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Afternoon Market Recap for Sept. 18, 2020

Grain rally charges forward.

Corn, soybeans and wheat extend gains in Friday’s session

Grain prices have been red-hot for much of this week, and the latest rally showed little signs of slowing Friday. Corn moved 0.75% higher, and soybeans posted double-digit gains for the third consecutive session today after another flurry of large export sales kept traders engaged in another round of technical buying. Wheat prices continue to follow overseas prices higher, with most contracts jumping nearly 4% higher today.

The Midwest and Plains continue to expect drier weather over the next three days, with almost no areas anticipating any measurable rainfall between Saturday and next Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. Drought’s footprint expanded slightly this past week, with the U.S. Drought Monitor noting that 57.5% of the country is now affected by overly dry conditions. Most of the problem areas are in the western U.S., but large pockets of drought remain entrenched in parts of Iowa, Illinois and Indiana.

On Wall St., the Dow is on pace for a third straight week of losses, dropping 281 points in afternoon trading to 27,620. An ongoing tech stock selloff is largely to blame, with uncertainty about the U.S. economy also in the mix. Energy futures were lightly mixed this afternoon. Crude oil firmed 0.3% to stay above $41 per barrel, with gasoline up nearly 1%. But diesel saw small losses in afternoon trading. The U.S. Dollar softened slightly.

On Thursday, commodity funds were net buyers of most grain contracts, including corn (+12,500), soybeans (+15,500), soymeal (+8,500) and CBOT wheat (+12,000) but were net sellers of soyoil (-1,000).

Corn

Corn prices made moderate inroads again today, closing nearly 1% higher on a round of technical buying spurred by export optimism and questions surrounding U.S. production potential. December futures added 3 cents to $3.7825, with March futures up 3.75 cents to $3.8775.

Corn basis bids were steady to lightly mixed Friday, moving as much as a penny higher at an Illinois river terminal while falling as much as 3 cents lower at an Iowa processor today.

Private exporters reported to USDA the sale of 8.3 million bushels of corn for delivery to China during the 2020/21 marketing year, which began September 1.

Jim McCormick, hedging strategist with AgMarket.net, has a few thoughts on why China has been “binge-buying” U.S. corn and soybeans recently. “The reason for the surge in buying can be attributed to hog herd rebuilding, production cuts due to three typhoons (5-10MMT) and record domestic corn prices around $9/bu,” he notes. Click here to read more of McCormick’s analysis in the latest Ag Marketing IQ blog.

Large speculators now hold a net long position on corn contracts through the week ending September 15, totaling 29,929, according to the latest data from the Chicago Board of Trade.

Ukraine’s economy ministry reports that the country’s 2020/21 corn exports are down sharply year-over-year, reaching only 24.1 million bushels since July 1. The country’s total grain exports are down 10.2% in the current marketing year.

French farmers have begun to harvest their embattled 2020 corn crop, with 4% complete through September 14. The drought-stressed crop is only 59% rated in good-to-excellent condition, down a point from a week ago.

Increasing talk about extreme weather, and a growing interest in the role of carbon in the atmosphere may open the door to a new income stream. Could you get paid to create carbon credits? Learn more in the latest Around Farm Progress Podcast.

If you didn’t visit FarmFutures.com earlier this week, there’s an easy way to quickly catch up on the latest ag news and analysis. Click here to read “7 ag stories you might have missed this week.”

Preliminary volume estimates were for 322,361 contracts, dropping moderately below Thursday’s final count of 371,355.

Soybeans

Soybean prices continued their hot streak today, moving higher for the 17th time in the past 19 sessions. China has made large purchases of U.S. soybeans in each of the past 11 days as the country tries to rebuild its hog herd and fulfill the commitments it made in the phase one trade agreement penned with the U.S. earlier this year. November futures climbed another 15.25 cents higher to reach $10.4375, and January futures rose 15.75 cents to $10.47. Prices haven’t reached these levels since May 2018.

Soybean basis bids continued to show considerable variability across the Midwest Friday, moving as much as 10 cents lower at an Indiana processor while jumping as much as 20 cents higher at a Nebraska processor today.

What’s the potential for prices to move even higher? Naomi Blohm, senior market adviser with Stewart Peterson, walks through five fundamentals the market is currently facing in Thursday’s Ag Marketing IQ blog – click here to learn more.

Private exporters reported to USDA the sale of 4.9 million bushels of soybeans for delivery to China during the 2020/21 marketing year, which begins September 1. Private exporters also reported purchasing 110,321 metric tons of soymeal. That sale is also for the 2020/21 marketing year and is headed for unknown destinations.

The Trump Administration announced yesterday that U.S. farmers facing market disruptions due to COVID-19 will receive another round of aid totaling $14 billion. Farmers can sign up for the Coronavirus Food Assistance Program (CFAP 2) between September 21 and December 11.

Preliminary volume estimates were for 314,845 contracts, falling substantially below Thursday’s final count of 469,071.

Wheat

Wheat prices continue to follow overseas prices higher on solid demand fundamentals. (For example, Paris future have risen 3.2% this week.) Lingering concerns over production potential for major producers such as Argentina and France are lending additional support. December Chicago SRW futures climbed 21 cents to $5.7725, December Kansas City HRW futures rose 18.5 cents to $5.06, and December MGEX spring wheat futures added 8.25 cents to $5.4975.

Ukraine’s wheat exports in the 2020/21 marketing year are matching last year’s pace so far, with 257.2 million bushels since July 1, according to the country’s economy ministry. Ukraine is the world’s No. 4 largest wheat exporter.

Some wheat fields in northern Argentina may not be harvested due to drought problems in that area, according to the Buenos Aires Grains Exchange. Argentinian farmers planted about 16 million acres for the 2020/21 season.

Preliminary volume estimates were for 166,766 CBOT contracts, climbing moderately above Thursday’s final count of 114,543.

Closing Prices for Key Commodities 

  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 379.25 373.25 378.25 3
21-Mar 388 381.75 387.75 3.75
Soybeans        
20-Nov 1046.75 1027.25 1043.75 15.25
21-Jan 1050.25 1030 1047 15.75
Soymeal                $/ton        
20-Dec 1046.75 1027.25 1043.5 15.25
Soyoil                    cents/lb        
20-Dec 343.7 335.3 342.1 6.8
Wheat                    $/bushel        
20-Dec 578 555.5 577.25 21
21-Mar 585.25 563.25 584.75 20.75
KC Wheat        
20-Dec 507.5 488 506 18.5
21-Mar 517.75 498.75 516 17.75
MPLS Wheat        
20-Dec 554.75 540 549.75 8.25
21-Mar 566.5 552.75 561 7.75
Live Cattle             cents/lb        
20-Oct 107.975 106.6 107.4 0.625
Feeder Cattle         cents/lb        
20-Oct 143.15 141.375 142.2 0.75
Lean Hogs             cents/lb        
20-Dec 64.5 62.8 63.525 -0.1
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Oct 41.49 40.3 41.05 0.08
Diesel        
20-Oct 1.1713 1.1431 1.1583 -0.0015
Unleaded Gasoline   $/gallon        
20-Oct 1.2382 1.2114 1.2341 0.0097
Natural Gas        
20-Nov 2.654 2.521 2.646 0.069
Ethanol Futures        
20-Nov 1.355 1.346 1.355 0.01
U.S. Dollar Index        
  93.045 92.77 92.93 -0.039
Gold                      $/ounce        
20-Oct 1959.1 1942.9 1952 12
Copper        
20-Sep 3.112 3.066 3.099 0.0325
Fertilizer Swaps     (as of 9/18)  
DAP Tampa-index              342.5 0
DAP-New Orleans              394.1 -1
Urea-New Orleans              248.6 -3
Urea-Middle East              260.0 -6
Urea-Black Sea              242.5 -4
UAN (32%) New Orleans              132.3 0

 

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