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Afternoon Market Recap for July 8, 2020

Winter wheat zooms 4% higher.

Corn also firms by 1% Wednesday, with soybeans down slightly

Wheat was Wednesday’s clear winner in the grain markets, with winter wheat contracts up more than 4% and spring wheat contracts climbing 2% higher today, thanks to a round of technical buying and short-covering spurred by expectations for declining production in the U.S. as well as among some major competitors such as France, Ukraine and Russia. Corn also finished today’s session in the green, with traders mindful of hot, dry weather forecasted for the Midwest later this week and next week. Soybeans didn’t hold the same optimism today, giving up morning-time gains to close slightly in the red.

Large portions of the Central Plains and eastern Corn Belt could see another 0.5” to 1” rain fall between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. But the agency’s latest 8-to-14-day outlook hints at drier conditions ahead, with much hotter-than-normal weather likely for most of the central U.S. between July 15 and July 21.

Wall St. was relatively calm after losses from airline stocks mostly canceled out gains from tech stocks. The Dow crept 5 points higher in afternoon trading to 25,895. Energy futures were lightly mixed, with crude oil up around 0.5% and gasoline up more than 1% this afternoon, while diesel trended 0.75% lower. The U.S. Dollar softened moderately.

On Tuesday, commodity funds were net sellers of most grain contracts, including corn (-10,000), soybeans (-3,000) and soymeal (-2,000) but were net buyers of soyoil (+3,500) and CBOT wheat (+1,500).

Corn prices chalked up 1% additional gains Wednesday on a round of technical buying partly spurred by weather worries and further supported by spillover strength from wheat. The Midwest is bracing for plenty of hot weather, with widespread forecasts of daytime highs of 90 degrees or higher. July futures added 3.25 cents to $3.4825, with September futures up 2.5 cents to $3.46.

Corn basis bids were mixed Wednesday, firming 2 to 5 cents at three Midwestern locations while dropping 3 cents at an Ohio river terminal today.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show corn sales ranging between 17.7 million and 43.3 million bushels for the week ending July 2.

Weekly ethanol production through July 3 has risen for the tenth consecutive week, reaching a daily average of 914,000 gallons. Stocks moved higher for the first time in more than two months, however, to 20.620 million barrels. September ethanol futures were mostly steady today, at $1.35.

Farmers are itching to see $4 corn again, but how much momentum would it take to get there? Matthew Kruse explores the potential in the latest Ag Marketing IQ blog – click here to learn more.

Brazil’s Conab is estimating the country’s 2019/20 corn exports at 1.358 billion bushels, unchanged from its June forecasts. If realized, corn exports this marketing year will fall 16% below 2018/19 totals.

Grain traveling the nation’s railways continues its sluggish pace this year, with 20,569 carloads last week. Cumulative totals are pacing 6.1% below 2019, at 558,461 carloads.

Preliminary volume estimates were for 282,106 contracts, spilling slightly below Tuesday’s final count of 310,181.

Soybean prices tested small gains this morning but ultimately closed in the red on some technical selling and profit-taking after prices reached four-month highs earlier this week. Hot, dry forecasts kept losses to a minimum today, however. July futures eased 0.5 cents to $8.9475, with August futures dropping 4.75 cents to $8.92. July futures haven’t closed above $9 per bushels since late January, but they have come tantalizingly close to that benchmark earlier this week.

Soybean basis bids softened 1 to 5 cents at two interior river terminals while holding steady across other Midwestern locations today.

Ahead of Thursday morning’s weekly export report from USDA, analysts expect the agency to show soybean sales ranging between 25.7 million and 66.1 million bushels for the week ending July 2.

Analysts also expect analysts to report soymeal sales totaling between 75,000 and 300,000 metric tons last week, plus another 5,000 to 30,000 MT of soyoil sales.

Brazil’s Conab projects the country’s 2019/20 soybean production at 4.442 billion bushels, which is slightly higher than its June estimates. That would also be above Brazil’s 2018/19 soybean production, which came in at 4.227 billion bushels.

Preliminary volume estimates were for 175,285 contracts, climbing slightly above Tuesday’s final count of 165,100.

Wheat prices soared on Thursday, pushed as much as 4% higher on a wave of technical selling spurred by a variety of production concerns both in the U.S. and overseas. September Chicago SRW futures climbed 22 cents to $5.1725, September Kansas City HRW futures gained 16.25 cents to $4.57, and September MGEX spring wheat futures added 10.25 cents to $5.2325.

Ahead of tomorrow morning’s weekly export report from USDA, analysts expect the agency to show wheat sales ranging between 7.3 million and 20.2 million bushels for the week ending July 2. Actuals will need to land on the high end of those estimates to best the prior week’s tally of 15.2 million bushels.

And ahead of July’s WASDE report, out Friday, analyst think the agency will lower its estimates for all-wheat production from 1.877 billion bushels down to 1.848 billion bushels.

French wheat exports outside of the European Union could rewrite records in the current marketing year, but consultancy FranceAgriMer is expecting a 43% decline for 2020/21, falling to 284.8 million bushels. Part of that drop is due to a smaller crop this season (down 21% year-over-year), along with more stringent competition among some overseas competitors, such as Australia.

Earlier this week, Ukrainian consultancy ProAgro lowered its estimates for the country’s 2020 wheat harvest to 958 million bushels, which would be an 8% decline from last year, if realized. The country has faced some unfavorably dry weather in recent weeks.

Jordan issued another tender to purchase 4.4 million bushels of milling wheat from optional origins that closes next Tuesday. Jordan purchased 2.2 million bushels of wheat in a tender that closed yesterday.

The Philippines issued an international tender to purchase 4.0 million bushels of animal feed wheat that closes tomorrow.

Preliminary volume estimates were for 185,263 CBOT contracts, nearly doubling Tuesday’s final count of 97,132.

 

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 348.5 341 348.25 3.25
20-Sep 346.75 339 346.25 2.5
Soybeans        
20-Jul 898.75 891.25 894.75 -0.5
20-Sep 896 889.5 890.75 -6.25
Soymeal                $/ton        
20-Aug 296.1 293.2 293.8 -1.8
Soyoil                    cents/lb        
20-Aug 28.93 28.39 28.55 -0.31
Wheat                    $/bushel        
20-Jul 513.5   517.5 25.25
20-Sep 517.5 494.75 516.5 22
KC Wheat        
20-Jul 453.5 447.25 452 17.5
20-Sep 457.75 440.25 456.75 16.25
MPLS Wheat        
20-Jul 507.75   512  
20-Sep 523.75 513 523.25 10.25
Live Cattle             cents/lb        
20-Jun 100.125 98.925 99.275 -0.725
Feeder Cattle         cents/lb        
20-Sep 136.6 134.775 135.4 -0.925
Lean Hogs             cents/lb        
20-Aug 49.2 47.9 48.05 -0.825
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Aug 41.08 40.3 40.9 0.28
Diesel        
20-Aug 1.2511 1.2288 1.2356 -0.0077
Unleaded Gasoline   $/gallon        
20-Aug 1.2974 1.2641 1.288 0.013
Natural Gas        
20-Sep 1.948 1.868 1.877 -0.062
Ethanol Futures        
20-Sep     1.35  
U.S. Dollar Index        
  97.005 96.345 96.375 -0.464
Gold                      $/ounce        
20-Aug 1829.8 1803.8 1815.5 11.3
Copper        
20-Jul 2.8145 2.7815 2.81 0.0225
Fertilizer Swaps     (as of 7/6)  
DAP Tampa-index              310.0 5
DAP-New Orleans              314.7 13
Urea-New Orleans              217.2 -3
Urea-Middle East              240.0 -3
Urea-Black Sea              211.0 0
UAN (32%) New Orleans              130.6 -1.65

 

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