Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: United States

Morning Market Review for Dec. 2, 2020

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Soybeans, corn on track for third day of losses. (Comments are updated by 7:30 a.m. Central Time.)

Fund liquidation and South American rains weigh heavily on futures prices

  • Corn down 4-6 cents
  • Soybeans down 11-17 cents, soyoil down $0.33/lb, soymeal down $7.2/ton
  • Wheat mixed to unchanged

*Prices as of 6:50am CST.

Corn

Corn prices were on track to notch a third straight trading session of losses this morning as speculative funds liquidated their long positions on corn amid improving weather conditions in South America. December corn futures fell $0.0575/bushel to $4.09 on the news while March futures relinquished $0.05/bushel to $4.1575.

Cash corn prices rose across the Corn Belt as several river terminals, ethanol plants, processors, and elevators as usage rates increased. Many dealers continued to roll their cash bids over to the March contract as the December CBOT futures contract entered into the delivery period. Farmer sales were light following two consecutive days of falling prices, suggesting recent rallies may have seen their peaks.

Location

11/30/2020 Basis (in cents/bushel)

12/1/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-9

-15*

-

   Burns Harbor IN

5

0*

-

   Lincoln NE

-20

-17

3

   Chicago IL

-30

-30

0

   Council Bluffs IA (elevator)

-8

-10*

-

Processors

     

   Chicago IL

13

13

0

   Decatur IL

18*

18*

0

   Cedar Rapids IA

0*

2*

2

   Blair NE

-10*

-10*

0

River Terminals

     

   Toledo OH

0*

3*

3

   Seneca IL

-3

0

3

   Savanna IL

-10

-8*

-

   Davenport IA

-10

-10*

-

   Morris IL

-3

-6*

-

Rail

     

   Columbus OH

26

26

0

   Evansville IN

28

28

0

   Hereford TX

110

110*

-

   Fort Worth TX

110

110*

-

Ethanol Plants

     

   Linden IN

0

0

0

   Union City IN

5*

7*

2

   Annawan IL

-1

-4*

-

   Council Bluffs IA

5

0*

-

December futures price as base.

     

*March futures price as base.

 

 

 

Source: Refinitiv

     

Ethanol production is showing renewed signs of life after the pandemic collapsed demand earlier this year, according to USDA-NASS usage data released yesterday afternoon. October 2020 corn consumption for ethanol was about 1.5% off from the same consumption patterns a year earlier, but at 432.7 million bushels, notched its highest monthly consumption rate since February 2020.

Today’s ethanol production data released in the EIA’s weekly Petroleum Inventory Status report will likely show an increase in fuel demand amid the Thanksgiving holiday. Despite strong urges from the CDC to limit gatherings amid rising COVID-19 rates and overflowing hospitals, pandemic-fatigued Americans took to the road and air to visit loved ones for the holiday.

Output rates will likely exceed last week’s mark of 41.6 million gallons/day and could post a new pandemic-era high for ethanol production. Gasoline fuel demand had dipped 1.6% in last week’s report to 341.4 million gallons – the lowest weekly reading since lockdown restrictions were lifted in early June.

Monthly corn consumption for beverage alcohol rose in October for the first time since the earliest days of the pandemic. Corn consumption for booze set a new record for October usage rates, coming in at 7.1 million bushels.

U.S. Corn Consumed For Alcoholic Beverages 2015-2020

The uptick marked a 10% rise in corn consumption for alcoholic beverages from September 2020. My professional analysis for the reason behind the rise: definitely the election (shudders)…

This week’s price losses raised concerns among technical traders over the prospects of the current rallies running out of steam, Farm Futures contributing analyst Bryce Knorr points out. Knorr admits markets may be taking a breather but there are other technical factors, including back adjustments, that could support the rally for a little while longer.

“When it comes to technical analysis, remember there’s nothing truly scientific about this method of predicting price movements,” Knorr advises in the latest Ag Marketing IQ column. “But even if you don’t accept it as gospel, looking at price charts at the least provides perspective of how current markets compare to the past.”

Soybeans 

Despite the cessation of an Argentine grain workers strike, soybean futures were on track to post significant losses this morning as weather conditions improved in Brazil and Argentina and forecasts for 2021 Brazilian soybean output rose on higher acreage estimates. The bearish signals sent speculative funds liquidating their long positions on soybeans, driving the losses even deeper.

January soybean futures fell $0.1725/bushel to $11.4475 on the sentiments while March soybeans shed $0.165/bushel to $11.465. January soyoil futures were down $0.33/lb to $36.68 as January soymeal futures gave up a staggering $7.2/ton in overnight trading to $383.

Cash prices for soybeans were mixed at processing locations around the Midwest yesterday. Meanwhile, basis widened on both the Illinois and Mississippi Rivers yesterday on strong export demand at the U.S. Gulf. Farmer sales were slow as futures prices slid, with many farmers concerned that recent rallies are running out of steam.

Location

11/30/2020 Basis (in cents/bushel)

12/1/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-21

-21

0

   Chicago IL

-10

-10

0

   Burns Harbor IN

-10

0

10

Processors

     

   Decatur IL

5

10

5

   Decatur IN

5

5

0

   Morristown IN

5

10

5

   Lafayette IN

5

5

0

   Sioux City IA

-40

-40

0

   Des Moines IA

-25

-26

-1

   Cedar Rapids IA

-50

-50

0

   Council Bluffs IA

-23

-23

0

   Lincoln NE

-15

-15

0

River Terminals

     

   Toledo OH

0

0

0

   Seneca IL

-16

-3

13

   Savanna IL

-20

-15

5

   Davenport IA

-23

-22

1

   Morris IL

-16

-3

13

Source: Refinitiv

     

January 2021 futures price as base.

Analyst estimates hit the nail on the head after predicting a record high for USDA’s monthly soybean crush volumes in October 2020, as reported by USDA-NASS yesterday. The nation’s oilseed processors crushed 196.5 million bushels of soybeans in October 2020, eclipsing the previous record high crush volume set in March 2020 of 192.1 million bushels.

U.S. Monthly Soybean Crush Volume

December is typically a slow month for Brazilian soybean exports, but this year may prove to be exceptional. After overselling exportable supplies – largely to China – the South American country will not ship out any soybeans from its ports in December, Brazilian grain exporter association Anec said in a statement yesterday.

In an effort to reduce dependence on higher-priced South American soybeans, France is expected to increase plantings of protein-rich crops 40% by 2023. The new goal will likely add nearly a million acres of French farmland into production by 2023 with an ultimate objective of doubling that acreage over the next 10 years.

France only currently grows half of the protein-rich crops it requires to feed its livestock herds. Concerns about increasing deforestation in the Amazon rainforest are also top of mind for many French policy makers.

New estimates released by Brazilian forecaster Datagro pegs the 2020/21 soybean crop at 4.96 billion bushels. The new estimate is on the higher end of current analyst projections for the Brazilian crop, which will be harvest next February, likely to reflect an increase in acreage. U.S. market analyst group StoneX raised their Brazilian soy acreage estimates to 94.6 million acres on the sentiment. Current USDA estimates for Brazil’s soybean crop have held steady at 4.89 billion bushels.

A strike by Argentine oilseed workers and grain inspectors that started yesterday came to a quick end overnight as new negotiations began to discuss wage opportunities for port workers. The strike shut down nearly half of the country’s export grain flows across Argentina and virtually all oilseed processing plants across the country. But the country’s grain exports are not out of the clear year – many export companies reported the proposed wage demands as “excessive,” increasing the likelihood of continued turmoil in the world’s largest exporter of soybean products.                 

 Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

+$0.04

$5.695

Kansas City HRW – December Futures

$0.00

$5.375

Minneapolis HRS – December Futures

$0.00

$5.345

After Chicago futures recorded a two-week low yesterday, wheat prices followed corn and soybeans lower this morning on fund-driven liquidation, though losses were fractional in the wheat complex compared to those of corn and soybeans. The sideways trade will likely continue in the wake of lower export demand and an improving global supply forecast. A higher dollar did not help the cause as the ICE Dollar Index rose 0.21% to $91.485.

Cash prices for several soft and hard red winter wheat locations across the Midwest and Southern Plains were unchanged yesterday, though several dealers began rolling over their cash bids into March futures contract. Cash sales were light in the wake of weak futures prices, but still at profitable levels for most farmers. Farmers worried about futures prices not bouncing back booked small volumes of both old and new crop sales across the Southern Plains yesterday.

Protein premiums for hard red winter wheat containing 11% protein rose for HRW delivered via rail into Kansas City. All other protein premiums were unchanged, as shown below.

HRW Wheat Protein Content   

Basis Range**

Change

Ordinary      

+82/+92

 

11.00%

+110/+120

+11

11.20%

+125/+135

 

11.40%

+137/+147

 

11.60%

+137/+147

 

11.80%

+137/+147

 

12.00%

+137/+147

 

12.20%

+137/+147

 

12.40%

+137/+147

 

12.60%

+138/+148

 

12.80%

+138/+148

 

13.00%

+131/+141

 

13.20%

+131/+141

 

13.40%

+131/+141

 

13.60%

+131/+141

 

13.80%

+131/+141

 

14.00%

+131/+141

 

**Premium in cents/bu. over December futures

Source: Refinitiv

Australia’s bumper wheat harvest may not weigh international prices as low as previously thought after reevaluating Asian demand for wheat. Australian wheat prices remain largely unchanged in China as sky-high corn prices drive many livestock feeders to cheaper wheat as an alternative. "APW is still cheaper than similar variety of Black Sea wheat, which is around $7.76 to $7.89 a bushel," said another Singapore-based trader.

Weather

Clear skies across the Midwest will provide corn farmers in Ohio a window to finish harvest activity, according to NOAA’s short-range forecasts. Rains and snow in the Southern Plains will help improve growing conditions for the winter wheat crop, with over an inch of accumulation expected in the region over the next 24 hours.

Financials

Coronavirus cases in the U.S. rose by an ominous 179,666 since yesterday morning to 13,726,304 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 2,588 lives overnight to 270,691 deaths as of press time.  

Looking for a good read this holiday season? Environmental lawyer and blogger Gary Baise recommends Forty Chances: Finding Hope in a Hungry World for a great feel-good story this holiday season. The book follows central Illinois farmer Howard G. Buffet’s quest to end world hunger. Farmers play a pivotal role  in discovering new ways to improve soil health and yields not just in the U.S. but across the globe, as Baise reviews in the latest Defending Agriculture column.

Tis the season of gift giving! If you are considering a year-end gift as part of a transition strategy, Next Gen Ag Advocates co-owner Mike Downey has some advice for you. Downey advises farmers there are multiple levels of gifting that can mitigate tax payments and digs into the logistics of unified tax credits in the latest More than Dirt column about farm transition strategies.

Commodity prices are on the rise, but bankers continue to report mixed credit conditions across the Midwest. Reports from the Federal Reserve Banks in Minneapolis, Chicago, and Kansas City found recovering revenue streams in the wake of pandemic damage but that most lenders remain cautiously optimistic about potential government payments and the longevity of the current commodity price rally.

S&P 500 futures pulled back from yesterday’s record-high close this morning on a round of profit-taking. But overall prospects seem positive for U.S. stock futures. Discussions for a potential pandemic relief package are expected to resume this week. The U.K. approved Pfizer and BioNTech’s COVID-19 vaccine overnight. S&P 500 futures shed 0.33% to $3,648.50 ahead of the opening bell.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish