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Afternoon Market Recap for May 22, 2020

Grain prices ease ahead of holiday weekend.

Wheat hit the hardest Friday, but corn and soybeans also decline

Grain prices were lower Friday as traders squared positions ahead of the holiday weekend. Corn prices eased fractionally, and soybean prices saw modest declines as worries persist over the potential of record-breaking U.S. crops this year. Wheat saw even bigger declines, with some contracts down more than 2% today after some favorable rains are expected to land in the U.S. Plains this weekend. Europe is also expected to receive some replenishing rains this coming week.

The Central Plains can expect to see some soggy weather this holiday weekend, with another 1” to 2” likely between Saturday and next Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. The Midwest will generally see lower totals, but nearly all of the central U.S. is likely to see some measurable precipitation during this time. According to NOAA’s latest 8-to-14-day outlook, seasonally cool, dry weather is likely between May 29 and June 4.

On Wall St., the Dow should close about 3% higher for the week, although stocks were down slightly today – dipping 48 points to 24,425. Investors are cautiously optimistic, however, as the nation continues to slowly open back up for business. Energy futures saw moderate declines, in contrast, with crude oil down nearly 2% this afternoon to just above $33 per barrel. Diesel dropped about 0.5%, with gasoline down around 1.25%. The U.S. Dollar firmed moderately.

On Thursday, commodity funds were net sellers of most grain contracts, including corn (-8,000), soybeans (-10,000), soymeal (-2,500) and soyoil (-2,000) but were net buyers of CBOT wheat (+2,500).

Grain markets will be closed this coming Monday in observance of Memorial Day. Have a safe, happy holiday and come back first thing Tuesday morning for our latest round of grain marketing analysis.

Corn prices pared a portion of overnight losses but were not able to break into the green Friday, instead ending today’s session down slightly. July futures dipped 0.25 cents to $3.1750, while September futures dropped 0.75 cents to $3.2225.

Corn basis bids were narrowly mixed across the central U.S. Friday, moving as much as 2 cents in either direction today.

Ukraine’s spring planting season is now 96% complete, including 12.849 million acres of corn. The country’s total grain harvest could fall as much as 13% below last fall’s record haul, according to Ukraine’s economy ministry – but it still figures to be a major corn and wheat exporter this coming marketing year.

France’s corn crop is in very good condition overall, although crop quality fell a point this past week to move to 86% rated in good-to-excellent condition. Ninety-three percent of the 2020 crop has now been planted, versus 90% a week ago.

Syria issued an international tender to purchase 2.0 million bushels of corn and 50,000 metric tons of soymeal, each for delivery four months after contracts are confirmed on the purchases.

“Fast planting and good early ratings aren’t a silver bullet guaranteeing a good corn crop,” notes grain market analyst Bryce Knorr. “But they’re better than the alternative for sure.” Find out what trends Knorr has been tracking in the latest Ag Marketing IQ blog – click here for more details.

Preliminary volume estimates were for 147,375 contracts, drifting below Thursday’s final count of 172,892.

Soybean prices continue to decline on expectations for a bin-busting U.S. crop, further marred by the absence of fresh Chinese sales this week. July futures dropped 1.75 cents to $8.3325, with August futures down 1.5 cents to $8.37.

Soybean basis bids dropped 4 cents at an Illinois river terminal Friday but held steady across other Midwestern locations today.

U.S. and China’s relationship remained terse this week, with each country pointing a finger at the other for its perceived various mishandlings of the world coronavirus outbreak. As it relates to the grain markets, traders have been anxious to see more large soybean sales coming down the pike. The last such sale was announced May 14.

Favorable weather conditions have also weighed down prices for much of the week. NOAA’s latest seasonal outlook, covering June through August, shows near-normal temperatures likely this summer, with some seasonally wet weather also probable. Soybean yields have bested the trendline average five of the past six years.

Preliminary volume estimates were for 178,125 contracts, slipping fractionally below Thursday’s final count of 180,227.

Wheat prices took a hit today after favorable weather forecasts in the U.S. Plains and across Europe triggered a round of technical selling. July Chicago SRW futures dropped 7.25 cents to $5.0875, July Kansas City HRW futures fell 10 cents to $4.4450, and July MGEX spring wheat futures lost 5 cents to $5.1175.

Ukraine is close to bumping up against its 2019/20 wheat quota limit. Exports this marketing year have reached 732.1 million bushels as of May 22, which leaves roughly 10 million more bushels allowed to be exported through the end of June. Ukraine is the world’s No. 4 largest wheat exporter.

France’s 2019/20 soft wheat crop quality improved from a week ago, moving up 2 points to 57% rated in good-to-excellent condition.

Japan purchased 4.1 million bushels of food-quality wheat from the United States, Canada and Australia in a regular tender that closed earlier this week. Of the total, 61% was sourced from the U.S.

Philippine importers purchased 2.1 million bushels of animal feed wheat from optional origins in a tender that closed earlier today. The grain is for shipment in July or August, depending on origin.

A South Korean flour mill passed on offers for a tender to purchase nearly 2.0 million bushels of milling wheat from the U.S., citing prices that were too high. The grain would have been for shipment in September. Another mill purchased 1.3 million bushels of U.S. wheat in a separate tender that closed Thursday.

Preliminary volume estimates were for 107,857 CBOT contracts, falling 15% below Thursday’s final count of 126,222.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 319 316 318 -0.25
20-Sep 323.75 320.75 322.75 -0.75
Soybeans        
20-Jul 839.5 828.5 833.25 -1.75
20-Sep 843.75 835.25 838.5 -1.75
Soymeal                $/ton        
20-Aug 288.3 283.9 286 1.9
Soyoil                    cents/lb        
20-Aug 27.32 26.77 26.82 -0.41
Wheat                    $/bushel        
20-Jul 516.25 503.25 508.75 -7.25
20-Sep 518.75 506.75 512.75 -6.75
KC Wheat        
20-Jul 454.75 443.5 444.5 -10
20-Sep 461.75 450.75 451.75 -10
MPLS Wheat        
20-Jul 517.75 ERR 513 -5
20-Sep 528.25 522.25 524.25 -4.5
Live Cattle             cents/lb        
20-Jun 99 96.775 97.45 -1.35
Feeder Cattle         cents/lb        
20-Aug 131.225 129.8 129.8 -0.325
Lean Hogs             cents/lb        
20-Jun 57 55.825 56.025 -1.15
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Jun 34 30.72 33.35 -0.57
Diesel        
20-Jun 0.9924 0.9344 0.9853 -0.0037
Unleaded Gasoline   $/gallon        
20-Jun 1.05 0.9851 1.0349 -0.0102
Natural Gas        
20-Jul 1.903 1.832 1.887 0.035
Ethanol Futures        
20-Jun 1.105 1.105 1.105 -0.004
U.S. Dollar Index        
  99.9 99.4 99.785 0.382
Gold                      $/ounce        
20-Jun 1742 1722.5 1726.6 6.1
Copper        
20-May 2.413 2.39 2.413 -0.039
Fertilizer Swaps     (as of 5/22)  
DAP Tampa-index              290.0 -11
DAP-New Orleans              282.2 -2
Urea-New Orleans              201.2 -25
Urea-Middle East              217.5 10
Urea-Black Sea              205.0 4
UAN (32%) New Orleans              141.7 -8.82
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