Morning Market Review for Dec. 3, 2020

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Corn, soybean futures rebound after selloff. (Comments are updated by 7:30 a.m. Central Time.)

Rising Chinese usage rates support this morning’s soy rally

  • Corn up 2-3 cents
  • Soybeans up 8-12 cents, soyoil up $0.58/lb, soymeal up $4.0/ton
  • Wheat unchanged to down 1 cent

*Prices as of 6:50am CST.

Corn

Strong ethanol production data supported rising corn prices this morning as corn markets rebounded following a three-day selloff. March futures traded $0.0175/bushel higher to $4.2575. May futures rose $0.015/bushel to $4.28.

Cash corn prices were mixed across the Heartland yesterday as many dealers, particularly at river, rail, and ethanol locations, continued to roll their bids into the March 2021 Chicago futures contract.

Location

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

12/2/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-15*

-15*

0

   Burns Harbor IN

0*

0*

0

   Lincoln NE

-17

-17

0

   Chicago IL

-30

-30

0

   Council Bluffs IA (elevator)

-10*

-10*

0

Processors

     

   Chicago IL

13

11

-2

   Decatur IL

18*

25*

7

   Cedar Rapids IA

2*

2*

0

   Blair NE

-10*

-8*

2

River Terminals

     

   Toledo OH

3*

0*

-3

   Seneca IL

0

-4*

-

   Savanna IL

-8*

-7*

1

   Davenport IA

-10*

-10*

0

   Morris IL

-6*

-4*

2

Rail

     

   Columbus OH

26

29*

-

   Evansville IN

28

30*

-

   Hereford TX

100*

100*

0

   Fort Worth TX

100*

100*

0

Ethanol Plants

     

   Linden IN

0

-3*

-

   Union City IN

7*

7*

0

   Annawan IL

-4*

-4*

0

   Council Bluffs IA

0*

-3*

-3

December futures price as base.

     

*March futures price as base.

 

 

 

Source: Refinitiv

     

 

Weekly corn export sales for the week ending November 26 are expected to be released today by USDA. Sales are expected to increase over last week as the analyst range rose to 31.5 million – 63.0 million bushels. A total of 24.5 million bushels in daily flash sales were reported to USDA via private exporters during the reporting period, with top buyers including Mexico (6.2 million bushels) and unknown buyers (18.3 million bushels).

Corn export shipments could see a boost today as well. Monday’s grains export inspection report from USDA saw a 2.2-million-bushel increase in corn export loading paces, with 35.0 million bushels of corn shipped out of U.S. export terminals in the November 20-26 reporting week. The favorable news should offer some stability to falling futures prices after three straight days of losses.

Rising food security concerns in China prompted Chinese lawmakers to issue new management recommendations for state grain reserves. The new rules will extend oversight to local government’s grain stockpiles, where it had previously only applied to state reserves.

The new law also mandates set storage volumes for each local facility and the timing of sales from these stockpiles. It goes a step further, dictating grain storage and purchasing recommendations for individuals as well.

Soybeans

Soybean futures rebounded this morning after three consecutive days of losses and forecasts of rising soybean usage rates in China. Rains in Brazil and Argentina capped the morning’s gains. January soybean futures rose $0.1225/bushel to $11.6525 while March soybeans added $0.125/bushel to $11.6725. Falling palm oil production estimates in Malaysia sent January soyoil futures rising $0.58/lb to $37.50. January soymeal futures recovered $4/ton from yesterday’s losses to $389.60.

An Argentine oilseed workers strike today will slow South American grain flows in the short run, though currency devaluation concerns in the South American country will likely offset most upward price potential for the world’s third largest soybean exporter.

Cash soybean prices across the Heartland inched up at elevator locations but narrowed on the Illinois River. Farmer sales were steady as many farmers believed prices to be falling off of last week’s peaks.

Location

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

12/2/2020 Basis (in cents/bushel)

Daily Change

Soybeans

12/1/2020

12/2/2020

 

Elevators

     

   Cincinnati OH

-21

-15

6

   Chicago IL

-10

-10

0

   Burns Harbor IN

0

0

0

Processors

     

   Decatur IL

10

10

0

   Decatur IN

5

5

0

   Morristown IN

10

10

0

   Lafayette IN

5

5

0

   Sioux City IA

-40

-40

0

   Des Moines IA

-26

-26

0

   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

-3

-4

-1

   Savanna IL

-15

-15

0

   Davenport IA

-22

-22

0

   Morris IL

-3

-4

-1

Source: Refinitiv

     

January 2021 futures price as base.

Soybean export sales continue to fall off strong paces seen earlier this year. Today’s export sales report will likely show a range of 14.7 million – 42.3 million bushels for soybean export sales for the reporting week of November 20 – 26. No daily flash sales for soybeans were reported by USDA during the reporting period. The last time a large daily soybean export sale was announced by USDA was on November 9 – a 4.9-million-bushel sale to an unknown buyer.

Soybeans export loading paces are showing signs of seasonal declines, according to Monday’s grains inspection for export report. For the week ending November 26, soybean volumes inspected for export fell 8.8% to 74.8 million bushels. If today’s report verifies these figures, futures prices could struggle to maintain support amid weakening loading paces.

Wheat

 

Contract

Price Change*

Price*

Chicago SRW – March Futures

-$0.02

$5.865

Kansas City HRW – March Futures

-$0.015

$5.5225

Minneapolis HRS – March Futures

-$0.0025

$5.5575

 

Futures prices in the wheat complex were unchanged to slightly lower this morning, moderating slightly after yesterday’s rally. The ICE Dollar Index weakened 0.36% to $90.790 in overnight trade, capping any potential losses in the wheat complex.

Soft red winter wheat cash prices at a Chicagoland processor fell $0.02/bushel to $0.07 below Chicago December futures yesterday. Basis was largely unchanged for SRW elsewhere in the Midwest.

Basis for hard red winter wheat in the Southern Plains held steady as dealers finished rolling over their cash bids to the March Kansas City futures contract. Country movement of wheat was slow.

Protein premiums for hard red winter wheat delivered by rail to Kansas City rose for protein levels of 11.4% and higher.

HRW Wheat Protein Content   

Basis Range**

Change

Ordinary      

+82/+92

 

11.00%

+110/+120

 

11.20%

+125/+135

 

11.40%

+150/+160

+13

11.60%

+150/+160

+13

11.80%

+150/+160

+13

12.00%

+150/+160

+13

12.20%

+150/+160

+13

12.40%

+150/+160

+13

12.60%

+145/+155

+7

12.80%

+145/+155

+7

13.00%

+140/+150

+9

13.20%

+140/+150

+9

13.40%

+140/+150

+9

13.60%

+140/+150

+9

13.80%

+140/+150

+9

14.00%

+140/+150

+9

**Premium in cents/bu. over March futures

Source: Refinitiv

Wheat export sales are expected to show renewed signs of activity in today’s export sales report. Trade estimates project today’s weekly figure ranging from 9.2 million – 25.7 million bushels for the week ending November 26. No daily flash sales for wheat were reported by USDA during the reporting period.

Strong export loading paces for wheat will likely prevail in today’s report. Monday’s grains inspected for export report showed a weekly increase of 5.1 million bushels to 18.5 million bushels for the reporting week of November 20-26. A lower dollar likely supported international demand during the reporting week, despite rising futures prices.

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. Sunny skies should prevail across the Heartland for the rest of the week and into the weekend.

Financials

Coronavirus cases in the U.S. rose by an ominous 199,686 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 3,156 lives overnight to 273,847 deaths as of press time. It marked the deadliest 24 hours of the pandemic in this country since beginning earlier this year.

Hospitalizations surpassed the 100,000 benchmark yesterday. Hospitals in many regions across the U.S. are nearing, if not already at, capacity as sick patients – both COVID and non-COVID – fill what few hospital beds remain, and staff outages strain the healthcare workforce.

The CDC shortened the recommended quarantine time from two weeks to 7-10 days for individuals exposed to others with the virus. Recent scientific findings also supported the revised policy stating that if an exposed person has tested negative and not shown symptoms, the quarantine period can be shortened to seven days. Individuals who cannot be tested should quarantine for 10 days.

Updated farm financial indicators released by USDA’s Economic Research Service (ERS) agency yesterday found net farm incomes in 2020 will likely rise 43% higher than 2019 profits, due in large part to high government payments and rising commodity prices.

The revised outlook, updated from September 2020 calculations, painted a rosier picture for most farmers than earlier forecasts, though the several variables remain concerning to farm market watchers.

The refreshed figures project 2020 net farm income at $119.3 billion, up $16.9 billion in nominal dollars from the last round of USDA’s net farm income estimates released in early September. Net cash farm income (NCI) for 2020 came in at $134.1 billion, 22.6% higher than 2019 NCI, relative to nominal dollars.

Depressed livestock prices will likely weigh 2020 farm incomes lower, with upward profit margin support coming from direct payments, higher crop commodity prices, and shrinking production expenses. Overall equity for the aggregate U.S. farm sector is expected to increase 1.1% from last year.

Both net farm incomes and net cash farm incomes are projected to notch the highest levels since 2013 on the back of the highest level of government assistance to farmers in history, even accounting for inflation. USDA estimates $46.5 billion will be paid out to farmers in 2020, with the lion’s share coming from ad hoc payments following the coronavirus pandemic.

Government payments will account for 39% of U.S. net farm income in 2020 due as part of an effort to support farmers who suffered damages in the economic fallout of the coronavirus pandemic. “We forecast the highest level of government payments ever, even when prior years are adjusted for inflation,” said USDA-ERS senior economist Carrie Litkowski in a webinar hosted by ERS to discuss the new estimates.

It will be the highest level of government support for farmers since 2001 (41%), but still well below the all-time high set in 1983 of 65%, according to Litkowski.

Ad hoc payments make up the majority of this category. Of the $46.5 billion in farmer income provided by the government, $11.0 billion was earmarked for Coronavirus Food Assistance Program (CFAP) 1.0, $13.3 billion for CFAP 2.0, and $5.9 billion for the Paycheck Protection Program. In total, $32.6 billion of taxpayer funds were distributed to U.S. farmers via ad hoc programs during 2020.

Representative David Scott of Georgia will replace Minnesota Representative Collin Peterson as the House Agriculture Committee chairman after Peterson’s reelection bid fell short last month. Scott has served on the House Ag Committee since his election in 2002. An avid supporter of biofuels and livestock production, Scott has also spent his political career strengthening the ag industry for generations to come, as reported by Farm Futures’ policy editor Jacqui Fatka.

U.S. stock futures edged lower this morning as markets awaited fresh unemployment data and digested rising COVID-19 cases and deaths. Weekly jobless claims are expected to moderate in today’s update. Optimism about vaccine development kept the bears at bay this morning. S&P 500 futures edged 0.06% lower to $3,665.00.

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