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Afternoon Market Recap for July 7, 2020

Short-term forecasts, profit-taking send corn and soybeans lower.

Wheat edges higher on reduced global production estimates

Editor’s Note: Our “Feedback from the Field” series is live! Click here to share your crop reports with other growers around the country via a short survey with freshly updated questions this week! We will update the interactive Google map with results throughout the day. Our most recent analysis just went live – check it out here. Thank you!

Corn: A chance for scattered showers took the steam out of corn’s upward price run today as a round of profit-taking ensued in the futures markets. The updated short-term forecast alleviated concerns about hot and dry weather scorching yields, sending futures prices lower. But the reprieve may be temporary as forecasts later in the week feature abnormally warm and dry weather, which could inflict greater damage as the crop creeps closer to pollination.

Cash corn bids inched up $0.03/bushel to $0.15 over September futures prices at a Decatur, Illinois processing facility. Bids were mostly steady elsewhere around the Corn Belt through early afternoon. Yesterday’s Crop Progress report, which showed better than expected corn conditions, dampened futures prices and deterred farmers from booking new cash sales.

Last week’s acreage reports gave a shot of optimism to corn growers, who were left weighing the chances of $4 corn by the time Independence Day rolled around. But what are the odds of corn reaching $4/bushel in the short run? Farm Futures senior grain market analyst emeritus Bryce Knorr points out that steady crop progress reports and a large old crop carryover will continue looming in the background despite dry forecasts that could potentially lower yields. Check out his insights in the latest Ag Marketing IQ column.

Soybeans: A shifting forecast increased the likelihood of rainfall in the Eastern Corn Belt and Northern Plains, which would be favorable for soybean development. Futures prices edged lower as a result. This morning’s burst of profit-taking continued into the afternoon after futures prices notched a four-month high in Chicago yesterday.

Cash soybean prices were largely unchanged across the Midwest today as farmer sales slowed on easing futures prices. Shrinking crush margins could cause processors to reduce their basis offerings, especially if soybean futures continue their weather rally. Cash soymeal offerings were mostly steady on the sentiment.

Do you feel like you miss out on summer price rallies every year? You’re not alone, Darren Frye of Water Street Solutions writes. The key to not missing these rallies is to plan for multiple price scenarios, consider put options, and don’t hesitate to execute your marketing plan. Check out his article for more tips on taking advantage of rallies.

Wheat: Concerns for a reduced global supply strengthened prices in the U.S. wheat complex today after Russia and France cut yield forecasts on the upcoming new crop. Gains were capped by a rising dollar as the ICE Dollar Index rose 0.20% to $96.880.

Cash soft red winter wheat bids rose $0.05/bushel to trade even with July Chicago futures at a Decatur, Indiana elevator this morning. Basis was flat elsewhere across the Midwest

Cash offerings for hard red winter wheat held steady in the Southern Plains this morning. Cash sales were steady in Kansas, where harvest is in full swing.

The French farm ministry released estimates this morning showing the 2020 soft wheat crop would fall nearly 21% to 1.15 billion bushels. A wet planting season and dry spring decimated yields on the 2020 crop, sending Chicago soft wheat futures prices higher on the reduced supply forecast. France is the largest grain producer in the European Union trade bloc.

Russian agricultural consultancy IKAR followed France’s lead, slashing Russia’s 2020 wheat production estimate by 55 million bushels to 2.9 billion bushels. The reduced forecast also underpinned strength in rising U.S. wheat markets this afternoon.

Weather: Another day of hot temperatures and mostly clear skies can be expected across most of the Midwest today, according to NOAA's short-range forecast. A chance of rain is possible across the Eastern Corn Belt this evening. Scattered showers in the Northern Plains could bring over an inch of rain to North Dakota and Minnesota today.

Financials: Coronavirus cases in the U.S. rose by 49,895 cases overnight to 2,938,624 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 359 lives to 130,306 deaths as of press time. At the current rate, the U.S. will likely surpass the three million caseload mark by tomorrow.

The June reading on the Purdue University – CME Group Ag Economy Barometer ticked 14 points higher from May to 117. Recent government direct payments from the Coronavirus Food Assistance Program (CFAP) and favorable spring planting weather helped boost farmer morale during June. Farmer optimism for a profitable year was slightly higher than the previous two months, but noticeably lower than the same time a year ago.

CFAP payments helped many farmers to ride out the worst of the coronavirus pandemic. But a pair of Oregon brothers who operate a 2,000-acre hay farm were ineligible for payments. And an export contract for $1 million in alfalfa hay vanished at the pandemic’s onset. But the Heffernan brothers put their heads together to create a new backup plan that involved direct sales to customers as well as up-front payments that have allowed them to remain afloat. Check out Mike Wilson’s interview with the Heffernan family in the latest This Business of Farming column.

Despite being largely absent from recent headlines, the coronavirus continues to rip through U.S. meat packing facilities as more plants have lifted special absenteeism policies that would allow a barrier for virus transmission at the plants. Over 17,000 coronavirus cases were reported in April and May at U.S. meat processing facilities, leading to almost 100 deaths. According to available CDC data, the virus impacted 87% of ethnic and racial minority workers. About 12% of positive cases were asymptomatic, allowing virus transmission to run rampant through the plants across the country despite additional safety precautions enacted by companies.

Increased forecasts for a “start and stop” recovery weighed heavily on Wall Street’s mind today. New car sales are down 40% during the second quarter in the U.S. An 11% unemployment rate and increasing concerns about another round of lockdowns to prevent virus transmission sent S&P 500 futures 32.30 points or 1.02% lower to $3,147.42 this afternoon.

Brazil’s President Jair Bolsonaro has tested positive for the coronavirus, he announced to reporters earlier today. The president, who was ordered by a court last month to comply with mask ordinances, has aggressively downplayed the impacts of the virus and has publicly admitted to taking the non-effective anti-malaria drug, hydroxychloroquine, to combat the virus.

Closing Prices for Key Commodities         
  High Low Last Change
Corn                     $/bushel  cents/bu      
20-Jul 347.5 341.75 345 +-1.5
20-Sep 348    340 1/4 343 1/4 -3 2/8
20-Jul 899 1/4 894    895 1/4 -3 2/8
20-Sep 901 1/2 893 3/4 896    -2 4/8
Soymeal                $/ton        
20-Jul 296.2 293 293 -2.4
Soyoil                    cents/lb        
20-Jul 28.8 28.27 28.76 +0.34
Wheat                    $/bushel        
20-Jul 495    491 1/2 492 1/4 +2 6/8
20-Sep 500    489 3/4 495 3/4 +2 4/8
KC Wheat        
20-Jul 436 1/2 434    436    +3 2/8
20-Sep 444    436 1/2 441 1/2 +3 0/8
MPLS Wheat        
20-Jul 504 3/4 504 1/4 504 1/4 +5 2/8
20-Sep 514 3/4 512    513 3/4 +1 0/8
Live Cattle             cents/lb        
20-Jun 100.375 99.6 100.175 +0.075
Feeder Cattle         cents/lb        
20-Aug 136.4 134.85 135.3 -0.85
Lean Hogs             cents/lb        
20-Jun 44.95 44.525 44.6 -0.35
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Jul 40.95 39.9 40.46 -0.17
20-Jul 1.2524 1.222 1.2387 -0.003
Unleaded Gasoline   $/gallon        
20-Jul 1.2841 1.2286 1.2721 0.0313
Natural Gas        
20-Jul 1.924 1.829 1.879 0.049
Ethanol Futures        
20-Jul 1.35 1.33 1.345 +0.011
U.S. Dollar Index        
  97.105 96.555 96.845 +0.163
Gold                      $/ounce        
20-May 1803.9 1783.3 1803.9 +15.4
20-May 2.7875 2.738 2.7825 +0.0165
Fertilizer Swaps     (as of 6/1)  
DAP Tampa-index     310 +5
DAP-New Orleans     314.71 +13
Urea-New Orleans     217.16 -3
Urea-Middle East     240 -3
Urea-Black Sea     211 +0
UAN (32%) New Orleans     130.62 -1.65
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