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Afternoon Market Recap for Dec. 2, 2020

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Wheat rebounds on bargain buying.

Corn also moves higher Wednesday, while the soybean slump continues

Grain prices were mixed but mostly higher Wednesday. Wheat contracts were the clear winners in today’s session, firming more than 2% higher on a round of bargain buying after seeing fairly steep cuts over the past week. Corn prices also moved higher, erasing overnight losses after rising steadily throughout the morning and early afternoon. But soybeans slid another 0.75% lower as favorable South American forecasts prompted traders to keep rolling back their net long position and engage in another round of technical selling.

Almost no measurable rain or snow is expected north of I-70 between Thursday and Sunday, per NOAA’s latest 72-hour cumulative precipitation map, although parts of the southern U.S. could gather another 1” or more during this time. NOAA’s 8-to-14-day outlook predicts some seasonally wet weather possible for the Northern Plains from December 9 to December 15, although drier-than-normal conditions are expected to prevail across the eastern Corn Belt. Warmer-than-normal temperatures are likely for most of the U.S. next week.

On Wall St., the Dow dipped 5 points lower to 29,818 in afternoon trading. Bank and travel stocks moved higher but were offset by general anxiety over the current stalemate for a coronavirus stimulus package in Congress. Energy futures grabbed solid gains, partly on news of lower domestic stocks. Crude oil rose 1.75% this afternoon to move back above $45 per barrel. Gasoline and diesel each saw gains of around 1.5%. The U.S. Dollar continues to soften, with a fairly uniform decline stretching back to late September.

According to report released by USDA earlier today, total net cash income for farmers is projected to rise to $134.1 billion, a 22.6% increase from last year and will climb to a seven-year high, if realized. That’s partly due to higher commodity prices, but a record-breaking $46.5 billion in government payments also played a significant role this year.

On Tuesday, commodity funds were net sellers of all major grain contracts for the second consecutive session, including corn (-15,000), soybeans (-7,000), soymeal (-1,000), soyoil (-4,000) and CBOT wheat (-5,500).

Corn

Corn prices firmed slightly on some technical buying partly spurred by spillover strength from wheat. Some bargain buying was also apparent after prices sank to a two-week low in overnight trading. December futures rose 4 cents to $4.1875, with March futures adding 2.75 cents to $4.2350.

Corn basis bids were mostly steady to firm across the central U.S., rising 1 to 7 cents higher at three locations but sliding 3 cents lower at an Iowa ethanol plant today.

Ahead of Thursday morning’s weekly export report from USDA, analysts expect to see corn sales ranging between 31.5 million and 63.0 million bushels for the week ending November 26.

Ethanol production took a moderate step back last week, moving from 990,000 barrels per day the prior week down to 974,000 barrels per day for the week ending November 27. January futures tumbled nearly 3% lower, to $1.31.

Meantime, USDA reported yesterday afternoon that corn used for ethanol reached 433 million bushels in October, which was 8% higher month-over-month but down 1% from October 2019.

South Korea purchased 2.6 million bushels of corn from optional origins in a private deal today. The grain is for arrival by June 15, 2021.

Algeria issued an international tender to purchase 1.4 million bushels of corn from optional origins, which closes tomorrow. The grain is for shipment by January 5, 2021.

Grain traveling the nation’s railways jumped 23% higher compared to the same week in 2019, reaching 25,099 carloads. Cumulative volume for 2020 is up 2.6% year-over-year, with 1,061,943 carloads.

Preliminary volume estimates were for 311,523 contracts, moving slightly ahead of Tuesday’s final count of 285,452.

Soybeans

Soybean prices have dropped lower every day so far this week, eroding another 0.75% Wednesday on a new round of technical selling largely spurred by favorable weather in South America that could be setting the stage for record or near-record soybean crops there, despite a dry start to the season. January futures dropped 9 cents to $11.53, with March futures losing 8.25 cents to $11.5475.

Soybean basis bids jumped 6 to 10 cents higher at two Midwestern processors, came in narrowly mixed at two interior river terminals and held steady elsewhere across the central U.S. today.

Ahead of the next weekly export report from USDA, out tomorrow morning, analysts expect the agency to show soybean sales ranging between 14.7 million and 42.3 million bushels for the week ending November 26. Analysts also expect to see soymeal sales ranging between 100,000 and 300,000 metric tons, plus between 8,000 and 40,000 MT of soyoil sales last week.

USDA reported yesterday afternoon that the U.S. October soybean crush climbed to a record-breaking 197 million bushels, moving ahead of the prior best set in March (192 million bushels) and climbing well ahead of September’s crush of 171 million bushels.

The Ag Economy Barometer, updated monthly by Purdue University / CME Group, fell 16 points in November but still boasts a healthy reading of farmer sentiment overall at 167 (anything over 100 is considered a net positive). Click here to learn about the survey’s insights into farm machinery purchases, farmland values, trade, farm policy and more.

In an attempt to strengthen its local currency (which has weakened 26.5% this year versus the U.S. Dollar), Argentina plans to strengthen a rule forcing grain exporters to convert foreign currency from sales into pesos. Argentina is a major exporter of soybeans, soymeal, corn and wheat.

Vietnam purchased 68,000 metric tons of soymeal from the United States and South America, which will be for shipment between December and July 2021.

Preliminary volume estimates were for 262,650 contracts, trending moderately higher than Tuesday’s final count of 207,498.

Wheat

Wheat prices bounced significantly higher on a round of bargain buying Wednesday, with most contracts gaining more than 2% today. December Chicago SRW futures rose 12.5 cents to $5.78, December Kansas City HRW futures added 11.5 cents to $5.49, and December MGEX spring wheat futures picked up 10.25 cents to $5.4475.

Ahead of tomorrow morning’s weekly export report from USDA, analysts think the agency will show wheat sales ranging between 9.2 million and 25.7 million bushels for the week ending November 26.

Thailand purchased nearly 2.0 million bushels of animal feed wheat from optional origins in a tender that closed earlier today. The grain is for shipment in March.

South Korea purchased 1.2 million bushels of milling wheat from the United States and Canada in a tender that closed earlier today. The grain is for shipment in February.

Preliminary volume estimates were for 124,716 CBOT contracts, falling moderately short of Tuesday’s final count of 148,031.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 419.75 409 419 4
21-Mar 424.75 414.5 423.75 2.75
Soybeans        
21-Jan 1164 1142.5 1153 -9
21-Mar 1165 1143 1154.75 -8.25
Soymeal                $/ton        
21-Jan 391.2 380.9 385.6 -4.6
Soyoil                    cents/lb        
21-Jan 37.26 36.57 36.92 -0.05
Wheat                    $/bushel        
20-Dec 578.75 565.5 578 12.5
21-Mar 592.5 574.75 588.5 10.75
KC Wheat        
20-Dec 549 539.5 550.5 11.5
21-Mar 555.25 536.25 553.75 13.75
MPLS Wheat        
20-Dec 544.75 541.5 540.25 10.25
21-Mar 558.5 547.5 556 5.75
Live Cattle             cents/lb        
20-Dec 110.8 109.75 110.425 -0.2
Feeder Cattle         cents/lb        
21-Mar 141.35 139.7 141.1 0.45
Lean Hogs             cents/lb        
21-Feb 68.4 67.725 67.9 -0.85
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Jan 45.92 43.92 45.27 0.72
Diesel        
21-Jan 1.3792 1.3336 1.3681 0.0208
Unleaded Gasoline   $/gallon        
21-Jan 1.2553 1.2037 1.2407 0.0203
Natural Gas        
21-Feb 2.918 2.744 2.744 -0.124
Ethanol Futures        
21-Jan 1.36 1.31 1.31 -0.04
U.S. Dollar Index        
20-Dec 91.495 91.085 91.11 -0.187
Gold                      $/ounce        
21-Jan 1832.3 1808.1 1827.2 13.1
Copper        
20-Dec 3.494 3.43 3.4805 0.0125
Fertilizer Swaps     (as of 11/27)  
DAP Tampa-index              264.0 3
DAP-New Orleans              407.9 12
Urea-New Orleans              270.6 8
Urea-Middle East              280.0 15
Urea-Black Sea              247.5 8
UAN (32%) New Orleans              132.3 0
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