Grain rally put on pause amid a round of technical selling to start the week
Grain prices were not immune from a broad commodity selloff that also sniped the stock markets and energy futures to start the week. Wheat contracts took the biggest hit, with some falling more than 3% today. Soybeans and corn fell more than 2%, meantime, on a round of profit-taking and technical selling after climbing to more than two-year highs late last week.
Some wet weather will return to the upper Midwest between Tuesday and Friday, but many areas will see no additional measurable rainfall during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts that seasonally dry weather will continue west of the Mississippi River between September 28 and October 4, with seasonally cool weather likely across much of the Corn Belt.
A selloff also occurred on Wall St. today, with the Dow tumbling 843 points lower in afternoon trading to 26,813. Uncertainty over another possible round of federal stimulus triggered much of the losses. Energy futures also spilled significantly lower, with crude oil down more than 4.5% this afternoon to fall back below $40 per barrel. Gasoline and diesel saw similar cuts. The U.S. Dollar firmed moderately.
Last Friday, commodity funds were net buyers of all major grain contracts, including corn (+10,000), soybeans (+15,000), soymeal (+7,000), soyoil (+2,500) and CBOT wheat (+15,000).
Corn prices tumbled more than 2% lower Monday on a round of technical selling and profit-taking that also affected a broad range of other commodities. Harvest pressure applied additional headwinds. December futures dropped 8 cents to $3.7050, while March futures fell 7.5 cents to $3.80.
Corn basis bids were mostly steady across the Midwest Monday but did tip 2 cents lower at an Iowa processor today.
Corn export inspections spilled 20% lower week-over-week to 29.7 million bushels. That was on the lower end of trade estimates, which ranged between 25.6 million and 35.4 million bushels. China topped all destinations, with 7.9 million bushels. Cumulative totals for the 2020/21 marketing year are off to a much better start compared to last year after reaching 77.4 million bushels since September 1.
Ahead of the next weekly crop progress report from USDA, out later this afternoon, analysts expect the agency to dock corn quality another point, falling to 59% rated in good-to-excellent condition through September 20. Analysts also expect USDA to report 11% of the crop has now been harvested, up from 5% a week ago.
European Union corn imports for the 2020/21 marketing year are down 20% compared to last year, reaching 150.8 million bushels through September 20.
Preliminary volume estimates were for 290,341 contracts, dropping slightly below Friday’s final tally of 322,356.
Soybean prices lost more than 2% today, closing Monday’s session with the largest single-day losses since April. Last Friday, prices had reached the highest levels since May 2018. Traders largely ignored another flurry of large export sales announced this morning, as well as expectations that crop quality will drop again this week. November futures eroded 22.25 cents to $10.2125, with January futures down 21.5 cents to $10.2575.
Soybean basis bids were mostly steady to weak across the central U.S. Monday. Midwestern processors showed the biggest declines, with four locations dropping between 5 and 15 cents today. An Illinois river terminal bucked the overall trend after firming 2 cents.
Private exporters reported three more large soybean sales to USDA this morning. The first was for 4.9 million bushels to China, the second was 4.9 million bushels to Pakistan, and the third was for 6.3 million bushels to unknown destinations. All three sales are for delivery during the 2020/21 marketing year, which began September 1.
Soybean export inspections fell again last week, dropping to 48.2 million bushels. That was in the middle of trade estimates, which ranged between 36.7 million and 58.1 million bushels. China accounted for around two-thirds of that total, with 32.5 million bushels. Cumulative totals for the 2020/21 marketing year are still well ahead of last year’s pace after reaching 131.1 million bushels.
Ahead of this afternoon’s weekly crop progress report from USDA, out later this afternoon, analysts expect the agency to dock soybean quality another point, moving to 62% rated in good-to-excellent condition through September 20.
European Union soybean imports for the 2020/21 marketing year have edged 6% above last year’s pace through September 20, reaching 119.4 million bushels through September 20. EU canola imports are down 22% over the same time, in contrast.
Preliminary volume estimates were for 286,160 contracts, falling slightly short of Friday’s final count of 314,845.
Wheat prices followed other commodity prices substantially lower Monday on a broad selloff. Some contracts finished the session more than 3% lower. December Chicago SRW futures dropped 21.5 cents to $5.5350, December Kansas City HRW futures lost 18 cents to $4.8625, and December MGEX spring wheat futures fell 16.25 cents to $5.35.
Wheat export inspections fell to 17.3 million bushels last week, dropping to the lower end of trade estimates, which ranged between 16.5 million and 25.7 million bushels. Japan led all destinations last week, with 3.5 million bushels. Cumulative totals for the 2020/21 marketing year are still moderately ahead of last year’s pace, at 316.9 million bushels.
Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to show 97% of the U.S. spring wheat crop now harvested, up from 92% a week ago. And winter wheat plantings are expected to reach 22%, versus 10% a week ago.
European Union soft wheat exports in 2020/21 have fallen 38% below last year’s pace so far, reaching 152.1 million bushels through September 20. EU barley exports are also down 17% year-over-year since July.
Russian consultancy SovEcon expects the country’s wheat exports to reach 183.7 million bushels in September, which is a roughly 11% increase over August totals, if realized. Russia is the world’s No. 1 wheat exporter.
Importers in Thailand have purchased 6.6 million bushels of bushels of animal feed wheat from optional origins in a tender that closed earlier today. The grain is for shipment between December and April.
Taiwan issued an international tender to purchase nearly 3.4 million bushels of grade 1 milling wheat from the United States that closes Wednesday. The grain is for shipment between late November and mid-December.
Preliminary volume estimates were for 132,753 contracts, drifting moderately below Friday’s final count of 166,766.
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