Afternoon Market Recap for Jan. 26, 2021

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Corn prices surge higher again.

Soybeans and wheat also gather up significant gains Tuesday

On Monday, grain prices were red-hot. Tuesday provided a solid encore, with corn prices jumping nearly 4% higher today, with bullish sentiment anchored by a massive sale to China announced this morning. Soybeans rose more than 2%, meantime, and wheat contracts tracked as much as 2.5% higher. All told, all major corn, soybean and wheat contracts finished the session with double-digit gains.

After some severe winter weather in parts of the Midwest and Plains earlier this week, don’t expect a lot of additional rain and snow between Wednesday and Saturday. Some areas will receive trace amounts but not much more, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook does predict widespread seasonally wet weather between February 2 and February 8, however. Warmer-than-normal temperatures are also likely for the eastern half of the country during this time.

On Wall St., the Dow inched 28 points higher to 30,988 (a pickup of around 0.1%) as investors attempt to untangle the latest batch of corporate earnings reports. Energy prices were mixed. Crude oil spilled about 0.25% lower to remain just below $53 per barrel. Diesel picked up 0.25%, in contrast, with gasoline rising 1.25% higher this afternoon. The U.S. Dollar softened moderately.

On Monday, commodity funds were significant net buyers of all major grain contracts, including corn (+37,500), soybeans (+22,500), soymeal (+7,000), soyoil (+5,000) and CBOT wheat (+11,000).

Corn

Corn prices surged nearly 4% higher Tuesday after a large sale to China triggered a round of technical buying, giving traders a fresh reminder that domestic stocks are tightening even further. March futures climbed 19.75 cents to $5.3125, with May futures up 18.5 cents to $5.3275.

Corn basis bids were steady to mixed across the central U.S. Tuesday after firming 3 to 4 cents at two Midwestern ethanol plants and dropping 2 cents lower at an Illinois processor today.

Private exporters announced to USDA two more large corn sales this morning. The first was for 53.5 million bushels to China, with another 4 million bushels headed for unknown destinations. Both sales are for delivery during the 2020/21 marketing year, which began September 1. The sale to China was the largest since last July.

ADM reports that China purchased around 200 million gallons of U.S. ethanol for the first half of 2021. CEO Juan Luciano also expects China’s corn imports to rise to 984 million bushels as the country continues to rebuild its hog herd.

A new report from USDA estimates that 2020/21 corn production in Argentina will reach 1.850 billion bushels. That’s nearly 20 million bushels lower than prior figures; the agency assumes drought damage earlier this season has trimmed production potential. Some are forecasting drier-than-normal weather in February, which could further lower yields.

Ahead of tomorrow’s weekly ethanol production report from the U.S. Energy Information Administration, it may be worth taking a quick look back at the latest few batches of data. Ethanol production has been slowly but steadily creeping higher since late December, moving higher for four consecutive weeks to reach 945,000 barrels per day through January 15. Wednesday’s report will cover the week through January 22. February futures climbed more than 1.5% higher today.

Brazil’s Anec predicts the country’s corn exports for January will reach 91.1 million bushels, which is slightly lower than its prior forecast made a week ago. For soybeans, Anec is only projecting January soybean exports at 8.3 million bushels, which is sharply lower than its previous forecast last week.

Which new crop corn pricing strategies tend to be the most profitable on a year-to-year basis? Grain market analyst Bryce Knorr took a deep dive on the subject in today’s Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 432,724 contracts, tracking slightly below Monday’s final count of 456,446.

Soybeans

Soybean prices followed corn higher on a round of technical selling that led to double-digit gains for the second consecutive session. News of sluggish harvest pace in Brazil added to the bullish sentiment today. March futures gained 28 cents to $13.7150, with May futures up 28.25 cents to $13.71.

Soybean basis bids were mostly steady across the central U.S. Tuesday but did tilt 3 cents higher at an Illinois river terminal and 2 cents lower at an Ohio elevator today.

Heavy rains in Brazil is slowing down field work there, with consultancy AgRural estimating that only 0.7% of this season’s harvest is complete through January 21. Progress crept just 0.3% above the prior week’s tally. The rains could be a mixed blessing, however, because they could benefit late-planted crops despite slowing down harvest for earlier planted crops.

Preliminary volume estimates were for 200,305 contracts, sliding moderately below Monday’s final count of 250,335.

Wheat

Wheat prices jumped 1.75% to 2.5% higher Tuesday on news that Russia will soon implement higher wheat export taxes for the remainder of the current marketing year. Spillover strength from corn and soybeans lent additional support. March Chicago SRW futures rose 16.5 cents to $6.65, March Kansas City HRW futures gained 13 cents to $6.4025, and March MGEX spring wheat futures added 11 cents to $6.37.

USDA’s latest round of winter wheat quality ratings showed Kansas, the No. 1 wheat producing state, has 43% of its crop rated in good-to-excellent condition through January 24, which is three points lower than it was at the beginning of the month. Quality ratings also fell in Colorado, Nebraska and South Dakota while firming in Montana.

Russia’s government has formally approved several measures to stabilize domestic food prices. The most attention-getting tactic is raising its wheat export tax to 50 euros (approximately $60) per metric ton between March 1 and June 30. Corn and barley taxes will also increase during this time, to approximately $30 per metric ton.

Trade relations between China and Australia have been rocky, but after a three-month dry spell for wheat exports, China purchased more than $191 million worth of Australian wheat in December. That helped push Chinese imports of Australian goods to near-record levels in 2020.

Japan issued a regular tender to purchase 2.2 million bushels of food-quality wheat from Australia that closes later this week. The grain is for shipment in April.

Jordan purchased 5.5 million bushels of animal feed barley from optional origins in an international tender that closed earlier today. The country has sought similar volumes of wheat and barley on a near-weekly basis this past year. The latest sale is for shipment in late July.

Preliminary volume estimates were for 128,773 CBOT contracts, moving slightly ahead of Monday’s final count of 119,907.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Mar 534.25 508 532.25 19.75
21-May 536 510.5 533.75 18.5
Soybeans        
21-Mar 1376.5 1333.5 1370.25 28
21-May 1375.25 1332.5 1369.5 28.25
Soymeal                $/ton        
21-May 436.2 422.4 433.8 7.4
Soyoil                    cents/lb        
21-May 43.28 41.81 43.12 0.92
Wheat                    $/bushel        
21-Mar 667.75 641.25 665.25 16.5
21-May 665.75 642 664.25 14.75
KC Wheat        
21-Mar 645.5 620.5 641 13
21-May 648.25 624.25 644.25 12.25
MPLS Wheat        
21-Mar 642 622 638 11
21-May 650 630.25 646.5 10.75
Live Cattle             cents/lb        
21-Feb 117.625 116.475 117.05 0.525
Feeder Cattle         cents/lb        
21-Mar 143.85 141.1 141.125 -2.725
Lean Hogs             cents/lb        
21-Apr 77.6 76.475 77 0.375
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Mar 53.25 52.29 52.54 -0.23
Diesel        
21-Feb 1.6069 1.5851 1.5966 0.0027
Unleaded Gasoline   $/gallon        
21-Feb 1.589 1.5535 1.5804 0.0193
Natural Gas        
21-Mar 2.662 2.59 2.633 0.035
Ethanol Futures        
21-Feb 1.53 1.53 1.53 -0.07
U.S. Dollar Index        
21-Mar 90.595 90.09 90.14 -0.233
Gold                      $/ounce        
21-Feb 1860.8 1847.2 1851.8 -3.1
Copper        
21-Jan 3.632 3.6265 3.631 -0.0095
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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