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Afternoon Market Recap for Aug. 5, 2020

Midweek markets turn in mixed results.

Corn and winter wheat futures move higher, as soybeans and spring wheat spill into the red

After taking a significant hit on Tuesday, grain markets finished Wednesday’s session mixed on an uneven round of technical maneuvering. Corn and winter wheat contracts tacked on moderate gains after a round of technical buying, but soybeans finished in the red again today, even after another large sale to China was announced this morning. There are lingering worries that both the U.S. and Brazil will produce massive (perhaps record-breaking) crops this year.

Don’t expect a lot of rain between today and Saturday, with the exception of North Dakota and Missouri, which could gather as much as 1”, per the latest 72-hour cumulative precipitation map from NOAA. Large parts of Illinois, Michigan, Indiana and Ohio will see no measurable accumulation during this time, meantime. NOAA’s 8-to-14-day outlook predicts a return to seasonally warm weather for much of the country between August 12 and August 18, with drier-than-normal conditions developing in the Central and Southern Plains.

On Wall St., the Dow is on pace for a fourth consecutive session of gains, climbing nearly 300 points in afternoon trading to 27,125, thanks in large part to optimism over progress on the development of a coronavirus vaccine. Energy futures also trended higher today, with crude oil up another 1.25% this afternoon to move back above $42 per barrel. Gasoline rose 1%, with diesel up more than 0.5%. The U.S. Dollar softened moderately.

On Tuesday, commodity funds were net sellers of all major grain contracts, including corn (-32,500), soybeans (-12,000), soymeal (-3,000), soyoil (-1,500) and CBOT wheat (-10,500).

Corn prices moved about 0.75% higher today on a round of short-covering and bargain buying after seeing significant declines yesterday. Worries still persist that U.S. growers will see yields above the trend line of 178.5 bushels per acre this fall. September futures picked up 2 cents to $3.1025, with December futures adding 2.25 cents to $3.2250.

Corn basis bids were mostly steady across the Midwest Wednesday but did tilt 4 cents lower at an Iowa river terminal today.

Prior to Thursday morning’s weekly export report from USDA, analysts expect the agency to show corn sales ranging between 82.7 million and 126.0 million bushels for the week ending July 30. Analysts are confident the latest numbers will eclipse the prior week’s tally of 24.0 million bushels.

A grower survey from Farm Futures found that 2020 corn yields could slightly surpass trendline yields to reach 178.9 bushels per acre this fall. Adding that to data from USDA’s June 30 acreage report, and U.S. production could reach 15.032 billion bushels this year. Ending stocks for 2020/21 could climb to 2.68 billion bushels, which will be the largest volume since 1987, if realized. Click here for more analysis on this exclusive survey.

Ethanol production for the week ending July 31 took a moderate step back from the prior week’s tally of 958,000 barrels per day, falling to a daily average of 931,000 barrels. Stocks also rose above last weeks’ levels, climbing to 20.346 million barrels. Ethanol futures followed other energy prices higher today, however, with September futures rising nearly 1.4% to $1.105.

Ukraine’s 2020/21 corn exports have gotten off to a sluggish start, with just 19.3 million bushels in sales since the start of July. Total grain exports are down 25% to start the current marketing year.

Brazilian exporter group ANEC says the country’s corn exports in August could climb 33% year-over-year to reach 248.8 million bushels. That’s also an improvement over July’s tally of 199.6 million bushels.

Two South Korean groups purchased nearly 5.2 million bushels of corn from optional origins in separate tenders that closed earlier today.

Worried about financial stress? David Kohl has some sage advice in his latest Road Warrior column. “Intense monitoring of the financial situation with sound, transparent financial records is not an option, but a requirement,” he says for starters. Click here to read Kohl’s additional recommendations.

Preliminary volume estimates were for 284,347 contracts, trending well below Tuesday’s final count of 467,472.

Soybean prices sagged Wednesday on some technical selling spurred by worries over bin-busting crops expected for both the U.S. and Brazil. Traders shrugged off another large sale to China announced this morning. August futures fell 2.5 cents to $8.8125, with September futures dropping 3.75 cents to $8.76.

Soybean basis bids fell 2 cents lower at an Indiana processor Wednesday while holding steady elsewhere across the central U.S. today.

Private exporters reported to USDA the sale of 7.1 million bushels of soybeans for delivery to China during the 2020/21 marketing year, which begins September 1. This follows another large soybean sale to unknown destinations on Monday, which was for 9.6 million bushels for delivery in 2019/20 and 2020/21.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show soybean sales ranging between 29.4 million and 64.3 million bushels for the week ending July 30, expressing doubt that it can match the prior week’s mammoth tally of 132.4 million bushels.

Analysts also expect USDA to report 300,000 to 750,000 metric tons of soymeal sales last week, plus another 5,000 to 35,000 MT of soyoil sales.

Per the results of our exclusive grower survey, released earlier today, average soybean yields could reach 51.0 bushels per acre this year, a 3.6-bushel boost over 2019, if realized. That would also put 2020 soybean production at 4.233 billion bushels, which is 98 million bushels higher than July WASDE projections and 19% above last year’s production.

Preliminary volume estimates were for 187,044 contracts, spilling moderately below Tuesday’s final count of 223,438.

Wheat prices were mixed Wednesday on an uneven round of technical maneuvering. Some bargain buying lifted winter wheat contracts today, while spring wheat contracts saw small losses as traders continue to digest better-than-expected crop quality in USDA’s latest crop progress report. September Chicago SRW futures gained 2.25 cents to $5.1050, September Kansas City HRW futures added 3.75 cents to $4.26, and September MGEX spring wheat futures slipped 0.75 cents lower to $5.01.

Ahead of the next weekly export report from USDA, out Thursday morning, analysts expect the agency to show wheat sales ranging between 7.3 million and 29.4 million bushels for the week ending July 30.

Farm Futures survey respondents expect to see a 1.8 bushel-per-acre drop in wheat yields this year after dry growing conditions plagued the Southern Plains. Survey participants estimate that cumulative 2020 wheat yields will top out at 49.9 bpa across the U.S. Click here to learn more.

Ukraine, the world’s No. 4 wheat exporter, has sold 53.6 million bushels of wheat so far during the 2020/21 marketing year, which began July 1. The country is expecting a decline in total grain output this year following a record harvest in 2019.

Unhelpful weather this growing season in France has the country’s farm ministry lowering its 2020 soft wheat forecast by 11.5% to 1.092 billion bushels. If realized, that tally will fall 16% below the prior five-year average, with the smallest harvested area since 1994. Heavy rains last fall and drought in spring plagued this year’s crop.

But in Canada, conditions may be aligned for a record wheat harvest, according to Manitoba-based FarmLink Marketing Solutions, which concluded a crop tour in late July. The group estimates production will reach 1.433 billion bushels, surpassing the prior best of 1.382 billion bushels in 2013.

Preliminary volume estimates were for 141,046 CBOT contracts, tracking moderately lower than Tuesday’s final count of 190,731.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Sep 311.25 309 311 2
20-Dec 323.5 320.75 323.25 2.25
20-Aug 884 880 882 -2.5
20-Sep 882.25 874.25 876.25 -3.75
Soymeal                $/ton        
20-Sep 287.6 284.4 284.7 -1
Soyoil                    cents/lb        
20-Sep 31.22 30.81 31.1 -0.03
Wheat                    $/bushel        
20-Sep 512.75 506 510.75 2.25
20-Dec 520 513.25 517.5 0.75
KC Wheat        
20-Sep 427.5 422.25 426.5 3.75
20-Dec 438.5 433 437.25 4
MPLS Wheat        
20-Sep 505.25 501 501.5 -0.75
20-Dec 518.5 515.25 516 -0.5
Live Cattle             cents/lb        
20-Aug 102.7 101.775 102.55 0.275
Feeder Cattle         cents/lb        
20-Sep 146.875 145.8 146.6 -0.025
Lean Hogs             cents/lb        
20-Oct 49.775 48.7 49.225 0.2
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Sep 43.52 41.47 42.23 0.53
20-Sep 1.3054 1.2516 1.2653 0.0069
Unleaded Gasoline   $/gallon        
20-Sep 1.2646 1.2092 1.2257 0.0114
Natural Gas        
20-Oct 2.395 2.3 2.351 0.017
Ethanol Futures        
20-Aug 1.16 1.16 1.16 0.01
U.S. Dollar Index        
  93.235 92.535 92.87 -0.508
Gold                      $/ounce        
20-Sep 2053.5 2011.2 2031.1 29.9
20-Aug 2.93 2.892 2.9105 0.021
Fertilizer Swaps     (as of 7/24)  
DAP Tampa-index              316.5 0
DAP-New Orleans              357.2 6
Urea-New Orleans              229.3 2
Urea-Middle East              245.0 9
Urea-Black Sea              222.0 7
UAN (32%) New Orleans              129.0 0
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