat production every month since December on a bevy of ongoing adverse weather conditions. The latest estimate is for 4.703 billion bushels.

Egypt has purchased 15.2 million bushels of wheat from Russia in an international tender that closed earlier this week. The grain was split among seven separate consignments that will be shipped in early October.

Jordan issued a new tender to purchase 4.4 million bushels of milling wheat from optional origins after making no purchases in a similar tender that closed earlier this week. The new tender closes August 19.

Preliminary volume estimates were for 168,560 CBOT contracts, moving slightly below Wednesday’s final count of 182,100.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Sep 327.5 314.75 325.25 10.5
20-Dec 340.75 327.5 338.75 11.25
Soybeans        
20-Aug 910.5 894.75 907.25 16.75
20-Sep 899 880.5 896.25 15.5
Soymeal                $/ton        
20-Sep 293.8 284.5 292.1 8.1
Soyoil                    cents/lb        
20-Sep 31.83 31.19 31.23 -0.37
Wheat                    $/bushel        
20-Sep 500.75 489 496.75 4
20-Dec 509.75 498 506.5 4.75
KC Wheat        
20-Sep 427.25 416.25 425 6.5
20-Dec 438 427.25 436 5.75
MPLS Wheat        
20-Sep 501.75 492 497 4.5
20-Dec 515 506.75 511 4
Live Cattle             cents/lb        
20-Aug 107.35 106.3 107.175 0.825
Feeder Cattle         cents/lb        
20-Sep 148.4 147.15 147.5 -0.45
Lean Hogs             cents/lb        
20-Oct 52.475 51.5 52.45 0.85
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Sep 42.84 42.09 42.25 -0.42
Diesel        
20-Sep 1.2565 1.2358 1.2384 -0.0188
Unleaded Gasoline   $/gallon        
20-Sep 1.2496 1.2176 1.2362 -0.0076
Natural Gas        
20-Oct 2.347 2.282 2.325 0.028
Ethanol Futures        
20-Oct     1.229  
U.S. Dollar Index        
  93.39 92.905 93.34 -0.068
Gold                      $/ounce        
20-Sep 1963.5 1911.7 1936.7 1.8
Copper        
20-Aug 2.879 2.796 2.805 -0.082
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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