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Afternoon Market Recap for July 13, 2020

Grain prices take big step back.

Corn, soybeans and wheat all spill into the red Monday

Grain prices stumbled through a rough session as technical selling resumed Monday, spurred by more rains in the short-term forecast. Corn futures dropped more than 1%, with some wheat contracts down more than 1.5% and soybeans suffering double-digit losses. The latest grain export inspection data from USDA generally held unsupportive numbers, while the agency’s next crop progress report out later this afternoon isn’t expected to hold any huge surprises.

Plenty of yield-replenishing rain is on its way to the Corn Belt, with 1” to 1.5” expected to fall on large portions of Iowa, Illinois, Minnesota, Wisconsin, Indiana and Michigan between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. Wetter weather east of the Mississippi River could prevail next week, per the agency’s latest 8-to-14-day outlook. Most (if not all) of the U.S. will also see hotter-than-normal temperatures between July 20 and July 26.

Hot-performing tech stocks are keeping Wall St. bullish, with the Dow up another 361 points in afternoon trading to 26,436. Energy futures were down this afternoon, in contrast. Crude oil lost more than 1% but is still hovering just above $40 per barrel. Gasoline was also down around 1%, with diesel dropping 1.5%. The U.S. Dollar softened moderately.

Corn prices saw moderate cuts Monday on another round of technical selling as timely rains are expected to land on key production areas later this week. July futures sank 6.5 cents to $3.34, with September futures dropping 9.25 cents to $3.28.

Corn basis bids were largely steady across the central U.S. Monday but did firm 4 cents higher at an Illinois ethanol plant today.

Corn export inspections tilted nearly 13% lower week-over-week to 35.5 million bushels for the week ending July 9. That was still on the high end of trade estimates, which ranged between 23.6 million and 45.3 million bushels. As they often are, Japan (9.6 million) and Mexico (8.1 million) were the top two destinations. Cumulative totals for the 2019/20 marketing year are still substantially behind last year’s pace, at 1.385 billion bushels.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to dock corn crop quality another point, dropping to 70% rated in good-to-excellent condition.

For the week ending July 7, commodity funds engaged in a huge unraveling of their net short position in corn, moving from a cumulative short of 201,648 contracts down to 141,741 last week. That was the biggest one-week reduction in a net short position since last June.

How are your crops doing? Fill out our short survey, and we will add your results to our interactive map to share with fellow farmers across the country. These responses will be compiled in our weekly Feedback From The Field feature, updated tomorrow.

Iran issued international tenders to purchase 7.9 million bushels of animal feed corn and 9.2 million bushels of feed barley, which close on Wednesday. The grain is for shipment between August and September.

European Union corn imports are sluggish compared to a year ago, according to data from the European Commission. Imports through the first two weeks of July were tracking 53% lower year-over-year, at 14.1 million bushels.

Preliminary volume estimates were for 415,259 contracts, falling slightly short of Friday’s final count of 442,343.

Soybean prices were slashed by double digits today on a round of technical selling prompted by spillover weakness from corn and mostly friendly weather forecasts for the rest of this week. Trade tensions between the U.S. and China also continue to lurk in the background. July futures tumbled 15 cents to $8.7650, with August futures losing 14.25 cents to $8.73.

Soybean basis bids held steady across the Midwest to start the week.

Soybean export inspections were relatively disappointing, sliding 14% from a week ago to 17.8 million bushels and landing near the middle of trade estimates, which ranged between 12.9 million and 25.7 million bushels. China reemerged as the No. 1 destination, with 5.9 million bushels. Cumulative totals for the 2019/20 marketing year have slid slightly below last year’s pace, with 1.391 billion bushels.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to show 70% of the soybean crop in good-to-excellent condition, sliding a point below last week’s results.

White House economic adviser Larry Kudlow told reporters this morning that the U.S. is “still engaging on the phase one trade deal” with China, although President Donald Trump said last week that the relationship between the two countries has been “severely damaged” over accusations surrounding the coronavirus pandemic. Trump also said phase two negotiations are not currently a priority, although they’re not off the table at this point.

European Union soybean imports during the first two weeks of the 2020/21 marketing year reached 19.5 million, sliding 19% lower year-over-year. EU canola imports tumbled 86% year-over-year, meantime, with EU soymeal imports also down 40% so far in July.

Iran issued an international tender to purchase 200,000 metric tons of soymeal, which closes Wednesday. The grain is for shipment in August or September.

Preliminary volume estimates were for 226,247 contracts, moving slightly ahead of Friday’s final count of 208,549.

Wheat prices followed other grains lower on a round of technical selling today, although some losses were relatively mild in comparison to corn and soybeans. September Chicago SRW futures dropped 10 cents to $5.24, September Kansas City HRW futures lost 3 cents to $4.49, and September MGEX spring wheat futures fell 7 cents to $5.1925.

Wheat export inspections climbed 67% higher from a week ago, reaching 22.9 million bushels. That tally was also above all trade estimates, which ranged between 12.9 million and 20.2 million bushels. China was the top destination, with 4.2 million bushels. Cumulative totals for the 2020/21 marketing year, which began in June, are now fractionally higher than last year’s pace, with 110.2 million bushels.

Analysts expect no change in spring wheat quality ratings from USDA when the agency releases its next crop progress report later this afternoon. Last week, USDA rated 70% of the crop in good-to-excellent condition. And analysts expect winter wheat harvest progress to move from 56% complete a week ago up to 70% through July 12.

Through the first two weeks of the 2020/21 marketing season, European Union soft wheat exports reached 8.9 million bushels, tumbling 62% year-over-year. EU barley exports through July 12 were also down 55% from a year ago.

Russian consultancy IKAR lowered its latest wheat production estimates by nearly 2%, to 2.811 billion bushels, due to weaker than previously expected yields in the country’s drought-stricken southern regions. Russia is the world’s No. 1 wheat exporter.

Egypt, the world’s No. 1 wheat buyer, has enough strategic reserves to last another five to six months, according to the country’s supply minister. Egypt has also purchased around 128 million bushels of domestic wheat so far this season.

Preliminary volume estimates were for 123,283 CBOT contracts, falling moderately below Friday’s final count of 215,959.

 

Closing Prices for Key Commodities 

  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 337.25 332 334 -6.5
20-Sep 334.5 326.75 328.75 -9.25
Soybeans        
20-Jul 888.75 884 876.5 -15
20-Sep 881.75 868 871.5 -15.25
Soymeal                $/ton        
20-Aug 292 284.2 284.6 -8.1
Soyoil                    cents/lb        
20-Aug 28.26 27.83 28.08 -0.14
Wheat                    $/bushel        
20-Jul 536 528 524.75 -11
20-Sep 535.5 522.25 524.75 -10
KC Wheat        
20-Jul     440.5  
20-Sep 457.5 443 449 -3
MPLS Wheat        
20-Jul     510.25  
20-Sep 528 516.25 518.75 -7
Live Cattle             cents/lb        
20-Aug 100.825 99.5 99.925 -0.075
Feeder Cattle         cents/lb        
20-Sep 139.1 137.575 138.2 0.875
Lean Hogs             cents/lb        
20-Aug 51.825 49.4 51.525 1.65
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Aug 40.72 39.66 39.94 -0.61
Diesel        
20-Aug 1.2412 1.219 1.2238 -0.0174
Unleaded Gasoline   $/gallon        
20-Aug 1.2913 1.2464 1.2648 -0.0183
Natural Gas        
20-Sep 1.854 1.788 1.795 -0.052
Ethanol Futures        
20-Aug 1.34 1.32 1.33 0.01
U.S. Dollar Index        
  96.64 96.205 96.43 -0.184
Gold                      $/ounce        
20-Aug 1818.8 1802.1 1805 6.8
Copper        
20-Jul 2.9815 2.9035 2.9195 0.0325
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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