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Afternoon Market Recap for Oct. 19, 2020

Corn finds more upward momentum

Soybeans and wheat also track moderately higher in Monday’s session

With the small exception of soyoil, grain prices made moderate inroads today. Corn moved nearly 0.75% higher on a round of technical buying spurred by the announcement of two large sales this morning. Soybeans tracked around 0.5% higher amid ongoing export optimism. Wheat prices also closed in the green, with traders still closely monitoring dry conditions among some key overseas competitors.

Did you see any snow in your area this past weekend? More wet weather is on the way between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA, which calls for an inch or more additional moisture likely for large parts of the Dakotas, Iowa, Minnesota and Wisconsin. Seasonally wet weather could continue for the eastern Corn Belt between October 26 and November 1, according to NOAA’s 8-to-14-day outlook. Widespread seasonally cool weather is also likely for much of the central U.S. as Halloween approaches.

On Wall St., concerns over the lack of progress in coronavirus stimulus negotiations have soured investors, leading to some technical selling that pushed the Dow down 285 points in afternoon trading to 28,320. Energy prices also landed in the red, with crude oil down around 0.4% but still holding above $40 per barrel. Diesel dropped 2%, with gasoline down nearly 1% this afternoon. The U.S. Dollar softened moderately.

Last Friday, commodity funds were net sellers of most major grain contracts, including corn (-2,500), soybeans (-10,000), soymeal (-4,500) and soyoil (-1,500) but were net buyers of CBOT wheat (+3,500).

CORN
 

Corn prices moved moderately higher Monday on a round of technical buying partly spurred by two large sales announced this morning, which are bound for Mexico and unknown destinations.  A healthy round of export inspection data, also out this morning, lent additional support. December futures closed 2.75 cents higher, reaching $4.0475. March futures added 3 cents to $4.10.

Corn basis bids were mixed Monday, moving as much as 8 cents higher at an Indiana ethanol plant and falling as much as 4 cents lower at an Iowa river terminal today.

Private exporters announced two more large corn sales to USDA. The first was for 13.6 million bushels to unknown destinations, and the second was for 4.8 million bushels to Mexico. Both sales are for delivery during the 2020/21 marketing year, which began September 1.

Corn export inspections firmed 8.6% higher week-over-week to reach 35.9 million bushels for the week ending October 15. That surpassed all trade guesses, which ranged between 25.6 million and 35.4 million bushels. China was the top destination, with 14.2 million bushels. Cumulative totals for the 2020/21 marketing year remain well above last year’s pace so far, with 214.8 million bushels.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to show corn harvest at 57% completion through October 18, up from 41% a week ago. Analysts expect crop quality to hold steady, with 61% rated in good-to-excellent condition.

“With the narrowing of the spreads, futures prices higher now than the spring or summer, and an unseasonably strong basis, the market structure is telling producers it wants the grain now,” notes Jim McCormick, hedging strategist for AgMarket.net. “We encourage producers to listen to what the market is telling them to do, which is market grain.” McCormick offers additional advice in the latest Ag Marketing IQ blog – click here to learn more.

Brazil’s Conab expects the country to see record-breaking corn production in 2020/21, with 4.142 billion bushels – moving 2.6% higher year-over-year.

Preliminary volume estimates were for 289,781 contracts, dropping below Friday’s final tally of 377,450.

SOYBEANS

Soybean prices received a modest lift Monday thanks to another round of technical buying spurred by export optimism after export inspections last week stayed on the upper end of trade estimates. November futures gained 5 cents to $10.55, while January futures rose 4.5 cents to $10.5475.

Soybean basis bids showed some volatility to start the week, moving as much as 10 cents higher at an Illinois processor while stumbling as much as 3 cents lower at an Illinois river terminal today.

Soybean export inspections dipped 9% below the prior week’s total to 79.9 million bushels. That was nevertheless on the very high end of trade estimates, which ranged between 44.1 million and 80.8 million bushels. China was by far the No. 1 destination last week, with 64.0 million bushels. Cumulative totals for the 2020/21 marketing year are nearly double last year’s pace so far, reaching 423.2 million bushels.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to show soybean harvest at 79% completion through October 18, up from 61% a week ago. With more than half of this year’s crop out of the fields, USDA is not expected to offer additional quality ratings moving forward.

Brazil’s Conab estimates 2020/21 soybean production will reach 4.913 billion bushels, as the country’s total grain production is expected to rise 4.2% this season. However, there is plenty of room to doubt these bullish estimates, with only 7.9% of the expected acres in the ground as of October 15, making this season one of the slowest starts in a decade. The country has been battling overly dry conditions in many areas over the past several weeks.

Preliminary volume estimates were for 217,203 contracts, sliding moderately below Friday’s final count of 270,104.

WHEAT

Wheat prices closed with mostly modest gains Monday, although spring wheat contracts jumped 1.5% higher today. Concerns about overly dry weather in some key production areas (including Russia and Argentina) have fueled some positive momentum in recent sessions that have pushed some contracts to the highest levels since late 2014. December Chicago SRW futures picked up 1.75 cents to $6.27, December Kansas City HRW futures added 2.25 cents to $5.61, and December MGEX spring wheat futures climbed 9 cents to $5.6875.

Wheat export inspections were lackluster last week after pulling in another 8.8 million bushels. Analysts were expecting a bigger haul, with trade guesses ranging between 14.7 million and 22.0 million bushels. Ethiopia led all destinations, with 2.4 million bushels. Cumulative totals for the 2020/21 marketing year remain moderately ahead of last year’s pace, reaching 392.3 million bushels.

Analysts expect USDA to report 81% of the 2020/21 U.S. winter wheat crop has been planted as of October 18 when the agency releases its next crop progress report later this afternoon, up from 68% a week ago. Individual trade guesses ranged between 77% and 85%.

Russia has received some badly needed rains this past weekend, but more is needed to get production fully back on track. Consultancy Sovecon said earlier this month that overly dry conditions could trim planted acres by 10% to 15%.

South Korea purchased 2.2 million bushels in a private deal last Friday. The grain is for arrival in early March.

Algeria issued an international tender to purchase 1.8 million bushels of milling wheat, although the country often buys more than the nominal amount. The deadline for offers is Wednesday.

Preliminary volume estimates were for 148,212 CBOT contracts, slipping fractionally below Friday’s final count of 148,318.

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