Afternoon Market Recap for Jan. 25, 2021

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Grain’s rollercoaster ride rumbles higher.

Corn, soybeans and wheat all trend significantly higher to start the week

There’s no way to sugarcoat it – last week was just plain awful for grain prices. But Monday brought in the bargain buyers, fueling a round of technical buying that fed double-digit gains today. Corn prices closed around 2.25% higher, as did most wheat contracts. Soybeans saw even more upside, trending more than 2.5% higher to start the week.

A winter storm is expected to dump as much as a foot of snow on parts of eastern Nebraska and western Iowa through Thursday evening. The storm has a wide footprint that could also dump a lot of ice, and is likely to stretch from Colorado through much of the upper Midwest and eastern Corn Belt. The rare phenomenon known as “thundersnow” is also possible in some locations. NOAA’s latest 8-to-14-day outlook predicts seasonally wet weather to continue for much of the central U.S. between February 1 and February 7, with seasonally warm weather likely for the eastern half of the country.

On Wall St., stocks were mixed, with the Dow trending 112 points lower in afternoon trading to 30,884, while the S&P 500 and Nasdaq made modest inroads to start the week. Energy futures firmed, with crude oil up 0.5% this afternoon to $52.50 per barrel, while diesel and gasoline rose nearly 1%. The U.S. Dollar firmed moderately.

Last Friday, commodity funds were significant sellers of all major grain contracts, including corn (-42,500), soybeans (-35,000), soymeal (-12,000), soyoil (-10,000) and CBOT wheat (-20,000).

Corn

Corn prices jumped noticeably higher Monday on a wave of technical and bargain buying that led to gains of around 2.25% today. A bullish set of export inspection data from USDA this morning lent additional support. March futures climbed 11 cents to $5.1150, with May futures up 11.25 cents to $5.1425.

Corn basis bids were steady to firm Monday after trending 1 to 3 cents higher across a handful of Midwestern locations today.

Corn export inspections moved 52% above the prior week’s volume to reach 54.8 million bushels. That was higher than all trade estimates, which ranged between 35.4 million and 45.3 million bushels. Japan led all destinations, with 20.4 million bushels. Cumulative totals for the 2020/21 marketing year are now 84% above last year’s pace, with 737.6 million bushels.

Ukraine’s economy ministry and agricultural unions agreed to limit 2020/21 corn exports to 881.8 million bushels in an attempt to stabilize domestic feed prices. The groups agreed there is enough corn to fulfill both local consumption and export demand this marketing year

European Union corn imports are lagging 26% lower year-over-year after reaching 372 million bushels through January 24, according to data released today by the European Commission.

South Africa is expected to plant 7% more corn acres this season due to higher prices and generally favorable weather. The country’s total corn footprint is expected to reach 6.87 million acres, per its Crop Estimates Committee.

With the latest volatile round of grain price movements, are you struggling to figure out your 2021 marketing strategy? Darren Frye, founder of Water Street Solutions, suggests making a few small steps to start. “Often the toughest step to take is the very first one,” he writes in his latest Finance First column. “Big goals can feel daunting. If they aren’t broken down into smaller steps, they can be nearly impossible to get started on.” Click here to learn more.

Preliminary volume estimates were for 456,522 contracts, sliding slightly below Friday’s final count of 481,326.

Soybeans

Soybean prices bolted more than 2.5% higher after a significant round of bargain buying today. A solid round of export inspection data from USDA this morning also helped, although traders remain wary of favorable weather in South America that is still expected to help generate a record soybean harvest this season. Today, March futures rose 34.5 cents to $13.46, while May futures gained 33.5 cents to $13.4525.

Soybean basis bids were steady to soft Monday after dropping as much as 6 cents at an Illinois river terminal and tilting lower at three other Midwestern locations today.

Soybean export inspections retreated slightly week-over-week, sliding to 72.7 million bushels, Still, that was on the high end of trade estimates, which ranged between 36.7 million and 77.2 million bushels. China once again accounted for more than half of the weekly total, with 44.8 million bushels. Cumulative totals for the 2020/21 marketing year are still far outstripping last year’s pace, with 1.664 billion bushels.

European Union soybean imports are trending slightly higher year-over-year after reaching 305.7 million bushels through January 24. EU soymeal imports are trending moderately lower from a year ago, in contrast. Note: since January 1, the European Commission is no longer including Britain in these reports, reflecting the country’s departure from the EU.

Is trying to time the market a “dead-end strategy?” Brady Huck with Advance Trading thinks so. “Instead of playing the guessing game, your time is probably better spent building a marketing plan that enables you to embrace the unpredictable nature of the market,” he notes. Huck offers some areas of focus and offers additional details in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 250,335 contracts, tilting moderately below Friday’s final count of 361,140.

Wheat

Wheat prices followed corn and soybean prices higher on a round of bargain buying Monday after spending the prior four sessions in the red. A better-than-expected set of export inspection data from USDA lent additional support today. March Chicago SRW futures rose 14.5 cents to $6.49, March Kansas City HRW futures added 13.75 cents to $6.27, and March MGEX spring wheat futures climbed 14 cents to $6.2650.

Wheat export inspections nearly doubled week-over-week, moving to a total volume of 19.3 million bushels. That was also better than all trade estimates, which ranged between 7.3 million and 14.7 million bushels. Japan was the No. 1 destination, with 4.2 million bushels. Cumulative totals for the 2020/21 marketing year are still slightly behind last year’s pace, however, with a total of 591.5 million bushels since June 1.

China sold 147.9 million bushels of its state reserves of wheat at auction last week, which was virtually all (99.9%) that was offered for sale. China has offered seven other similarly sized wheat auctions since the beginning of December in an effort to stabilize rising feed prices.

European Union soft wheat exports for the 2020/21 marketing year have reached 532.8 million bushels through January 24, which is down nearly 16% from last year’s pace. EU barley exports are also trending lower year-over-year, with 177.3 million bushels during the same period.

Taiwan issued an international tender to purchase 3.1 million bushels of grade 1 milling wheat from the United States that closes on Friday. The grain is for shipment between late March and late April.

Algeria issued an international tender to purchase at least 1.8 million bushels of milling wheat from optional origins, which closes on Wednesday. The country often buys more than the nominal amount listed.

Preliminary volume estimates were for 119,907 CBOT contracts, trending moderately lower than Friday’s final count of 146,991.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Mar 515.5 492.5 511.5 11
21-May 517.75 494.5 514.25 11.25
Soybeans        
21-Mar 1352.25 1298 1343.5 34.5
21-May 1351.5 1297 1342.75 33.5
Soymeal                $/ton        
21-May 430.6 413.4 426.4 9
Soyoil                    cents/lb        
21-May 42.82 41.13 42.21 0.71
Wheat                    $/bushel        
21-Mar 651.5 624.25 648.5 14.5
21-May 651.5 626 649 13
KC Wheat        
21-Mar 630.25 605.5 627.25 13.75
21-May 633.5 609.5 631 13.5
MPLS Wheat        
21-Mar 627.5 605 626 14
21-May 636.5 615 634.75 13.75
Live Cattle             cents/lb        
21-Feb 117.05 115.95 116.325 -0.4
Feeder Cattle         cents/lb        
21-Mar 144.85 142.35 143.85 -0.3
Lean Hogs             cents/lb        
21-Apr 76.85 75.7 76.75 0.6
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Mar 52.88 51.82 52.74 0.47
Diesel        
21-Feb 1.5959 1.5657 1.5934 0.0174
Unleaded Gasoline   $/gallon        
21-Feb 1.5725 1.5328 1.559 0.0103
Natural Gas        
21-Mar 2.603 2.498 2.602 0.146
Ethanol Futures        
21-Mar     1.575  
U.S. Dollar Index        
21-Mar 90.51 90.075 90.37 0.158
Gold                      $/ounce        
21-Feb 1867.4 1846.2 1851.8 -3.9
Copper        
21-Jan 3.6355 3.6115 3.612 -0.0235
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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