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Afternoon Market Recap for July 15, 2020

Wheat prices surge 4% higher.

Soybeans track around 1% higher, with corn closing fractionally lower

Grain markets were mixed but mostly firm Wednesday, anchored by big gains in wheat, which are following global prices higher. Some contracts rose more than 4% today. Soybeans also moved about 1% higher on a round of technical buying partly spurred by two large sales to China this week. Corn is still struggling to find traction, meantime, as traders eye more rain and milder temperatures across the Midwest this coming week.

Parts of the eastern Corn Belt could see up to 1” of additional rainfall between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. Areas farther west will generally see less rain, but most parts of the Midwest should see some measurable accumulation during this time. NOAA’s latest 8-to-14-day outlook still calls for seasonally warm weather across the entire U.S. between July 22 and July 29, with wetter-than-average conditions likely east of the Mississippi River.

Wall St. remained bullish Wednesday amid some promising coronavirus vaccine news today, lifting the Dow another 194 points higher in afternoon trading to 26,837. Energy futures were also firm, with oil rising 2% higher to move back above $41 per barrel. Diesel was also up around 2%, with gasoline tracking 1.4% higher. The U.S. Dollar softened slightly.

On Tuesday, commodity funds were net buyers of most grain contracts, including soybeans (+5,000), soymeal (+1,000), soyoil (+4,500) and CBOT wheat (+2,500) but were net sellers of corn (-7,500).

Corn prices continue to struggle to find any positive momentum, as traders largely ignored another large sale to China this morning and spillover strength from wheat, instead focusing on yield-friendly weather forecasts that could protect or boost yield potential across the Midwest. September futures slipped 0.25 cents lower to $3.2575.

Want to learn more about why the latest weather rally fizzled? We talked through some of the variables in play right now that are having the biggest effect on grain prices. Click here to listen to the latest Midweek Markets podcast.

Corn basis bids were mixed at Midwestern ethanol plants Wednesday but held steady across most other central U.S. locations today. Farmer sales have been generally slow so far this week.

China booked a large corn sale for the second straight day. Private exporters reported to USDA the sale of 5.2 million bushels of corn to China for delivery during the 2020/21 marketing year, which begins September 1.

For the eleventh consecutive week, domestic ethanol production improved, reaching a daily average of 931,000 barrels per day – up from 917,000 daily barrels the prior week. August futures were down slightly this morning.

Prior to Thursday morning’s weekly export report from USDA, analysts expect the agency to show corn sales totaling between 59.1 million and 114.2 million bushels for the week ending July 9.

Consultancy APK-Inform raised Ukraine’s 2020 corn production estimates by 3.4% to 1.441 billion bushels. Of that, up to 1.142 billion bushels could be exported.

South Korea purchased 2.6 million bushels of corn from optional origins, for arrival in late November.

Preliminary volume estimates were for 249,210 contracts, spilling moderately below Tuesday’s final count of 300,953.

Soybean prices trended moderately higher Wednesday, closing the session up 1% on a round of technical buying spurred by optimism that China is ramping up efforts to meet its phase-one trade agreement promises. (Between January and May, China only fulfilled 16% of its pledge to buy $36.5 billion in U.S. farm goods this year.) August futures rose 9 cents to $8.87, with September futures up 7 cents to $8.8125.

Soybean basis bids tumbled 5 to 8 cents lower at two processors Wednesday while holding steady elsewhere across the central U.S. today.

Private exporters reported to USDA the sale of 14.3 million bushels of soybeans for delivery to China during the 2020/21 marketing year, which begins September 1. This follows Tuesday’s announcement of another large soybean sale to China totaling 14.7 million bushels, also for delivery in 2020/21. Private buyers were also said to have booked another five cargoes today, totaling around 11.0 million bushels.

The National Oilseed Processors Association (NOPA) reported a U.S. soybean crush in June totaling 167.263 million bushels, which was the largest June crush on record and topped all trade guesses, despite a gentle 1.4% decline from May’s tally of 169.584 million bushels.

Ahead of tomorrow morning’s weekly grain export report from USDA, analysts expect the agency to show soybean sales totaling between 25.7 million and 68.0 million bushels for the week ending July 9. Actuals will need to at least make it to the middle of those estimates to top the prior week’s tally.

Analysts also expect USDA to report another 75,000 to 350,000 metric tons in soymeal sales last week, plus 5,000 to 35,000 MT of soyoil sales.

Preliminary volume estimates were for 144,433 contracts, falling short of Tuesday’s final count of 162,835.

Wheat prices remain volatile but saw significant upside Wednesday on a wave of speculative buying and short-covering amid reports of higher global prices. September Chicago SRW futures jumped 24.75 cents to $5.5150, September Kansas City HRW futures climbed 17.75 cents to $4.60, and September MGEX spring wheat futures added 8.5 cents to $5.2725.

Ahead of Thursday morning’s weekly grain export report from USDA, analysts expect the agency to show wheat sales ranging between 9.2 million and 23.9 million bushels for the week ending July 9.

A Russian consultancy downgraded the country’s wheat production estimates yesterday, but today, ProZerno thinks that number could track higher, to 2.877 billion bushels. That figure is more bullish than the agriculture ministry’s forecast of 2.756 billion bushels, however.

Germany’s soft wheat production potential has fallen by 6% from earlier estimates, according to the Agritel consultancy, due to lower planted acres amid a soggy fall. Agritel currently estimates production at 793.7 million bushels.

If ENSO forecasts continue to favor a weak La Niña event developing, that could mean unfavorably dry weather for Argentina’s wheat crop. The country’s Rosario grains exchange has already trimmed its 2020/21 production forecasts to a range of 661.4 million to 698.1 million bushels.

China’s statistics bureau estimates wheat production will move 0.6% higher than earlier estimates to 4.838 billion bushels, with improved yields more than making up for lower acres this year.

Japan is looking to purchase 2.9 million bushels of feed wheat and 4.6 million bushels of feed barley in a simultaneous buy-and-sell auction taking place next Wednesday. The grain would be for arrival by late December.

Jordan issued another tender to purchase 4.4 million bushels of milling wheat from optional origins that closes next Tuesday. Yesterday, the country bought 2.2 million bushels of milling wheat.

Preliminary volume estimates were for 159,288 CBOT contracts, nearly doubling Tuesday’s final tally of 88,802.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul     334.75  
20-Sep 328.75 322.75 326.25 -0.25
Soybeans        
20-Jul     882.25  
20-Sep 882 873.5 880.75 7
Soymeal                $/ton        
20-Aug 289.9 286.5 288.6 1
Soyoil                    cents/lb        
20-Aug 28.98 28.62 28.94 0.36
Wheat                    $/bushel        
20-Jul     524.75  
20-Sep 551.75 526.75 550.75 24.75
KC Wheat        
20-Jul     438.25  
20-Sep 460.25 441 459.5 17.75
MPLS Wheat        
20-Jul     510  
20-Sep 528.25 516.75 527.75 8.5
Live Cattle             cents/lb        
20-Aug 101.8 98.425 101.8 3
Feeder Cattle         cents/lb        
20-Sep 139.9 137.25 139.9 2.425
Lean Hogs             cents/lb        
20-Aug 50.95 49.75 50.175 0.25
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Aug 41.26 40.08 41.07 0.78
Diesel        
20-Aug 1.2485 1.209 1.2445 0.0237
Unleaded Gasoline   $/gallon        
20-Aug 1.2771 1.2448 1.2602 0.0128
Natural Gas        
20-Sep 1.822 1.769 1.814 0.027
Ethanol Futures        
20-Aug 1.17 1.141 1.17 -0.063
U.S. Dollar Index        
  96.215 95.72 96.04 -0.167
Gold                      $/ounce        
20-Aug 1819.5 1804 1813.5 2.9
Copper        
20-Jul 2.93 2.86 2.8725 -0.0435
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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