Morning Market Review for Dec. 4, 2020

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Corn, soybeans struggle on Brazilian rains. (Comments are updated by 7:30 a.m. Central Time.)

Chicago and Kansas City wheat fight an uphill battle against large global wheat stocks

  • Corn down 2-3 cents
  • Soybeans down 1-2 cents, soyoil up $0.56/lb, soymeal down $3.5/ton
  • Wheat mixed

*Prices as of 6:55am CST.

Editor’s Note: Our January 2021 survey is live! Click here to share harvest results and answer a few questions about the top-trending issues in agriculture right now. Our results will be released January 5, 2021 to allow farmers enough time to recalibrate their marketing plans ahead of the January 12 WASDE and Crop Production reports, which will feature final crop estimates for 2020 corn and soybean harvests.

Corn

Corn futures edged lower this morning following steady rainfall in Brazil over the past week. Corn futures are on track to post their first weekly loss in the past five weeks if today’s weaker prices hold steady. March corn futures traded $0.0225/bushel lower to $4.2425. May futures also gave up $0.0225/bushel to $4.265.

Cash corn prices were mixed at river locations along the Mississippi and Illinois waterways yesterday. Basis widened at elevators and ethanol plants in the Eastern Corn Belt. Country movement of corn was slow and scattered as dealers completed rolling their cash bids over to the March futures contract.

Location

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

12/3/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-15*

-9*

6

   Burns Harbor IN

0*

0*

0

   Lincoln NE

-17

-23*

-

   Chicago IL

-30

-30

0

   Council Bluffs IA (elevator)

-10*

-10*

0

Processors

     

   Chicago IL

11

11

0

   Decatur IL

25*

25*

0

   Cedar Rapids IA

2*

2*

0

   Blair NE

-8*

-8*

0

River Terminals

     

   Toledo OH

0*

0*

0

   Seneca IL

-4*

-5*

-1

   Savanna IL

-7*

-6*

1

   Davenport IA

-10*

-14*

-4

   Morris IL

-4*

-5*

-1

Rail

     

   Columbus OH

29*

29*

0

   Evansville IN

30*

30*

0

   Hereford TX

100*

100*

0

   Fort Worth TX

100*

100*

0

Ethanol Plants

     

   Linden IN

-3*

-3*

0

   Union City IN

7*

10*

3

   Annawan IL

-4*

-4*

0

   Council Bluffs IA

-3*

-3*

0

December futures price as base.

     

*March futures as base.

 

 

 

Source: Refinitiv

     

 

The futures market selloff earlier this week will likely send speculators selling their long positions on most grain commodities. Commitment of Trader data released this afternoon by the CFTC will likely show a moderate liquidation of bought positions by the funds for the reporting week ending December 1.

Speculator interest has helped underpin price support in the commodities markets since mid-August. But the recent selloffs suggest that speculators may believe that grains prices may have hit their peaks in the short run.

Soybeans

Rains in Brazil this week sent soybean futures lower this morning, though losses were likely capped by steady export loading paces in the U.S. last week. January soybean futures shed $0.025/bushel to $11.6575 while March futures traded $0.0225/bushel lower to $11.68. January soybean oil gained $0.56/lb to $39.24 while January soymeal futures tumbled $3.5/ton lower to $386.50.

Soybean cash prices were largely unchanged across the Midwest yesterday. Upward basis movement was seen at a Sioux City, Iowa crush facility while basis narrowed on the Illinois River. A recovery in the futures market spurred some light farmer sales across the Heartland for growers looking to raise funds for short-term cash flow needs.

Location

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

12/3/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-15

-15

0

   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

-35

5

   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

-4

-4

0

   Savanna IL

-15

-15

0

   Davenport IA

-22

-22

0

   Morris IL

-4

-8

-4

Source: Refinitiv

     

January 2021 futures price as base.

 

Soybean exports continue to show signs of weakness after yesterday’s weekly export sales report from USDA. New soybean export sales only totaled 15.0 million bushels for the week ending November 26, down 68% from the prior four-week average, due in large part to a reduction in Chinese purchases.

However, soybean export loading paces notched 91.6 million bushels on the week, offering some stability to the soybean market despite fewer new sales being booked. Corn export loading paces recorded a marketing year high of 42.2 million bushels despite slower sales, also driven by Chinese demand.

Soybean futures prices hit resistance just under $12/bushel a couple weeks ago. What will it take to get back to those levels? Total Farm Marketing’s Naomi Blohm predicts an unseasonal uptick in export demand, smaller U.S. crops in next week’s WASDE report, and weather damage to South American crops could all send soybean futures rallying back towards the $12/bushel benchmark in the latest Ag Marketing IQ column.

 Wheat

Contract

Price Change*

Price*

Chicago SRW – March Futures

-$0.0425

$5.8025

Kansas City HRW – March Futures

-$0.025

$5.4725

Minneapolis HRS – March Futures

+$0.0025

$5.5375

 

Plentiful global stocks held back wheat rallies this morning. Prices were weighed down by strong Australian and Canadian harvests, as well as improving weather forecasts in the Black Sea region. Cooler temperatures in the Southern Plains next week are not expected to significantly alter the global balance sheet. Spring wheat found some price support this morning from a weakening dollar as the ICE Dollar Index dropped $0.093 to $90.625

Cash prices for soft red winter wheat fell $0.04/bushel to $0.14 under March futures prices on the Chicago Board of Trade at a Chicagoland elevator. Basis for SRW was largely unchanged elsewhere across the Midwest yesterday.

Basis held steady for hard red winter wheat bids in the Southern Plains yesterday. An Oklahoma merchandiser reported slow cash sales amid falling futures prices.

Protein premiums for hard red winter wheat delivered by rail to Kansas City shifted for all levels of protein yesterday, as shown below.

HRW Wheat Protein Content   

Basis Range**

Change

Ordinary      

+90/+100

+8

11.00%

+120/+130

+10

11.20%

+130/+140

+5

11.40%

+146/+156

-4

11.60%

+146/+156

-4

11.80%

+146/+156

-4

12.00%

+146/+156

-4

12.20%

+146/+156

-4

12.40%

+146/+156

-4

12.60%

+146/+156

+1

12.80%

+146/+156

+1

13.00%

+149/+159

+9

13.20%

+149/+159

+9

13.40%

+149/+159

+9

13.60%

+149/+159

+9

13.80%

+149/+159

+9

14.00%

+149/+159

+9

**Premium in cents/bu. over March futures

Source: Refinitiv

 

French soft wheat exports to destinations outside the European Union set a new record for the time of year in November. The largest wheat producing country in the EU bloc shipped 32.2 million bushels of soft wheat during November 2020. The volume bested the prior month’s shipments by nearly 6.4 million bushels to rank as the highest volume of soft wheat exports for France for their 2020/21 marketing year to date.

French shipments were supported by a return of sales to top destination Algeria, who had been frequenting soft wheat origins in the Black Sea after France’s 2020 soft wheat crop was slashed due to poor growing conditions. Strong demand from China also spurred French sales higher, in addition to renewed buying interest from Morocco and Egypt

A little closer to home, U.S. wheat exports rose 40% above the four-week average in yesterday’s export sales report to 16.6 million bushels. Competitive Chinese demand supported the uptick, though the top destination for U.S. wheat for the November 20 – 26 reporting period was Indonesia with 4.4 million bushels.

High futures prices sent new export sales edging 5% lower on the week to 16.4 million bushels. Wheat export demand remains supported by the lowest dollar values in nearly 20 months.

Weather

The Midwest will largely enjoy a weekend of clear skies and mild temperatures over the next couple days, according to NOAA’s short-range forecasts. The Ohio River Valley could see some showers today, though the lion’s share of accumulation will be focused on states in the Southeast. Snow showers are forecast along the Upper Mississippi River Valley on Sunday.

The latest 6 to 10-day weather outlook from NOAA, released yesterday, forecasts above average likelihoods of rainfall later next week. For the reporting period of December 9 – 13, there is a 33 – 40% chance for above average precipitation between the Rocky Mountains and the Ohio River Valley.

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