Morning Market Review for Jan. 20, 2021

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Corn stumbles after refiner exemptions. (Comments are updated by 7:30 a.m. Central Time.)

Soybeans down over $0.50/bushel over the past two days on rain in South America

  • Corn down 9-12 cents
  • Soybeans down 22-31 cents, soyoil down $0.27/lb, soymeal up $9.6/ton
  • Wheat down 9-15 cents

*Prices as of 6:50am CST.

Corn

Despite calls by Ukrainian feed and meat producers to curb corn exports to slow rising global corn prices, Ukraine will not likely issue an export ban on corn in the coming days. However, the sentiment could not keep corn futures from falling this morning after the outgoing Administration approved three biofuel blending waivers last night.

Rainfall across South America chipped away at corn gains this morning as March corn futures fell $0.1075/bushel to $5.5125. May corn futures shed $0.11/bushel to $5.1725.

After narrowing basis across the Corn Belt last week, cash corn prices largely held steady across the Heartland yesterday. Basis weakened slightly on the Illinois River and at an Indiana ethanol plant that limited delivery hours last week to manage the massive influx of grain following rapid farmer sales after last week’s rallies.

Farmer sales finally slowed yesterday as futures prices edged lower on concerns about potential conflicts with China after comments from the outgoing presidential administration were released. A wet forecast in South America also contributed to falling prices, discouraging farmer sales.

Location

1/15/2021 Basis (in cents/bushel)

1/19/2021 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

13

15

2

   Burns Harbor IN

-10

-10

0

   Lincoln NE

-23

-23

0

   Chicago IL

-20

-20

0

   Council Bluffs IA

-25

-25

0

Processors

     

   Chicago IL

5

5

0

   Decatur IL

15

15

0

   Cedar Rapids IA

-10

-10

0

   Blair NE

-18

-18

0

River Terminals

     

   Toledo OH

-5

-5

0

   Seneca IL

4

2

-2

   Savanna IL

3*

3*

0

   Davenport IA

5*

5*

0

   Morris IL

4

2

-2

Rail

     

   Columbus OH

18

18

0

   Evansville IN

18

18

0

   Hereford TX

110

110

0

   Fort Worth TX

110

110

0

Ethanol Plants

     

   Linden IN

2

2

0

   Union City IN

-6

-8

-2

   Annawan IL

-4

-4

0

   Council Bluffs IA

-18

-18

0

March futures price as base.

     

*May futures as base.

     

Source: Refinitiv

     

In a final, crushing blow to farm country, President Trump’s Environmental Protection Agency (EPA) granted three biofuel blending waivers exempting three refiners from complying with 2018 and 2019 biofuel blending regulations outlined by the Renewable Fuel Standard (RFS).

The names of the refiners receiving the exemptions were not released when the EPA made the announcement last night. But the damage likely did not cut as deep as it could have – over 30 exemption waiver requests from refineries for 2019 remain outstanding. Exemption requests for 2020 compliance only total 15. However, these waivers could face a different fate under the Biden administration, which begins at noon today.

The move, though a slap in the face to rural America, is not entirely unexpected after the Trump administration see-sawed between farmers and oil companies through its entire duration. The blending mandate ensures fuel to be mixed with renewable fuel additives grown by the Heartland, namely corn ethanol and soy biodiesel.

National Corn Growers Association (NCGA) President John Linder encapsulated the sentiment in a NCGA statement saying, “It shouldn’t be a surprise to those who have been paying attention for the last four years that this EPA would undermine corn farmers and the ethanol market on its way out the door.”

Linder continued, “there is no reason for the EPA to take this action now, especially with the Supreme Court set to consider the Tenth Circuit ruling in the new term. Corn farmers need an EPA that will follow the law as written and intended by Congress.”

Soybeans 

A truckers’ protest in Argentina over rising wages amid surging inflation could not stop the bleeding in the soybean complex this morning. Harvest continues to progress on the Brazilian soybean crop, though recent rains brought much relief to crops in the region amid a dry La Niña weather pattern. The prospects increased the likelihood of favorable South American soybean yields, sending March soybean futures falling $0.29/bushel to $13.5675. May soybean futures tumbled $0.2925/bushel lower to $13.54.

March soyoil futures shed $0.27/lb to $41.43 as competing Malaysian palm oil prices fell. Livestock and poultry feeders continue to minimize feed purchases as soymeal futures prices remain high. March soymeal futures dropped $9.6/ton on the sentiment to $440.90.

Cash soybean offerings across the Midwest fell on the Illinois River yesterday, despite positive prospects about export demand on the Mississippi River. Last week’s rallies and rapid farmer sales left buyers with plentiful stocks. Farmers had little incentive to increase cash sales yesterday as supplies remain plentiful and futures prices tumbled on the progressing Brazilian soybean harvest.

Location

1/15/2021 Basis (in cents/bushel)

1/19/2021 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

20

19

-1

   Chicago IL

-5

-5

0

   Burns Harbor IN

0

0

0

Processors

     

   Decatur IL

20

20

0

   Decatur IN

0

0

0

   Morristown IN

15

15

0

   Lafayette IN

0

7

7

   Sioux City IA

-40

-40

0

   Des Moines IA

-23

-23

0

   Cedar Rapids IA

-20

-20

0

   Council Bluffs IA

-30

-30

0

   Lincoln NE

-15

-15

0

River Terminals

     

   Toledo OH

-10

-10

0

   Seneca IL

6

5

-1

   Savanna IL

5*

5*

0

   Davenport IA

1*

3*

2

   Morris IL

6

5

-1

Source: Refinitiv

     

March 2021 futures as base.

     

*May 2021 futures as base.

     

Chinese export data released earlier this week saw a nearly 53% year over year increase in U.S. soybean imports to the world’s second largest economy. But will it be enough to satisfy Phase 1 trade agreement targets?

Likely not, though official U.S. census bureau data outlining the trade goals will not be released for another couple weeks. China bought 951.2 million bushels of U.S. soybeans during the 2020 calendar year, according to data released from the General Administration of Customs on Monday.

Brazil continues to be China’s top soybean supplier, exporting a total of 2.4 billion bushels to China in 2020, up over 11% from 2019. Cumulative 2020 Chinese soybean imports totaled 3.7 billion bushels, as China set a new record for soybean import volumes during the year amid a recovering hog herd.

Forecasters expect 2021 Chinese soybean imports to surge to new highs.

Soybean export volumes for the week ending January 14 rose 11% on the week to 75.6 million bushels in yesterday’s USDA Export Inspections report. The loading paces reassured trader faith in the strength of Chinese soybean demand, as the world’s second largest economy was the destination for 62% of last week’s U.S. soybean shipments.           

 Wheat

Contract

Price Change*

Price*

Chicago SRW – March Futures

-$0.1525

$6.57

Kansas City HRW – March Futures

-$0.0925

$6.3475

Minneapolis HRS – March Futures

-$0.10

$6.335

 

Wheat futures prices followed those of corn and soybeans sharply lower overnight, despite strong Chinese imports from the U.S. A strengthening dollar certainly provided no price support and added to the losses incurred by profit-taking. The ICE Dollar Index rose $0.059 to $90.540 in overnight trading.

Cash offerings for hard and soft red winter wheat in the Southern Plains and Midwest were largely unchanged yesterday. Old crop farmer sales were slow, as most growers have already booked 2020 sales. Rising prices could trigger a fresh round of cash sales on the old crop, though overnight losses suggest this may not be in the cards today.

Farmers found more incentive to respond to rising new crop prices, however. Merchandisers reported scattered new crop sales yesterday due in large part to last week’s rallies on tightening Black Sea wheat supplies.

Protein premiums for wheat containing 13% protein and higher rose by $0.20/bushel yesterday for hard red winter wheat delivered by rail to Kansas City. Price changes are shown below.

HRW Wheat Protein Content   

Basis Range**

Change

Ordinary      

+108/+118

 

11.00%

+120/+130

 

11.20%

+130/+140

 

11.40%

+125/+135

 

11.60%

+125/+135

 

11.80%

+125/+135

 

12.00%

+130/+140

 

12.20%

+130/+140

 

12.40%

+130/+140

 

12.60%

+130/+140

 

12.80%

+130/+140

 

13.00%

+135/+145

+20

13.20%

+135/+145

+20

13.40%

+135/+145

+20

13.60%

+135/+145

+20

13.80%

+135/+145

+20

14.00%

+135/+145

+20

**Premium in cents/bu. over March futures

Source: Refinitiv

 

Weather

A chance of snow is possible today in Northern Wisconsin and Michigan while rain continues to fall in Texas and the Southeast today, according to NOAA’s short-range forecasts. Snowfall totals in the Upper Peninsula will be relatively light and could be minimized by warm temperatures.  

Temperatures are expected to remain unseasonably warm over the next couple days with highs in the 30’s and 40’s in the Northern Plains by tomorrow.

Financials 

Coronavirus cases in the U.S. rose by 175,076 to 24,254,283 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 2,774 lives to 401,777 deaths as of press time. The U.S. surpassed 400,000 lives lost due to the pandemic yesterday afternoon.

 Rising grain prices have an ugly side – the trend typically leads to rising input prices as well. Farm Futures contributing editor Bryce Knorr points to a 12% weekly increase in wholesale urea prices at the U.S. Gulf last week as evidence that 2020’s input price lows are quickly becoming a thing of the past.

Recurring COVID-19 outbreaks in China could threaten to constrain global urea flows. At any rate, 2021 planting season may see more supply chain snafus compared to 2020, Knorr cautions in the latest Ag Marketing IQ column.

The importance of communication is not lost on any farmer, but the logistics of good communication skills are far more intricate than what meets the eye. K Coe Isom’s Davon Cook observes that different sets of communication skills are needed for ongoing operational coordination, addressing conflicts, and long-term strategizing. Cook digs into how to effectively communicate daily tasks and expectations in the latest Family Farm Success column.

Earnings week on Wall Street continues today with investors optimistic about reports from Morgan Stanley, U.S. Bancorp, Proctor & Gamble, and UnitedHealth as well as the presidential inauguration of Joe Biden later this morning. S&P 500 futures rose 0.37% to $3,804.75 in anticipation of a new round of stimulus expected to be quickly legislated into law by the incoming president.

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