Afternoon Market Recap for Jan. 19, 2021

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Soybeans sag on South American rains.

Corn also takes a moderate spill Tuesday, with wheat mixed

Grain prices were mixed but mostly lower Tuesday. Rainy weather in Brazil last weekend, with more forecasted through the latter half of this month, was enough to kick soybean prices more than 2% lower on a significant round of technical selling. Corn prices also spilled more than 1% lower today on yield-friendly forecasts in South America. Wheat prices were mixed after Kansas City HRW and MGEX spring wheat contracts tilted back into the green just before the close.

Drier weather is in store for the central U.S. between Wednesday and Saturday, with zero to only trace amounts expected in most areas, according to NOAA’s latest 72-hour cumulative precipitation map. The agency’s 8-to-14-day outlook predicts seasonally dry weather for the Plains between January 28 and February 1, with warmer-than-normal conditions likely for the central third of the U.S. during this time.

On Wall St., the Dow moved 157 points higher in afternoon trading to 30,971, with investors placing their bets that a new stimulus package can be finalized in the near future and optimistic that the coronavirus vaccine will see an improved distribution after the Biden Administration officially takes the helm tomorrow. Energy futures also firmed, with crude oil up more than 1% this afternoon to climb just below $53 per barrel. Gasoline was up around 0.75%, with diesel rising around 0.5% higher. The U.S. Dollar softened moderately.

Last Friday, commodity funds were net buyers of CBOT wheat (+2,000) contracts but were net sellers of corn (-10,000), soybeans (-12,000), soymeal (-1,000) and soyoil (-12,000).

Corn

Corn prices fell around 1.25% today as traders shrugged off two large flash sales announced this morning and engaged in some technical selling spurred by supportive South American weather. Sputtering soybean prices, down for the same reason, added to today’s headwinds. March futures dropped 6.5 cents to $5.25, while May futures fell 8 cents to $5.2675.

Corn basis bids were mostly steady but slightly mixed Tuesday, dropping 2 cents at an Illinois river terminal and an Indiana ethanol plant while firming 2 cents higher at an Ohio elevator today.

Private exporters announced two new large corn sales to USDA today. The first is for 5.0 million bushels to Japan, and the second is for 3.9 million bushels to Israel. Both sales are for delivery during the 2020/21 marketing year, which began September 1.

Corn export inspections were less than impressive, fading 33% week-over-week to land at 34.5 million bushels. That was also below all trade estimates, which ranged between 35.4 million and 49.2 million bushels. However, cumulative totals for the 2020/21 marketing year are still well ahead of last year’s pace, with 680.1 million bushels. Mexico led all destinations last week, with 8.8 million bushels.

China imported a record amount of corn in 2020, reaching 444.9 million bushels last year. Of the total, 88.6 million bushels was imported in December alone. Total corn imports were more than double 2019’s totals, per data from the General Administration of Customs.

Next week, Ukraine’s economy ministry and agricultural unions will determine if it will be necessary to limit corn exports for the 2021/22 marketing year to 866 million bushels. Grain traders are opposed to the proposition, which is being considered to protect domestic grain prices, saying it could generate “additional turbulence in the market, exacerbated by decisions on export duties from Russia.”

AgRural reports that Brazil’s summer corn harvest is at 3.4% completion, versus 2.5% last year. Much of the initial harvest kicked off in Rio Grande do Sul and Santa Catarina. Brazil’s government currently predicts a total corn harvest of 4.028 billion bushels this season.

And Brazil’s ANEC expects the country’s corn exports will reach 94.4 million bushels in January, which is moderately higher than its estimates from a week ago.

Worried that rising grain prices will lead to rising input costs? Your fears aren’t unfounded, according to grain market analyst Bryce Knorr. Fuel and fertilizer costs are already on the rise. Knorr walks through some specifics in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 370,067 contracts, improving slightly above last Friday’s final count of 350,576.

Soybeans

Soybean prices stumbled significantly lower after the latest South American weather forecasts prompted a round of technical selling. Prices eroded steadily throughout Tuesday’s session and closed more than 2.25% lower to fall back below $14 per bushel. March futures lost 33.25 cents to $13.8350, with May futures down 33.5 cents to $13.8125.

Soybean basis bids were steady to mixed Tuesday, dropping as much as a penny lower at an Illinois river terminal while firming as much as 7 cents higher at an Indiana processor today. Most Midwestern locations remained unchanged.

Private exporters announced to USDA the sale of 4.9 million bushels of soybeans for delivery to China during the 2021/22 marketing year, which begins September 1.

Soybean export inspections climbed 11.4% higher from a week ago to reach 75.6 million bushels. That was better than all analyst estimates, which ranged between 33.1 million and 68.0 million bushels. China accounted for 62% of last week’s total, with 46.8 million bushels. Cumulative totals for the 2020/21 marketing year are nearly doubling last year’s pace, with 1.578 billion bushels.

Brazilian consultancy AgRural reports that the country’s 2020/21 soybean crop is just beginning to be harvested, with 0.4% progress so far. That’s behind last year’s pace of 1.8%. Rainy weather through the second half of January should help some overly dry areas, according to AgRural, which predicted last month that Brazil’s soybean harvest could reach 4.839 billion bushels this season.

And Brazil’s ANEC predicts the country’s soybean exports will reach 37.7 million bushels in January, which is slightly lower than its estimate of 38.7 million bushels from a week ago.

Preliminary volume estimates were for 239,139 contracts, trending 22% above Friday’s final count of 196,282.

Wheat

Wheat prices were mixed but mostly higher after a late-session push helped get some contracts into the green by the close. Traders attempted to balance a tepid round of U.S. export inspection data out this morning with Russia’s recent decision to raise and extend its export taxes for wheat through the end of the 2020/21 marketing year. March Chicago SRW futures fell 2.25 cents to $6.7325, while March Kansas City futures picked up 0.75 cents to $6.4375 and March MGEX spring wheat futures added 3.5 cents to $6.4675.

Wheat export inspections continue to show mostly lackluster results, sliding slightly lower week-over-week to 10.2 million bushels. That was mostly in the middle of analyst estimates, which ranged between 7.3 million and 14.7 million bushels. Indonesia was the No. 1 destination, with 4.0 million bushels. Cumulative totals for the 2020/21 marketing year are sliding farther behind last year’s pace, now at 572.1 million bushels.

Last year, China imported a record amount of wheat, buying 307.9 million bushels against a total quota of 354.2 million bushels. That more than doubled the country’s wheat purchases in 2019.

Japan issued a regular tender to purchase 2.7 million bushels of food-quality wheat from the United States and Canada. Of the total, 71% is expected to be sourced from the U.S

Preliminary volume estimates were for 126,180 CBOT contracts, which moderately trailed Friday’s final count of 161,196.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Mar 534.25 523.25 526 -6.5
21-May 537 525.5 528.25 -8
Soybeans        
21-Mar 1421.25 1383.25 1385.75 -33.25
21-May 1419.25 1380.75 1383.25 -33.5
Soymeal                $/ton        
21-May 459.1 446.6 447 -11.5
Soyoil                    cents/lb        
21-May 41.95 40.65 41.19 -0.38
Wheat                    $/bushel        
21-Mar 691.25 668.75 672.25 -2.25
21-May 690.75 670 673.5 -2.25
KC Wheat        
21-Mar 657 638.75 644 0.75
21-May 659 641.75 647 0.75
MPLS Wheat        
21-Mar 653.5 640 643.5 3.5
21-May 662 649 652 3.5
Live Cattle             cents/lb        
21-Feb 113.9 112.1 113.25 0.475
Feeder Cattle         cents/lb        
21-Mar 138.65 135.375 136.95 1.125
Lean Hogs             cents/lb        
21-Apr 72.8 71.375 71.45 -1.2
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Feb 53.13 51.76 52.97 0.61
Diesel        
21-Feb 1.6089 1.5776 1.5974 0.0045
Unleaded Gasoline   $/gallon        
21-Feb 1.5489 1.5115 1.5383 0.0099
Natural Gas        
21-Mar 2.641 2.507 2.521 -0.175
Ethanol Futures        
21-Mar     1.605  
U.S. Dollar Index        
21-Mar 90.745 90.38 90.475 -0.279
Gold                      $/ounce        
21-Feb 1845 1800.8 1839.2 9.9
Copper        
21-Jan 3.64 3.616 3.63 0.027
Fertilizer Swaps     (as of 01/15)  
DAP Tampa-index              405.0 15
DAP-New Orleans              444.8 12
Urea-New Orleans              330.1 34
Urea-Middle East              315.0 19
Urea-Black Sea              287.5 28
UAN (32%) New Orleans              162.6 16.53
 
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