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Afternoon Market Recap for Oct. 22, 2020

Corn hangs on for modest gains

Soybeans tilt slightly lower in Thursday’s session, while wheat prices crumble

Grain prices were mixed but mostly lower Thursday. Corn was the lone bright spot, hanging on for modest gains as traders continue to balance export optimism against harvest pressure. Soybean prices spent most of today testing modest gains but shifted into the red just before the close. Wheat prices fell victim to a round of technical selling and profit-taking, meantime, with some contracts spilling nearly 1.5% lower today.

Over the past several months, drought’s footprint in the U.S. has grown relatively massive, now affecting 66% of the country. Most of the problem areas lie west of the Mississippi River, but large portions of the U.S. and Plains are also affected. NOAA noted in its winter outlook last week that “With a La Niña climate pattern in place, southern parts of the U.S. may experience expanded and intensifying drought during the winter months ahead.”

On Wall St., hints of progress in the latest round of coronavirus stimulus talks helped push the Dow 194 points higher in afternoon trading to 28,404. Energy futures showed some improvement, with crude oil moving more than 1% higher this afternoon to stay above $40 per barrel. Gasoline was also up around 1% today, with diesel carving out gains of more than 1.5%. The U.S. Dollar firmed moderately.

On Wednesday, commodity funds were net buyers of some grain contracts, including corn (+17,500), soybeans (+7,500) and soymeal (+6,000) but were net sellers of soyoil (-1,000) and CBOT wheat (-500).

Corn prices faded late in Thursday’s session but managed to hold onto modest gains by the close, thanks to some light technical buying sparked by export optimism. Prices closed at the highest levels since August 2019 and have moved higher seven of the past eight sessions. December futures added 2 cents to $4.1575, while March futures picked up 1.25 cents to $4.18.

Corn basis bids were steady to firm across multiple Midwestern locations Thursday, rising as much as 12 cents higher at an Iowa river terminal today, a signal that demand remains high right now.

Corn sales for the week ending October 15 topped the prior four-week average by 21% after reaching 72.1 million bushels. That tally was higher than all trade estimates, which ranged between 31.5 million and 55.1 million bushels. Japan led all destinations, with 19.3 million bushels. Cumulative totals for the 2020/21 marketing year have started much stronger compared to a year ago, with 212.2 million bushels.

Corn export shipments also held 7% above the prior four-week average, with 35.4 million bushels. China was the No. 1 destination, with 14.3 million bushels.

Ethanol production saw moderate declines for the week ending October 16, with the U.S. Energy Information Administration reporting a daily average of 913,000 barrels, versus the prior week’s daily average of 937,000 barrels. Weekly production has leveled off between 910,000 and 940,000 barrels per day since July, aside from a few minor outliers.

COVID-19 has negatively affected the agriculture industry in a wide variety of ways, but the financial impact has been muted by an infusion of federal dollars, Farm Credit leaders said during an Oct. 21 webinar exploring the pandemic's impact on agriculture. Click here to learn more.

Preliminary volume estimates were for 315,203 contracts, tracking moderately below Wednesday’s final count of 410,407.

Soybean prices tested small gains this morning but faded down the stretch on some profit-taking that left prices slightly lower by the close. Export optimism remains high, however, which helped limit losses today. November futures slid 0.75 cents lower to $10.7125, with January futures falling 1.75 cents to $10.6975. Prices remain just below the highest levels since July 2016.

Soybean basis bids were steady to firm, trending as much as 10 cents higher at an Ohio elevator Thursday, as several areas attempt to drum up additional farmer sales to meet rising demand.

Private exporters announced two more large soybean sales to USDA today. The first was for 5.6 million bushels to Mexico, and the second was for 4.9 million bushels to unknown destinations. Both sales are for delivery during the 2020/21 marketing year, which began September 1.

In the past month, soybean prices have rocketed past $10 per bushels and are now tantalizingly close to $11 per bushels. What else will be needed for prices to clear that next benchmark? We walked through some scenarios in the latest Midweek Markets podcast – click here to listen.

Soybean exports were relatively strong but still 18% down from the prior four-week average, with 81.8 million bushels. That was still on the high end of trade estimates, which ranged between 55.1 million and 91.9 million bushels. China snapped up more than half of that total, with 44.9 million bushels. Cumulative totals for the 2020/21 marketing year are at 419.7 million bushels.

Soybean export shipments jumped 49% above the prior four-week average, with
92.5 million bushels. China took most of that total, with 72. 0 million bushels.

Preliminary volume estimates were for 305,703 contracts, moving ahead of Wednesday’s final count of 266,417.

Wheat prices suffered a setback Thursday on a round of technical selling and profit-taking that pushed some prices nearly 1.5% lower. Prices remain relatively close to multiyear highs captured earlier this week, however. Today, December Chicago SRW futures fell 8.25 cents to $6.2150, December Kansas City HRW futures dropped 11.25 cents to $5.5850, and December MGEX spring wheat futures lost 8.25 cents to $5.7425.

Private exporters reported to USDA the sale of 4.8 million bushels of white wheat for delivery to South Korea during the 2020/21 marketing year, which began June 1.

Wheat export sales were mostly lackluster last week, drifting 23% below the prior four-week average to 13.5 million bushels, landing on the lower end of trade estimates that ranged between 7.3 million bushels and 29.4 million bushels. Mexico took more than half of that total, with 7.1 million bushels. Cumulative totals for the 2020/21 marketing year are at 374.4 million bushels.

Wheat export shipments tumbled 67% below the prior four-week average, with 7.1 million bushels. Indonesia led all destinations, with 2.0 million bushels.

In Argentina, the Buenos Aires Grains Exchanged trimmed its wheat production forecast by another 4% to 617.3 million bushels, citing extended bouts with overly dry weather in recent months.

Algeria is thought to have purchased as much as 25.7 million bushels of milling wheat from optional origins in a tender that closed yesterday. The grain is for shipment between November and December.

Turkey purchased 6.4 million bushels of wheat in an international tender that closed earlier today. The grain is for shipment no later than November 24. Turkey has been an active grain buyer in recent weeks as it shores up its domestic stockpile.

Japan purchased nearly 3.0 million bushels of food-quality wheat from the United States and Canada that closed earlier this week. Of the total, 36% weas sourced from the U.S.

Tunisia purchased 1.8 million bushels of soft milling wheat and 2.3 million bushels of animal feed barley from optional origins in an international tender that closed earlier today. The grain is for shipment between late November and mid-December.

Preliminary volume estimates were for 99,795 CBOT contracts, trending slightly lower than Wednesday’s final count of 110,603.

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