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Afternoon Market Recap for May 29, 2020

Trade tensions trim soybean prices.

Corn also closes lower Friday, while the latest wheat rally keeps marching

Worries over an eroding relationship with China kept soybean prices sliding lower again on Friday. Technical selling trimmed prices by another 0.7%. Corn prices also saw moderate losses, as planting pressure and the expectation for a huge harvest this year has created headwinds for both crops. Wheat prices jumped another 1.25% or more higher Friday, in contrast, as dry weather in the U.S. and abroad may negatively impact yields in some key production countries.

The upper Midwest could see some wet weather between today and Monday, with some areas gathering another 1” or more, per the latest 72-hour cumulative precipitation map from NOAA. Some areas farther south could also see some measurable rainfall over the weekend. The agency’s latest 8-to-14-day outlook predicts much warmer, drier weather throughout the Midwest and Plains from June 5 to June 11.

On Wall St., stocks spent Friday’s session on their heels, with the Dow dropping 132 points this afternoon to 25,268. Energy prices continue to recover in earnest, with crude oil up another 4% today and on pace to have its best month ever. Gasoline was up 6% this afternoon, with diesel rising 7%. The U.S. Dollar was fractionally lower.

On Thursday, commodity funds were net buyers of corn (+28,000), soymeal (+2,500) and CBOT wheat (+11,000) contracts but were net sellers of soybeans (-3,000) and soyoil (-2,000).

Corn prices fell moderately today as expectations for a large 2020 crop triggered some technical selling. Spillover weakness from soybeans applied additional headwinds. July futures fell 2 cents to $3.2550, with September futures down 1.75 cents to $3.30.

Corn basis bids softened 1 to 3 cents at multiple interior river terminals and firmed 2 cents higher at an Iowa processor while holding steady elsewhere across the central U.S. today.

Private exporters reported to USDA the sale of 4.0 million bushels of corn for delivery to unknown destinations during the 2019/20 marketing year, which ends August 31.

Corn saw 16.8 million bushels in old crop sales plus just 1.8 million bushels in new crop sales for a total tally of 18.6 million bushels for the week ending May 21. Analysts were expecting a much more robust tally, with trade guesses ranging between 21.7 million and 51.2 million bushels. Cumulative sales for the 2019/20 marketing year are still significantly below last year’s pace, now at 1.089 billion bushels.

Corn export shipments were better but still 16% below the prior four-week average, with 41.8 million bushels. Mexico was the No. 1 destination, with 12.6 million bushels.

Ukraine’s 2019/20 corn exports have topped 1.118 billion bushels so far, according to the country’s agriculture ministry. Total grain exports are expected to rewrite records this year.

France’s 2020 corn crop planting progress reached 97% by May 25, per consultancy FranceAgriMer. The crop is in generally good shape so far, with 83% rated in good-to-excellent condition, although crop quality fell three points from a week ago.

Preliminary volume estimates were for 296,124 contracts, dropping about 25% below Thursday’s final count of 396,368.

Soybean prices saw another round of losses on Friday as tense relations with China triggered more technical selling – even as private exporters reported a large sale to that country this morning. July futures dropped 6.25 cents to $8.4075, with August futures down 5.75 cents to $8.4350.

Soybean basis bids held steady across the Midwest Friday. Farmer sales have been generally slow this week, as the focus has largely remained on wrapping up planting.

Private exporters reported to USDA the sale of 4.0 million bushels of soybeans for delivery to China. Half of the total is for delivery in the current marketing year, with the remainder for delivery in 2020/21.

Soybean export sales were down significantly week-over-week, falling to 23.7 million bushels in old crop sales plus another 7.5 million bushels in new crop sales. That was on the low end of analyst expectations, with trade guesses ranging between 22.0 million and 51.4 million bushels. One silver lining – China returned as the No.1 buyer, accounting for nearly half the total with 14.4 million bushels. Cumulative totals for the 2019/20 marketing year are still slightly ahead of last year’s pace, with 1.302 billion bushels.

Soybean export shipments tumbled to a marketing-year low, with just 12.2 million bushels. Mexico led the way, with 4.3 million bushels.

President Donald Trump gave a statement about U.S.-China relations earlier this afternoon. The U.S. and China have had a frosty relationship in recent weeks as each country has criticized the other’s handling (or mishandling) of the coronavirus pandemic, and as China moves to impose a controversial national security law on Hong Kong. “The world needs answers from China – we need transparency,” Trump said toward the beginning of the address. Trump also announced he is “terminating” the U.S. relationship with the World Health Organization and is blaming China for covering up the pandemic.

Preliminary volume estimates were for 167,500 contracts, moving slightly above Thursday’s final tally of 154,761.

Wheat prices moved higher again on Friday as dry conditions building in the U.S. Plains and among some key overseas competitors prompted some technical buying. Most contracts closed up around 1.25%. July Chicago SRW futures gained 7 cents to $5.2150, July Kansas City HRW futures added 6.25 cents to $4.7025, and July MGEX spring wheat futures picked up 5.75 cents to $5.25.

Wheat export sales improved slightly week-over-week but still fell 23% below the prior four-week average, with 7.7 million bushels in old crop sales. New crop sales were more robust, at 18.2 million bushels. Totals sales still bested trade estimates, which ranged between 5.5 million and 22.0 million bushels. And cumulative sales for the 2019/20 marketing year still maintain a modest lead over last year’s pace, with 871.7 million bushels.

Wheat export shipments fared much better, jumping 53% higher week-over-week and 29% above the prior four-week average, with 20.6 million bushels. China was the No. 1 destination, with 6.1 million bushels.

Ukraine’s 2019/20 wheat exports topped 742 million bushels so far. Total grain exports are expected to climb 17% above last year’s tally after harvesting record crops last fall.

Bulgaria’s agriculture ministry says the country could harvest more than 183 million bushels of wheat this year, which would drop 19% from a year ago, if realized, due to generally unfavorable growing conditions this year. That said, the country still expects to be a net exporter of wheat in 2020.

In France, wheat quality ratings are at a nine-year low, with 56% of the crop rated good-to-excellent, according to consultancy FranceAgriMer, which docked crop quality a point versus last week. Hot, dry weather has proved burdensome for the crop so far this spring.

Preliminary volume estimates were for 88,423 CBOT contracts, sliding below Thursday’s final count of 106,028.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Jul 329.5 323.25 325.75 -2
20-Sep 333.75 328 330 -1.75
20-Jul 846 837 840.75 -6.25
20-Sep 849.25 842 845.5 -4.75
Soymeal                $/ton        
20-Aug 286.3 284 285 -1.3
Soyoil                    cents/lb        
20-Aug 27.68 27.31 27.55 0.01
Wheat                    $/bushel        
20-Jul 522.25 511.75 520.75 7
20-Sep 525 515 523.5 6.5
KC Wheat        
20-Jul 473 462.75 470.5 6.25
20-Sep 479.25 469.25 477 5.75
MPLS Wheat        
20-Jul 526   525 5.75
20-Sep 536.75 526.5 536 5.25
Live Cattle             cents/lb        
20-Jun 101.4 98.825 100.15 -1.325
Feeder Cattle         cents/lb        
20-Sep 136.2 133.6 135.425 -0.825
Lean Hogs             cents/lb        
20-Jul 57.15 54.325 57.025 1.375
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Jun 35.77 32.36 35.13 1.42
20-Jun 0.997 0.9025 0.997 0.0714
Unleaded Gasoline   $/gallon        
20-Jun 1.062 0.9759 1.062 0.0635
Natural Gas        
20-Aug 1.951 1.862 1.926 0.007
Ethanol Futures        
20-Jul 1.145 1.118 1.122 0.006
U.S. Dollar Index        
  98.55 97.935 98.275 -0.097
Gold                      $/ounce        
20-Jun 1745 1718.6 1732.7 19.4
20-Jun 2.441 2.407 2.441 0.028
Fertilizer Swaps     (as of 5/29)  
DAP Tampa-index              289.0 -1
DAP-New Orleans              286.0 4
Urea-New Orleans              200.6 -1
Urea-Middle East              215.0 -3
Urea-Black Sea              200.0 -5
UAN (32%) New Orleans              143.3 1.65
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