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Soybeans finish lower on Friday

String of export sales aren't enough to keep beans in the green.

Missed some marketing news this week? Here's all the news you need to get you caught up and ready for another week of marketing your grain.

Ag Marketing IQ

The U.S. corn market recently received a welcome boost from the demand side as China came shopping in a rather big way. Daily sales announcements of 30.1 million bu. for 19-20 shipment and 23.6 million bu. for 20-21 delivery were made the week ending July 9th. These were then followed by a 69 million bu. sale on July 14th along with a 4.2 million bu. sale on July 15th. The former was the largest daily corn sale since a sale to Mexico in December of 2018.

Supply and demand ultimately determine the price of corn and soybeans. But the scales of market economics are weighing these factors differently halfway through summer, helping account for the recent disconnect in prices between the two commodities. To be sure, strong crop ratings reported for both crops – not to mention uncertainties caused by the coronavirus pandemic – continue to keep prices depressed. But while corn grinds towards contract lows, November soybeans have at least spent a little time above $9.

The global export market for corn has more than doubled in the last twenty years.  Yet, during this time the U.S. export volume has remained virtually stagnant. While the U.S. made up more than 50% of the world’s corn export market roughly twenty years ago, it has dwindled to roughly one-third (It was 70% in the early 20th century).

As we head into the last months of 2020, and early 2021 there are a few things brewing globally that really have my attention.  It would take a perfect concoction of sequential fundamental occurrences to justify a bullish story. Yet, we just may be setting up 2021 for just that.

Crops

Corn quality held steady, with 69% of the crop rated in good-to-excellent condition in the latest crop progress report. The majority of the soybean crop - 69% - is rated good-to-excellent. Winter wheat harvest progress is still progressing more slowly than anticipated, with 74% of the 2019/20 crop now complete compared to the prior week’s tally of 68%. For spring wheat, 91% of the crop is now headed, versus 80% last week.

“Best crop in 45 years of farming,” a Northern Illinois reader shared of his corn crop in Feedback From the Field. But a few miles up the road in Southwest Wisconsin, a grower lamented that recent rains would likely not undo damage caused by an accompanying windstorm. “[Corn is] down, twisted and won’t pollinate from wind over the weekend,” they said. “Nothing will be produced.”

Exports

Corn was the clear-cut winner in the latest grain export report, accounting for more than half of all grain export inspections last week and climbing above the entire range of trade guesses. Soybeans and wheat were relatively muted, in comparison, with each charting a week-over-week decline in volume.

The 2019/20 marketing year is winding down for corn and soybeans, and old crop sales for each crop were lackluster after digesting data from USDA’s latest weekly export sales report, covering the week ending July 16. But a surge in new crop sales left plenty of room for optimism in the latest report.

USDA reported an export sale every day this week, extending a string of sales that began July 14. There have been 12 days with reported sales this July, compared to sales reported on two days in July 2019. China has been the main buyer.

Podcast

The U.S. and China have undoubtably had a rocky relationship over the past several years. So far, China hasn’t matched pace on its phase-one trade agreement promises, but it has made some serious inroads in the past two weeks amid a flurry of large soybean sales reported on an almost daily basis. Prices have moved higher, but perhaps not as much as some farmers would have hoped. The weather has had more than a little to do with that. We predict whether corn and soybean yields have a shot at making trendline yields this year, talk about the ongoing spate of volatile wheat prices and much more. Listen to the latest Midweek Markets podcast.

Recaps

High weekend temperatures in the Midwest weighed September futures prices $0.05/bushel lower to $3.275 Friday morning, but forecasted rain and cooler temperatures next week sent new crop December futures rising $0.0025/bushel to $3.3575. Chicago soybeans are on rack to record a second straight week of gains after several days of consecutive U.S. soybean purchases from China, despite weaker prices this morning on concerns about eroding diplomatic relations between the two countries. A weakening dollar boosted gains in the wheat complex this morning, even as the ICE Dollar Index firmed 0.05% to $94.695. The falling dollar lifted optimism for more wheat export sales in the coming weeks.

Soybeans have enjoyed a glut of sales in recent days, with private exporters reporting large sales to USDA every single day this week – with many of those heading to China. That has firmed prices throughout the week, but trade tensions between the U.S. and China remain high, which tempered trader optimism on Friday, and a round of light technical selling pushed prices slightly lower today. Corn futures were narrowly mixed, meantime, while wheat prices jumped as much as 2% higher on trade optimism spurred partly by the U.S. Dollar, which is the weakest it has been in nearly two years.

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