Afternoon Market Recap for Jan. 27, 2021

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Corn, soybeans tilt slightly higher.

Wheat takes a tumble of more than 1% Wednesday

Grain prices turned in a mixed midweek performance today. Wheat suffered a moderate setback after a round of technical selling and profit-taking pushed most contracts more than 1% lower. However, corn and soybeans clung to small gains today, even after rocketing substantially higher Monday and Tuesday. That may suggest the market’s focus is still largely on tightening supplies and robust demand, even with historically large South American crops on the cusp of harvest right now. Additional flash sales announced this morning lent additional support.

Some more wet weather is making its way across the Midwest between Thursday and Sunday. Missouri will receive the most moisture, with another 1” or more, according to the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts widespread seasonally wet weather between February 3 and February 9, with close-to-average temperatures for the central U.S. during this time.

On Wall St., the Dow tumbled 543 points lower in afternoon trading to 30,393 after investors digested some poor earnings reports and some speculative shorts placed against the retail sector. Energy prices were lightly mixed. Crude oil rose nearly 0.5% this afternoon but stayed just below $53 per barrel. Diesel also rose around 0.5%, with gasoline dipping 0.25% lower. The U.S. Dollar firmed moderately.

On Tuesday, commodity funds were again significant net buyers of all major grain contracts, including corn (+47,500), soybeans (+21,000), soymeal (+6,000), soyoil (+6,000) and CBOT wheat (+13,000).

USDA announced earlier today that it will temporarily suspend debts incurred by about 12,000 farmers who owe money from FSA’s Farm Storage Facility Loan and Direct Farm Loan programs, due to stress from the COVID-19 pandemic. USDA will suspend some past-due debts and foreclosures for some borrowers and extend some loan deadlines. Click here to learn more.

Corn

Corn prices came into Wednesday’s session with moderate overnight gains. Prices dropped sharply at the open but managed to stay barely in the green for the rest of the day on some light technical buying. March and May futures each picked up a penny to reach $5.3325 and $5.3475, respectively.

Corn basis bids were mostly steady to firm after rising 2 to 4 cents higher at a handful of Midwestern locations Wednesday. An Iowa river terminal bucked the overall trend, sliding 2 cents lower today.

For the second straight day, private exporters reported a very large Chinese corn sale to USDA. Today’s sale is for 26.8 million bushels of corn for delivery during the 2020/21 marketing year, which began September 1.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show corn sales ranging between 35.4 million and 66.9 million bushels for the week ending January 21.

Ethanol production for the week ending January 22 fell to the lowest levels since mid-October, dropping to a daily average of 933,000 barrels. However, production levels haven’t seen a lot of volatility since late December, with daily averages ranging between 933,000 barrels and 945,000 barrels over the past month.

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 yesterday’s Ag Marketing IQ blog – click here to learn more.

Algeria issued an international tender to buy 1.6 million bushels of corn from optional origins that closes tomorrow. The grain is for shipment between late February and mid-March.

Preliminary volume estimates were for 409,065 contracts, sliding slightly below Tuesday’s final count of 432,664.

Soybeans

Soybean prices followed a similar pattern to corn after moderate overnight gains mostly eroded by the time today’s session closed. Prices still ended modestly higher, however, with gains of around 0.2%. March futures added 3.5 cents to $13.7375, while May futures picked up 2.25 cents to $13.7175.

Soybean basis bids were steady to soft Wednesday, falling 1 to 5 cents lower across four Midwestern locations today.

Private exporters announced two more large soybean sales to USDA today. The first is for 4.6 million bushels for delivery to unknown destinations during the current marketing year, which began September 1, and the second is for 4.9 million bushels for delivery to China in 2021/22..

Ahead of Thursday morning’s weekly export report from USDA, analysts expect to see soybean sales ranging between 38.6 million and 71.7 million bushels for the week ending January 21. Analysts also think USDA will show between 150,000 and 400,000 metric tons of soymeal sales last week, plus another 10,000 to 30,000 MT of soyoil sales.

The Chicago-based AgResource consultancy predicts that Chinese soybean imports for the 2021/22 marketing year could rewrite record books, coming in at an estimated 4.042 billion bushels. That projection depends on the country continuing to rebuild its hog herd after battling with ASF.

The U.S. could capitalize on this surge in China’s need for soybeans, but Wendong Zhang, Iowa State University ag economist, warns that trade relations remain rocky with the world’s No. 1 soybean importer. “There’s a growing concern that, from the Chinese business perspective, we are anticipating a bumpy relationship over the next decade,” he says. Zhang offers many more insights here.

Facing a major domestic supply pinch, U.S. soy processors typically book grain a few weeks ahead of crushing but are now buying soybeans well beyond that to ensure adequate supplies in the coming months. Some processors have booked supplies all the way to May, according to Reuters. “He who has beans, rules,” quips Kent Woods, owner of CrushTraders Market Info. “If you own beans at the end, you can make decisions. If you don't have beans, you have limited choices and are at the mercy of others' decisions

Preliminary volume estimates were for 312,878 contracts, moving well above Tuesday’s final count of 197,694.

Wheat

Wheat prices stumbled around 1% lower Wednesday after a round of technical selling and profit-taking today. March Chicago SRW futures lost 8.75 cents to $6.5650, March Kansas City HRW futures dropped 5.5 cents to $6.3550, and March MGEX spring wheat futures fell 7.25 cents to $6.3075.

Ahead of Thursday morning’s weekly export report from UDSA, analysts expect the agency to report wheat sales ranging between 9.2 million and 23.9 million bushels for the week ending January 21.

Argentina is rumored to be considering an export cap on wheat as its government looks into ways to protect domestic supplies and food inflation – although the move would appear to be one of last resort. “In the case of wheat, we are seeing what we can do to ensure that we have enough in the country, without closing the export market,” according to agriculture minister Luis Basterra. The country’s 2020/21 production reached 632 million bushels and may export nearly 60% of that total.

Jordan purchased 2.2 million bushels of hard milling wheat from optional origins in a tender that closed earlier today. The grain is for shipment in late August.

Preliminary volume estimates were for 107,073 CBOT contracts, drifting below Tuesday’s final count of 128,773.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Mar 543.75 529.5 534 1
21-May 544.75 530.75 535.25 1
Soybeans        
21-Mar 1394.75 1364.5 1374.75 3.5
21-May 1393.25 1363.75 1373.25 2.25
Soymeal                $/ton        
21-May 439.8 431 433.7 -0.6
Soyoil                    cents/lb        
21-May 44.35 43.18 43.69 0.58
Wheat                    $/bushel        
21-Mar 672.75 652.5 658.25 -8.75
21-May 670.25 652.25 657.75 -7.5
KC Wheat        
21-Mar 648 630.75 636.75 -5.5
21-May 650.75 633.75 639.5 -6
MPLS Wheat        
21-Mar 643.75 628.5 632.75 -7.25
21-May 652 637.5 641.5 -7.25
Live Cattle             cents/lb        
21-Feb 116.975 116 116.4 -0.6
Feeder Cattle         cents/lb        
21-Mar 141.375 139.175 140.3 -1.175
Lean Hogs             cents/lb        
21-Apr 77.575 76.15 76.325 -0.625
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Mar 53.3 51.85 52.58 -0.03
Diesel        
21-Feb 1.621 1.5825 1.6027 0.0043
Unleaded Gasoline   $/gallon        
21-Feb 1.59 1.5615 1.57 -0.0107
Natural Gas        
21-Mar 2.74 2.618 2.697 0.061
Ethanol Futures        
21-Mar     1.6  
U.S. Dollar Index        
21-Mar 90.88 90.13 90.635 0.487
Gold                      $/ounce        
21-Feb 1851.5 1828.4    
Copper        
21-Jan     3.628  
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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