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Afternoon Market Recap for Jan. 22, 2021

phongphan5922/Thinkstock markets charts - green with red line
Selloff spooks the bulls.

Corn, soybeans and wheat all spill significantly lower Friday

Grain prices have risen substantially over the past several weeks, but the prospect of record-breaking grain production in South America, where harvest has already begun in some areas, cooled prices considerably this week, with the worst losses occurring today. Traders shrugged off positive export sales data from USDA this morning as they continue to back off of a historically large net long position. Corn and soybean contracts tumbled more than 4% lower after a big round of technical selling, with wheat contracts sinking 3.5% to 4% lower today.

Wet weather is returning to the central U.S. – especially in parts of the Ohio River Valley, which could see as much as 2” of additional moisture between Saturday and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts seasonally wet weather will remain across the Corn Belt between January 29 and February 4, with warmer-than-normal conditions likely for the Midwest and Plains.

On Wall St., the Dow stumbled 125 points lower to 31,050, easing below record highs captured earlier this week. Energy prices also faded, with crude oil dropping 1.5% to fall back below $53 per barrel. Diesel was also down nearly 1.5%, while gasoline saw fractional losses. The U.S. Dollar firmed slightly.

On Thursday, commodity funds were net buyers of corn (+5,000), soybeans (+2,000) and soyoil (+5,000) contracts but were net sellers of soymeal (-2,000) and CBOT wheat (-7,000). Through January 19, corn speculators still had a net long position of 415,715 contracts, with soybeans sitting on a net long position of 145,790 contracts according to regulatory data released earlier today.

Corn

Corn prices concluded a bad week with heavy losses Friday, capping off the first weekly loss since early December. With a very large net long position, prices are vulnerable to periods of liquidation, as was evident today. March and May futures each tumbled 24 cents lower to close at $5.0025 and $5.0225, respectively.

Corn basis bids were steady to mixed across the central U.S. Friday, moving as much as 4 cents higher at an Indiana ethanol plant and as much as 5 cents lower at an Ohio river terminal today.

Corn export sales were nearly identical from a week ago through January 14, with 56.6 million bushels in old crop sales, plus another 1.8 million bushels in new crop sales. That was above all trade estimates, which ranged between 23.6 million and 47.2 million bushels. Cumulative totals for the 2020/21 marketing year are still well ahead of last year’s pace, reaching 693.2 million bushels.

Corn export shipments slid 39% lower week-over-week and landed 24% below the prior four-week average, in contrast. Mexico led all destinations, with 7.8 million bushels.

Ethanol production firmed slightly for the week ending January 15, moving from a daily average of 941,000 barrels the prior week up to 945,000 barrels per day last week.

In Argentina, recent rains have helped farmers near the finish line for corn planting, which is now 93.4% complete, according to the Buenos Aires Grains Exchange. “The rains improved water levels, slowing down the deterioration in early plantings and improving the panorama for later sowings,” the group noted.

Preliminary volume estimates were for 481,326 contracts, jumping 56% above Thursday’s final count of 308,930.

Soybeans

Soybean prices took a dramatic spill this morning, finishing the session more than 4% lower on a wave of technical selling and profit-taking largely spurred by improving South American weather that is expected to fuel record production this season. Nearby contracts lost more than $1 per bushel this week, losing 7.7% since Tuesday’s open. Today, March futures dropped 60.5 cents to $13.0975, with May futures down 59.5 cents to $13.0925.

Soybean basis bids fell 6 cents lower at an Ohio elevator and firmed a penny higher at an Iowa river terminal while holding steady at other Midwestern locations Friday.

Private exporters reported to USDA the sale of 5.0 million bushels of soybeans for delivery to China during the 2020/21 marketing year, which began September 1. China also bought 4.8 million bushels of sorghum, half of which is for delivery this marketing year, with the other half for delivery in 2021/22.

Soybean export sales were up noticeably from a week ago, reaching 66.8 million bushels in old crop sales plus another 30.5 million bushels for a total tally of 97.3 million bushels. That bested all trade estimates, which ranged between 40.4 million and 77.2 million bushels. Cumulative totals for the 2020/21 marketing year are still far exceeding last year’s pace, with 1.594 billion bushels.

Soybean export shipments inched 9% ahead of the prior four-week average, with 87.4 million bushels. China was by far the No. 1 destination, with 49.6 million bushels.

A poll of 13 analysts shows Brazil is expected to harvest 4.858 billion bushels of soybeans this season – a record, if realized. After recent rains, the poll is trending slightly above December estimates of 4.842 billion bushels.

Agroconsult has a very similar prediction for Brazilian soybean production, with a new estimate of 4.866 billion bushels. However, the consultancy’s production estimates are trending slightly below its prior estimate from last November. It also expects Brazil to export 3.050 billion bushels of soybeans this year.

Preliminary volume estimates were for 361,993 contracts, nearly doubling Thursday’s final count of 190,027.

Wheat

Wheat prices followed corn and soybean prices lower, with worries about increased overseas competition creating additional headwinds that led to significant technical selling today. March Chicago SRW futures fell 25.75 cents to $6.35, March Kansas City HRW futures dropped 21.75 cents to $6.14, and March MGEX spring wheat futures lost 24.25 cents to $6.11. Today’s losses contributed to the largest weekly decline in more than five months.

European wheat prices also saw sharp declines Friday, losing 4% and falling to a 10-day low on worries that a new swine fever outbreak in China could put a dent in demand. A prior outbreak in 2018 led to the death of millions of hogs. Overseas competition is also increasingly stiff ahead of Russia’s planned export tax, which will begin in three weeks.

Wheat export sales improved by 49% from a week ago, to 12.1 million bushels. That was still 7% below the prior four-week average, however, and on the lower end of trade estimates that ranged between 9.2 million and 23.9 million bushels. Cumulative totals for the 2020/21 marketing year continue to trail last year’s pace, with 551.3 million bushels.

Wheat export shipments spilled 33% below the prior four-week average, with 9.7 million bushels. Indonesia was the No. 1 destination, with 4.0 million bushels.

Russian consultancy Sovecon raised its estimates for the country’s 2021 wheat production to 2.855 billion bushels, citing improved weather throughout January. “Overall conditions for the 2021 wheat crop remain far from ideal,” the group also noted. “Plants entered the winter in the worst shape for 10 years due to lack of rain during the autumn.”

Turkey purchased 14.7 million bushels of wheat from optional origins in an international tender that closed earlier today. The grain is for shipment between late January and late February.

Preliminary volume estimates were for 146,991 CBOT contracts, moving 68% above Thursday’s final count of 87,388.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Mar 522.75 499.25 500.5 -24
21-May 524.75 501.25 503 -24
Soybeans        
21-Mar 1367 1305.25 1311.75 -60.5
21-May 1365.75 1305 1311.75 -59.5
Soymeal                $/ton        
21-May 434.8 416.3 417.9 -18
Soyoil                    cents/lb        
21-May 42.7 41.33 41.55 -1.24
Wheat                    $/bushel        
21-Mar 659 633 634.5 -25.75
21-May 660.25 634.25 636 -26
KC Wheat        
21-Mar 634.25 611.75 613.25 -21.75
21-May 637.75 615.75 617 -21
MPLS Wheat        
21-Mar 634.5 611 612.5 -24.25
21-May 643.25 619.75 621.5 -24.5
Live Cattle             cents/lb        
21-Feb 116.775 114.175 116.55 2.45
Feeder Cattle         cents/lb        
21-Mar 144.15 139.3 144.05 4.9
Lean Hogs             cents/lb        
21-Apr 76.25 73.85 76.15 2.25
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Feb 53.16 51.44 52.23 -0.9
Diesel        
21-Feb 1.6014 1.5556 1.5769 -0.0237
Unleaded Gasoline   $/gallon        
21-Feb 1.5517 1.5074 1.5494 0.0015
Natural Gas        
21-Mar 2.511 2.425 2.455 -0.042
Ethanol Futures        
21-Mar     1.575  
U.S. Dollar Index        
21-Mar 90.3 90.05 90.22 0.093
Gold                      $/ounce        
21-Feb 1870.8 1836.3 1854.9 -10.4
Copper        
21-Jan 3.631 3.5745 3.6285 -0.027
Fertilizer Swaps     (as of 01/22)  
DAP Tampa-index              450.0 45
DAP-New Orleans              476.8 32
Urea-New Orleans              352.2 22
Urea-Middle East              342.5 28
Urea-Black Sea              310.0 23
UAN (32%) New Orleans              188.0 25.36

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