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Afternoon Market Recap for July 10, 2020

Weather, WASDE take a bite out of corn prices.

Soybeans also down in Friday’s session, with wheat coming in mixed

Traders shrugged off a massive corn sale to China this morning, focusing instead on improving weather forecasts and a generally unhelpful set of supply and demand data from USDA’s July World Agricultural Supply and Demand Estimates (WASDE) report. The result was a round of technical selling that kicked prices nearly 3% lower. Soybeans followed suit, losing around 1%. Wheat was decidedly mixed, meantime, with Chicago SRW contracts jumping nearly 3% higher while Kansas City HRW contracts slumped around 0.5% lower.

Between Saturday and next Tuesday, most of the Midwest and Plains should see some measurable rainfall, per the latest 72-hour cumulative precipitation map from NOAA, but don’t expect to see more than 0.25” to 0.5” in most areas during this time. Further out, the agency’s 8-to-14-day outlook predicts drier weather emerging south of I-80 between July 17 and July 23, with seasonally warm temperatures prevailing across all of the central U.S.

On Wall St., the Dow rose 307 points in afternoon trading to 26,013 on overall optimism over economic recovery in the wake of the global COVID-19 pandemic. Energy futures were also no the mend today, with crude oil up 2.5% to move back above $40 per barrel this afternoon. Gasoline was also up around 2.5%, with diesel up almost 1.5%. The U.S. Dollar softened slightly.

On Thursday, commodity funds were net buyers of most grain contracts, including corn (+15,000), soybeans (+4,500), soymeal (+4,000) and CBOT wheat (+7,000) but were net sellers of soyoil (-3,000).

Corn prices slumped about 3% lower Friday on a round of technical selling and profit-taking as traders digested the latest weather forecasts and crop data from USDA. July futures dropped 10.75 cents to $3.4050, while September futures tumbled 12.5 cents to $3.3625.

Corn basis bids dropped 2 cents at an Iowa ethanol plant, firmed 2 cents at a Nebraska processor and held steady elsewhere across the central U.S. Friday. Farmer sales are up overall this week amid rising futures prices.

Private exporters reported the sale of 53.7 million bushels of corn for delivery to China. Of the total, 30.1 million bushels is for delivery during the current marketing year, with the remainder for delivery in 2020/21. It was the second largest corn purchase from China on record, according to USDA data.

USDA noted “sharply lower supplies,” and also lower feed and residual use with higher food, seed and industrial use in this morning’s WASDE report. Feed and residual use fell 200 million bushels, while food, seed and industrial use bumped up 25 million bushels. The net result was lower ending stocks, at 2.648 billion bushels.

As expected, USDA also significantly trimmed its 2020 corn production forecast by 995 million bushels, for a total production now at 15 billion bushels, which analysts largely expected after digesting the agency’s June 30 acreage report. Yield expectations were unchanged, however, at an average 178.5 bushels per acre.

Also worth noting – USDA raised its season-average price estimates by 15 cents to $3.35 per bushel based on recent inroads that futures have made in the past month.

World ending stocks for 2019/20 declined slightly, to 12.281 billion bushels. Analysts were expecting a modest increase from USDA’s June tally of 12.319 billion bushels, in contrast. World ending stocks for 2020/21 also fell below analyst expectations, to 12.403 billion bushels.

Was last week’s USDA quarterly stocks and acreage report a surprise? The agency trimmed its corn estimates by 5 million acres. What happened to those acres? Farm Progress Panel participants weighed in – click here to find out what this survey revealed.

FranceAgriMer estimates that 83% of France’s corn crop is in good-to-excellent condition through July 6, holding steady from a week ago.

Preliminary volume estimates were for 442,841 contracts, trending moderately ahead of Thursday’s final count of 392,120.

Soybean prices faded about 1% lower Friday on a round of technical selling over more favorable weather forecasts and concerns over U.S.-China trade relations. Spillover weakness from corn applied additional headwinds. July futures dropped 6.75 cents to $8.9150, with August futures down 9.5 cents to $8.87.

Soybean basis bids were mostly steady across the Midwest Friday but did slip a penny lower at an Iowa river terminal today.

The U.S. soybean footprint is now estimated 200,000 acres larger, with USDA bumping up the total to 83.0 million acres this year. Export projections didn’t change, but supplies moved up 45 million bushels and crush estimates also went up 15 million bushels, for a net gain of 30 million bushels that left 2020/21 ending stocks at 425 million bushels.

USDA boosted soybean’s season-average price higher after futures prices have rose steadily this past month, now reaching $8.50 per bushel.

World ending stocks for 2019/20 soybeans rose slightly to 3.662 billion bushels, while 2020/21 world ending stocks shrank down to 3.493 billion bushels. Analysts were expecting increases for both data points.

China raised its 2019/20 soybean imports forecast to 3.454 billion bushels based on strong crushing demand. The country signaled again it wants to increase imports from the U.S. to meet its phase-one trade promises.

Meanwhile, trade relations between the U.S. and China remain relatively frosty. President Donald Trump noted earlier today that relations are “severely damaged” after each has accused the other of mishandling the coronavirus pandemic. Trump indicated a planned phase-two trade agreement is still on the table but is not a priority right now.

Preliminary volume estimates were for 208,554 contracts, moving slightly above Thursday’s final count of 180,771.

Wheat prices were mixed but mostly higher Friday on generally favorable supply and demand data from USDA this morning. Two large sales to China this morning lent additional support. September Chicago SRW futures climbed 10.25 cents to $5.3525, September Kansas City HRW futures dropped 3.5 cents to $4.5325, and September MGEX spring wheat futures inched half a penny higher to $5.2650.

Private exporters reported two large wheat sales for delivery to China. The first is for 6.98 million bushels of hard red spring wheat during the 2020/21 marketing year. The second is for 4.78 million bushels of hard red winter wheat, also for delivery in 2020/21.

USDA noted “larger supplies, lower domestic use, unchanged exports and increased stocks” for wheat. As a result, 2020/21 ending stocks rose 17 million bushels higher to 942 million bushels. Analysts were expecting a slightly larger total, with an average trade guess of 948 million bushels. The season-average farm price held steady, at $4.60 per bushel.

World ending stocks for 2019/20 wheat moved slightly higher, to 10.916 billion bushels, which was slightly below the average trade guess of 10.923 billion bushels. World ending stocks for 2020/21 moved slightly lower, in contrast, to 11.567 billion bushels.

Russia, the world’s No. 1 wheat exporter, plans to replenish its state grain stockpile, which it had largely depleted earlier this year through domestic sales. The country’s agriculture ministry still expects a 2020 harvest topping 2.755 billion bushels. Harvest has already kicked off in the southern regions of Russia.

France’s wheat harvest is now 10% complete, versus 4% a week ago, per consultancy FranceAgriMer. Total production could fall 21% year-over-year, meantime, amid hot, dry weather earlier this growing season. FranceAgriMer estimates that 55% of the crop is in good-to-excellent condition through July 6, down a point from last week.

Preliminary volume estimates were for 215,961 CBOT contracts, falling slightly below Thursday’s final count of 217,950.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 352 340 340.5 -10.75
20-Sep 351.5 336.25 337.25 -12.5
Soybeans        
20-Jul 900.75 888.75 891.5 -6.75
20-Sep 898.75 882.75 885.5 -10.25
Soymeal                $/ton        
20-Aug 298.3 292.1 292.5 -4.9
Soyoil                    cents/lb        
20-Aug 28.51 28.03 28.22 -0.1
Wheat                    $/bushel        
20-Jul 543 536.75 535.75 9.5
20-Sep 539 520.5 534 10.25
KC Wheat        
20-Jul 454.75 450 447.25 -2
20-Sep 459.5 446.75 452 -3.5
MPLS Wheat        
20-Jul     517  
20-Sep 530.75 517.5 526.25 0.5
Live Cattle             cents/lb        
20-Aug 100.225 99.175 100.175 0.925
Feeder Cattle         cents/lb        
20-Sep 137.55 135.975 137.275 1.1
Lean Hogs             cents/lb        
20-Aug 51.025 49.35 49.75 -0.475
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Aug 40.77 38.54 40.6 0.98
Diesel        
20-Aug 1.2423 1.1994 1.2399 0.016
Unleaded Gasoline   $/gallon        
20-Aug 1.2911 1.2245 1.2813 0.0308
Natural Gas        
20-Sep 1.874 1.787 1.847 0.026
Ethanol Futures        
20-Aug 1.4 1.31 1.32 -0.075
U.S. Dollar Index        
  96.96 96.395 96.585 -0.088
Gold                      $/ounce        
20-Aug 1817 1796.5 1798.9 -0.3
Copper        
20-Jul 2.8955 2.8305 2.8955 0.0675
Fertilizer Swaps     (as of 7/10)  
DAP Tampa-index              313.0 3
DAP-New Orleans              339.0 24
Urea-New Orleans              226.0 9
Urea-Middle East              240.0 0
Urea-Black Sea              211.0 0
UAN (32%) New Orleans              129.0 -1.65

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