Afternoon Market Recap for Nov. 27, 2020

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Grains carve out post-Thanksgiving gains

Corn, soybeans and wheat all move higher in Friday’s session

With Thanksgiving now in the rearview mirror, traders turned into a shortened Friday session to engage in a round of technical buying that led to healthy gains today. Kansas City HRW contracts saw the biggest bounce, jumping more than 3% higher. Corn prices firmed by 1.5%, with soybeans up around 0.75% after more reports of dry weather in South America injected some more optimism into already-strong supply and demand fundamentals.

The eastern Corn Belt should see moderate rainfall between Saturday and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA, but areas farther west will be completely dry during this time. NOAA’s 8-to-14-day outlook, meantime, calls for seasonally warm, dry weather for most of the central U.S. between December 4 and December 10.

On Wall St., the Dow pushed another 37 points higher to reach 29,910, finishing the week with 2.2% gains on rising optimism over coronavirus vaccines and a drop in the VIX volatility index (a so-called “fear gauge”). Energy prices spilled moderately lower, in contrast. Crude oil fell 0.5% but is still above $45 per barrel. Gasoline and diesel dropped nearly 1%. The U.S. Dollar softened moderately and is at the lowest level since the spring of 2018.

On Wednesday, commodity funds were net sellers of most grain contracts, including corn (-17,000), soybeans (-6,000), soymeal (-2,000) and CBOT wheat (-14,500) but were net buyers of soyoil (+2,000).

Corn

Corn prices jumped about 1.5% higher Friday on a round of technical buying spurred by another large sale to Mexico announced this morning, along with reports of dry weather in South America. December futures rose 6.25 cents to $4.2625, while March futures climbed 7.75 cents to $4.3525.

Corn basis bids were steady to lightly mixed Friday, dipping a penny lower at an Ohio elevator while firming as much as 2 cents at an Iowa ethanol plant today.

Private exporters reported to USDA the sale of 11.9 million bushels of corn for delivery to Mexico during the 2020/21 marketing year, which began September 1.

Corn export sales for the week ending November 19 were up 53% week-over-week, to 65.6 million bushels. That was higher than all trade guesses, which ranged between 31.5 million and 55.1 million bushels. Mexico topped all destinations, with 21.8 million bushels. Cumulative totals for the 2020/21 marketing year are well ahead of last year’s pace, with 366.1 million bushels since the start of September.

Brazil’s Safras & Mercado is expecting a reduction in corn yield potential after a lack of rainfall so far this season. The first corn crop may drop 18% below last year’s total, but the second corn crop may still come in 14% higher from a year ago, thanks to a 6% increase in acreage. Total production could still come in at 4.046 billion bushels.

Ukraine’s 2020 corn harvest is 92% complete through November 26, per the country’s economy ministry. Production is now at 1.035 billion bushels across 12.405 million acres so far. Exports this marketing year have reached 204.7 million bushels, which is trending 24% below last year’s pace so far.

South Korea purchased 2.4 million bushels of corn, likely sourced from the United States. The grain is for shipment in February.

Preliminary volume estimates were for 197,184 contracts, falling well below Wednesday’s final count of 468,349.

Soybeans

Soybean prices climbed around 0.75% higher on reports of dry weather in South America, which overrode a disappointing round of export sales data from USDA this morning. Spillover strength from corn and wheat lent additional support. January and March futures each added 9.25 cents to close at $11.9325 and $11.95, respectively.

Soybean basis bids were mostly steady Friday but did drop 5 cents lower at an Ohio elevator and tumbled 20 cents lower at an Iowa processor today. Farmer sales have been generally light this holiday week.

Soybean export sales fell to a new marketing-year low for the week ending November 19, dropping to 28.2 million bushels. Analysts were generally expecting a more robust tally, with trade guesses ranging between 25.7 million and 51.4 million bushels. China was by far the No. 1 destination, with 21.3 million bushels. Cumulative totals for the 2020/21 marketing year still far exceed last year’s pace, with 905.1 million bushels.

Preliminary volume estimates were for 80,498 contracts, which was less than half of Wednesday’s final count of 170,327.

Wheat

Wheat prices firmed significantly higher after a round of better-than-expected export sales and dry weather in both the U.S. Plains and among some key overseas competitors triggered a round of technical buying today. December Chicago SRW futures added 7.5 cents to $5.9575, December Kansas City HRW futures jumped 19.25 cents to $5.63, and December MGEX spring wheat futures picked up 6 cents to $5.4950.

Wheat export sales for the week ending November 19 climbed to a marketing-year high of 29.2 million bushels and bested all trade guesses, which ranged between 7.3 million and 16.5 million bushels. China was the top buyer, with 12.2 million bushels. Cumulative totals for the 2020/21 marketing year is still slightly behind last year’s pace, with 438 million bushels.

France’s 2020/21 soft wheat crop has been completely planted, and crop quality is off to a great start, with 96% in good-to-excellent condition through November 23, according to consultancy FranceAgriMer. More rains will be needed in December to protect that stellar rating.

Russia’s IKAR consultancy is expecting a moderate decline in the country’s wheat production this coming year, predicting a fall of 7.1% to 2.866 billion bushels. Russia is the world’s No. 1 wheat exporter.

Ukrainian wheat exports this marketing year have slid 10% below last year’s pace so far, to 434.7 million bushels. Total grain exports are running 11.3% lower from a year ago.

South Korean mills purchased 1.8 million bushels of milling wheat from Australia in a tender that closed Thursday. The grain is for shipment between mid-February and mid-March.

Preliminary volume estimates were for 93,519 CBOT contracts, sliding moderately below Wednesday’s final count of 155,080.

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