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Afternoon Market Recap for Sept. 29, 2020

Grain prices continue to fade.

Corn, soybeans and wheat all spill into the red Tuesday

Grain prices suffered a moderate setback Tuesday, as a round of technical selling pushed corn, soybean and wheat contracts into the red. Harvest progress applied headwinds for corn and soybeans, as did the expectation for bearish stocks data in USDA’s next quarterly report, which will be released tomorrow. Traders also expressed concern that the pace of Chinese grain demand is slowing.

Aside from parts of the upper Midwest and eastern Corn Belt, much of the central U.S. will see no measurable rainfall between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts seasonally warm weather west of the Mississippi River between October 6 and October 12, with drier-than-normal conditions likely for most of the U.S. during this time.

On Wall St., investors remain skittish about the prospects of a new wave of coronavirus infections this fall. The Dow dropped 84 points in afternoon trading to 27,499. Energy futures tracked significantly lower this afternoon. Crude oil dropped more than 4% to fall back below $39 per barrel. Gasoline also saw a 4% decline, with diesel down 3%. The U.S. Dollar softened moderately.

On Monday, commodity funds were net buyers of corn (+7,500), soyoil (+2,500) and CBOT wheat (+6,000) contracts but were net sellers of soybeans (-5,000) and soymeal (-4,000).

Corn

Corn prices dropped moderately after harvest pressure and expectations for historically large domestic stocks spurred a round of technical selling. December futures dropped 2.25 cents to $3.6450, with March futures down 2 cents to $3.7350.

Corn basis bids tilted 4 to 10 cents lower at two ethanol plants on Tuesday but remained steady to slightly firm elsewhere across the central U.S. today.

Sixty-one percent of this year’s corn crop is rated in good-to-excellent condition, with 25% of the crop rated fair, and with the remaining 14% rated poor or very poor. All of those numbers were identical to USDA’s September 21 report.

Harvest progress has reached 15% completion, up from 8% last week. Analysts were expecting a bit more progress, with an average trade guess of 17%. That’s also slightly behind the prior five-year average of 16%. Three-fourths of the crop is now fully mature, up from 59% a week ago and ahead of the prior five-year average of 65%.

Traders eagerly await the next weekly set of ethanol production data from the U.S. Energy Information Administration, out tomorrow morning. U.S. ethanol production has moved moderately lower in the past two weeks, moving from a seasonal high of 941,000 barrels per day on September 4 down to 906,000 daily barrels through September 18. November ethanol futures followed other energy prices lower today, falling to $1.30.

Also out tomorrow is USDA’s quarterly stocks report. Analysts expect the agency to show September 1 corn stocks at 2.250 billion bushels, which would be the highest tally since 2017, if realized.

South Africa’s 2020 corn production is expected to rise 37% year-over-year, reaching 607.1 million bushels, according to the country’s Crop Estimates Committee.

Grain market analyst Bryce Knorr took a close look at what hurdles corn prices may face in the months ahead to see if there are hopes of an upcoming rally – or if prices continue to fade as fall progresses. Click here to learn more in the latest Ag Marketing IQ blog.

Preliminary volume estimates were for 216,426 contracts, falling slightly below Monday’s final count of 233,451.

Soybeans

Soybean prices continued to fade on better-than-expected crop quality and expectations of seeing historically large domestic stocks when USDA releases that data tomorrow. November futures fell 4.5 cents to $9.9175, with January futures down 4.25 cents to $9.96.

Soybean basis bids were steady to firm across the central U.S. Tuesday, rising 2 to 3 cents higher at a handful of Midwestern locations today.

Private exporters reported to USDA the sale of 3.7 million bushels of soybeans for delivery to Mexico during the 2020/21 marketing year, which began September 1.

This year’s soybean crop is quickly nearing the end of the season, too. Seventy-four percent of the crop is now dropping leaves, up from 59% last week and moving more swiftly than the prior five-year average of 69%. And USDA has marked harvest progress at 20%, jumping ahead of last week’s mark of 6%, as well as the prior five-year average of 15%. Analysts were expecting the agency to show 18% of the crop has been harvested.

Quality-wise, 64% of the crop is now rated in good-to-excellent condition, up a point from last week. Analysts had expected USDA to hold ratings steady. Another 26% is rated fair (down a point from last week), with the remaining 10% rated poor or very poor (unchanged from a week ago).

Ahead of tomorrow’s quarterly stocks report from USDA, analysts expect the agency to show September 1 soybean stocks at 576 million bushels – the second-largest volume on record but still far below 2019’s tally of 909 million bushels.

During harvest season, it often feels like “we’re moving non-stop,” according to Darren Frye, founder of Water Street Solutions. Frye offers three essential tips to time-pinched farmers this fall in his latest Finance First blog – click here to learn more.

Preliminary volume estimates were for 178,901 contracts, moving slightly ahead of Monday’s final count of 171,177.

Wheat

Wheat prices fell on the prospect of rising domestic stocks and the usual concerns over U.S. wheat’s competitiveness on the world market. December Chicago SRW futures eased 1.25 cents to $5.49, December Kansas City HRW futures dropped 7.25 cents to $4.7550, and December MGEX spring wheat futures lost 5.25 cents to $5.2425.

USDA is no longer reporting spring wheat harvest progress after noting 96% completion last week. The agency continues to update winter wheat planting progress, however. The 2020/21 crop is now 35% planted, up from 20% last week and slightly ahead of the prior five-year average of 33%. And 10% of the crop is now emerged, versus 3% a week ago and the prior five-year average of 8%.

Ahead of tomorrow’s quarterly stocks report from USDA, analysts expect the agency to show September 1 wheat stocks at 2.242 billion bushels, which is more than double the June 1 total of 1.044 billion bushels but moderately lower than the year-over-year tally of 2.346 billion bushels. Analyst also expect USDA to peg 2020 all-wheat production at 1.841 billion bushels in tomorrow’s report, which is slightly above the agency’s August estimate of 1.838 billion bushels.

Thailand issued an international tender to purchase 7.8 million bushels of animal feed wheat from optional origins, which closes tomorrow. The grain would be for shipment between November and January.

Turkey issued an international tender to purchase nearly 5.0 million bushels of red milling wheat that closes October 8. The grain would be for shipment between mid-October and early November.

Preliminary volume estimates were for 63,305 CBOT contracts, falling moderately short of Monday’s final count of 89,625.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Dec 367.75 361 364.5 -2.25
21-Mar 376.25 370.5 373.5 -2
Soybeans        
20-Nov 997.75 985.75 991.75 -4.5
21-Jan 1001.5 990.25 996 -4.25
Soymeal                $/ton        
20-Dec 334.6 329.7 331.9 -2.1
Soyoil                    cents/lb        
20-Dec 33.26 32.32 32.69 -0.43
Wheat                    $/bushel        
20-Dec 553.25 546 549 -1.25
21-Mar 559.75 553 555.75 -1.25
KC Wheat        
20-Dec 484 474.75 475.5 -7.25
21-Mar 494 484.75 485.5 -7.25
MPLS Wheat        
20-Dec 531 523 524.25 -5.25
21-Mar 543.5 536.5 537.75 -4.25
Live Cattle             cents/lb        
20-Oct 109.225 108.3 108.85 0.9
Feeder Cattle         cents/lb        
20-Oct 144.55 141.35 143.8 2.7
Lean Hogs             cents/lb        
20-Dec 64.3 61.575 61.65 -2.375
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Oct 40.7 38.41 39.11 -1.49
Diesel        
20-Oct 1.1438 1.1025 1.1067 -0.0328
Unleaded Gasoline   $/gallon        
20-Oct 1.2518 1.1856 1.1972 -0.0494
Natural Gas        
20-Nov 3.267 3.087 3.102 -0.169
Ethanol Futures        
20-Nov 1.367 1.36 1.367 0.037
U.S. Dollar Index        
  94.35 93.86 93.93 -0.372
Gold                      $/ounce        
20-Oct 1899.9 1877.6 1893.6 20.8
Copper        
20-Sep 2.996 2.958 2.991 0.0065
Fertilizer Swaps     (as of 9/28)  
DAP Tampa-index              345.0 3
DAP-New Orleans              394.1 0
Urea-New Orleans              242.0 -7
Urea-Middle East              256.0 -4
Urea-Black Sea              240.0 -3
UAN (32%) New Orleans              132.3 0
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