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Morning Market Review for Jan. 26, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Grains bounce back on technical buying. (Comments are updated by 7:30 a.m. Central Time.)

Gains limited on favorable South American weather forecasts

  • Corn up 3-6 cents
  • Soybeans up 4-9 cents, soyoil up $0.62/lb, soymeal up $0.5/ton
  • Wheat mixed to 1-3 cents higher

*Prices as of 6:50 am CST.

Corn

Corn prices rose this morning as fund buying continued in the early morning hours. Rising energy prices also contributed to some of corn’s price strength this morning.

Cash corn prices held mostly steady across the Heartland yesterday, though there was some mixed price action at processors and on the Illinois River. Despite a bounce back in futures prices due in large part to technical buying from managed money funds, farmer sales remained slow as growers waited to see if further price action would follow yesterday’s gains.

Location

1/22/2021 Basis (in cents/bushel)

1/25/2021 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

11

11

0

   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

4

-1

   Decatur IL

15

17

2

   Cedar Rapids IA

-15

-15

0

   Blair NE

-18

-18

0

River Terminals

     

   Toledo OH

-10

-10

0

   Seneca IL

2

5

3

   Savanna IL

4*

5*

1

   Davenport IA

8*

8*

0

   Morris IL

5

4

-1

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

0

0

0

   Union City IN

-4

-4

0

   Annawan IL

-4

-4

0

   Council Bluffs IA

-20

-20

0

March futures price as base.

     

*May futures as base.

     

Source: Refinitiv

     

In addition to slapping a tax on wheat exports, the Russian government also announced overnight an approval for an $0.83/bushel export tax on outgoing corn shipments. The tax will be enforced on Russian corn exports between March 1 and June 30 to combat rising domestic food prices.

Ukraine will also combat rising food prices amid a 2020 crop shortfall due to dry weather by capping 2020/21 corn exports. The Ukrainian economy ministry will limit corn exports after shipping out 944.9 million bushels of corn. The move is an effort to keep feed prices stable, but the cap was about 79 million bushels higher than livestock and poultry feeders had originally desired.

Good planting conditions in South Africa is allowing farmers in the country to take advantage of rising corn prices. A Reuters survey predicts South Africa’s Crop Estimates Committee (CEC) will release 2020/21 planting estimates of 6.9 million acres of corn, a 7% increase from the year prior. South Africa is the world’s seventh largest exporter of corn.

The 2020/21 marketing year could not look more different than the 2019 crop year if it tried. But as Advance Trading’s Brady Huck points out, that doesn’t mean that your marketing plan has to drastically change. A few key principles, including flexibility, discipline, and control, can help to cement a successful marketing plan. Huck expands on these in the latest Ag Marketing IQ column.

Soybeans

Soybean futures prices were on track to post steady gains this morning as funds renewed interest in soybeans after recent selloffs. Gains were capped by improving weather conditions in South America.

Cash soybean prices were largely unchanged across the Midwest yesterday. Basis narrowed on the Illinois River and eased slightly at a Cincinnati, Ohio elevator. Farmers were reportedly interested in the fuel behind yesterday’s market rally, but prices had not yet risen enough to encourage the booking of new sales.

Location

1/22/2021 Basis (in cents/bushel)

1/25/2021 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

10

9

-1

   Chicago IL

0

0

0

   Burns Harbor IN

0

0

0

Processors

     

   Decatur IL

15

15

0

   Decatur IN

0

0

0

   Morristown IN

15

15

0

   Lafayette IN

7

7

0

   Sioux City IA

-40

-40

0

   Des Moines IA

-23

-23

0

   Cedar Rapids IA

-25

-25

0

   Council Bluffs IA

-30

-30

0

   Lincoln NE

-15

-15

0

River Terminals

     

   Toledo OH

-10

-10

0

   Seneca IL

0

-6

-6

   Savanna IL

5*

2*

3

   Davenport IA

4*

4*

0

   Morris IL

-6

-6

0

Source: Refinitiv

     

March 2021 futures as base.

     

*May 2021 futures as base.

     

A truckers’ strike in Argentina lasting over the past week came to a halt yesterday. Drivers blocked the roads leading from the Pampas grain belt region to the country’s top port, Rosario, to protest rising tolls, insurance premiums, taxes, and fuel costs as high inflation dilutes earnings. Reports from the region indicate a return to normal shipping patterns – for now.

Economic instability has plagued the Argentine grain trade over the past six months. Rising inflation has led many employee unions to go on strike, including oilseed workers and grains inspectors, as a way to negotiate higher wages.

Wheat

Declining winter wheat crop conditions in Kansas, Colorado, Nebraska, and South Dakota pulled Kansas City wheat futures higher this morning. But improving winter wheat conditions in the Midwest dragged Chicago wheat futures lower. Spring wheat futures were mixed as the dollar weakened. Russia’s finalized export tax announced overnight had little impact on prices this morning.

Russia approved the formal proposal overnight to enact a higher tax on wheat exports beginning March 1 through June 30. The new tax is set at $1.66/bushel, a 50% increase from original estimates, and will last four months. Markets did not seem to be significantly impacted by the announcement, suggesting that the proposals were previously priced into market prices.

The move is widely viewed as an effort to combat rising domestic food prices in Russia, though has already had the effect of driving up world prices as global buyers seek out a new and affordable source for wheat. Russia is the world’s largest wheat exporter.

Russian wheat prices also traded lower overnight after last weeks rallies. The trend stretched across the world as wheat export prices in Ukraine fell $0.08 - $0.11/bushel from last Friday to $7.81 - $8.14/bushel as of yesterday. Improving winter weather conditions in the Black Sea region also helped to lower price offerings as concerns about crop shortfalls eased.

However, some weather concerns continue to plague winter wheat crops across Europe. Crops showed resistance to frost damage in December, but warm temperatures in January across the European Union’s southeast region could put crops in the area at risk for winterkill if a freezing spell is cast on the area.

Cash offerings for both hard and soft red winter wheat in the Southern Plains and Midwest were unchanged yesterday. Unlike corn and soybean growers, wheat farmers were more incentivized by yesterday’s rally, with merchandisers reporting small old crop sales booked from on-farm storage.

Weather

Yesterday’s winter storm will push northeast into the Upper Great Lakes states today and into New England by this evening, according to NOAA’s short-range forecasts. Snow accumulation will range between 3-12 inches from Colorado to Michigan by tonight.

Another winter storm will trail the first, though accumulation is expected to be lighter. The storm is currently developing in the Central Rockies and will move east through the Southern Plains and the Central Mississippi River Valley over the next couple days. The forecasts will benefit dry winter wheat growing conditions in the Southern and Central Plains as low soil moisture continues to plague farmers in that region.

Financials

Coronavirus cases in the U.S. rose by 170,127 to 25,298,405 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 2,014 lives to 421,239 deaths as of press time.

As a new administration takes office, many questions loom for the future of ag policy. Farm Futures policy editor Jacqui Fatka speculates on how a Biden presidency will impact the Waters of the U.S. (WOTUS) regulations in the fourth installment in the multi-part series what a Biden administration means for farmers.

Have you given up on your 2021 New Year’s resolutions? Water Street Solutions’ Darren Frye offers farmers with marketing goals some helpful tricks to gain momentum with your marketing plans. Frye recommends learning new marketing tools by taking small steps, setting deadlines, finding credible sources, and working with an advisor to ensure marketing success in the latest Finance First column.

Top grain trader ADM released fourth quarter earning estimates this morning. The behemoth grains processor and trader reported a 36% increase in fourth quarter profits, despite an unprecedented downturn in fuel demand and colossal consumer demand shifts in food consumption. ADM’s fiscal growth was largely driven by improvements to its agricultural services and nutrition businesses.

ADM’s net earnings for the fourth quarter rose to $687 million, or $1.22/share. Grains processors are expected to weather the pandemic reasonably well, capitalizing on more consumers preparing and consuming food at home, as well as increased international demand for grains as countries stockpile food reserves to combat domestic food increases as well as pandemic-driven uncertainty.

U.S. stocks wobbled slightly this morning on a round of profit-taking but were largely trading higher at last glance after yesterday’s new round of highs. Earning season will be in peak form this week, as the market eagerly anticipates earnings reports from General Electric, Verizon, Raytheon Technologies, American Express, Lockheed Martin, Starbucks, Microsoft, and Texas Instruments.

Investors remain optimistic about broad economic growth and that trend will likely continue today, pending a negative earnings surprise from one of the aforementioned companies. S&P 500 futures traded 0.06% higher to $3,850.75 on the prospects.

Morning Ag Commodity Prices - 1/26/2021
Contract Units High Low Last Net Change % Change
MAR '21 CORN $ / BSH  5.1875 5.08 5.18 0.065 1.27%
MAY '21 CORN $ / BSH  5.2125 5.105 5.205 0.0625 1.22%
JUL '21 CORN $ / BSH  5.1625 5.06 5.155 0.055 1.08%
SEP '21 CORN $ / BSH  4.62 4.5575 4.6175 0.03 0.65%
DEC '21 CORN $ / BSH  4.3775 4.3225 4.375 0.0275 0.63%
MAR '22 CORN $ / BSH  4.44 4.395 4.44 0.025 0.57%
MAY '22 CORN $ / BSH  4.4775 4.435 4.4775 0.0275 0.62%
MAR '21 SOYBEANS $ / BSH  13.5975 13.335 13.55 0.115 0.86%
MAY '21 SOYBEANS $ / BSH  13.5825 13.325 13.5375 0.11 0.82%
JUL '21 SOYBEANS $ / BSH  13.42 13.155 13.375 0.09 0.68%
AUG '21 SOYBEANS $ / BSH  12.905 12.6825 12.9 0.0975 0.76%
SEP '21 SOYBEANS $ / BSH  11.915 11.71 11.8875 0.0625 0.53%
NOV '21 SOYBEANS $ / BSH  11.3875 11.1875 11.34 0.0375 0.33%
JAN '22 SOYBEANS $ / BSH  11.325 11.1375 11.2725 0.0225 0.20%
MAR '22 SOYBEANS $ / BSH  11.0775 10.8875 11.0325 0.0325 0.30%
MAY '22 SOYBEANS $ / BSH  10.9475 10.815 10.945 0.025 0.23%
MAR '21 SOYBEAN OIL  $ / LB 43.86 42.65 43.68 0.74 1.72%
MAY '21 SOYBEAN OIL  $ / LB 42.97 41.81 42.79 0.58 1.37%
MAR '21 SOY MEAL $ / TON 432.8 425.6 431.9 2.3 0.54%
MAY '21 SOY MEAL $ / TON 429.5 422.4 428.5 2.1 0.49%
JUL '21 SOY MEAL $ / TON 425.2 418.4 424.7 2.2 0.52%
AUG '21 SOY MEAL $ / TON 410 403.9 409.6 1.8 0.44%
SEP '21 SOY MEAL $ / TON 390.3 385.8 390 1.4 0.36%
MAR '21 Chicago SRW $ / BSH  6.505 6.4125 6.4775 -0.0075 -0.12%
MAY '21 Chicago SRW $ / BSH  6.5075 6.42 6.48 -0.01 -0.15%
JUL '21 Chicago SRW $ / BSH  6.3425 6.265 6.3275 -0.01 -0.16%
SEP '21 Chicago SRW $ / BSH  6.3425 6.2725 6.3275 -0.0125 -0.20%
DEC '21 Chicago SRW $ / BSH  6.3925 6.3325 6.375 -0.015 -0.23%
MAR '21 Kansas City HRW $ / BSH  6.3125 6.205 6.2875 0.015 0.24%
MAY '21 Kansas City HRW $ / BSH  6.3475 6.2425 6.3225 0.0125 0.20%
JUL '21 Kansas City HRW $ / BSH  6.33 6.23 6.3075 0.015 0.24%
SEP '21 Kansas City HRW $ / BSH  6.3475 6.2525 6.325 0.0125 0.20%
DEC '21 Kansas City HRW $ / BSH  6.36 6.31 6.3525 -0.01 -0.16%
MAR '21 MLPS Spring Wheat $ / BSH  6.2825 6.22 6.255 -0.005 -0.08%
MAY '21 MLPS Spring Wheat $ / BSH  6.365 6.3025 6.3575 0.01 0.16%
JUL '21 MLPS Spring Wheat $ / BSH  6.4075 6.3475 6.4025 0.005 0.08%
SEP '21 MLPS Spring Wheat $ / BSH  6.4525 6.4175 6.4525 0.01 0.16%
DEC '21 MLPS Spring Wheat $ / BSH  6.5 6.46 6.5 0.005 0.08%
MAR '21 ICE Dollar Index $ 90.595 90.29 90.3 -0.073 -0.08%
 MA '21 Light Crude $ / BBL  53.24 52.29 53.16 0.39 0.74%
 AP '21 Light Crude $ / BBL  53.12 52.2 53.03 0.36 0.68%
FEB '21 ULS Diesel $ /U GAL 1.6067 1.5851 1.6038 0.0099 0.62%
MAR '21 ULS Diesel $ /U GAL 1.6084 1.5868 1.6062 0.0107 0.67%
FEB '21 Gasoline $ /U GAL 1.5859 1.5535 1.5841 0.023 1.47%
MAR '21 Gasoline $ /U GAL 1.581 1.549 1.5797 0.0218 1.40%
JAN '21 Feeder Cattle $ / CWT 0 #N/A 136.55 0 0.00%
MAR '21 Feeder Cattle $ / CWT 0 #N/A 143.85 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 116.525 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 122.95 0 0.00%
FEB '21 Live Hogs $ / CWT 0 #N/A 70.625 0 0.00%
APR '21 Live Hogs $ / CWT 0 #N/A 76.625 0 0.00%
JAN '21 Class III Milk $ / CWT 16.13 #N/A 16.16 0 0.00%
FEB '21 Class III Milk $ / CWT 15.85 15.74 15.74 -0.22 -1.38%
MAR '21 Class III Milk $ / CWT 16.91 16.76 16.81 -0.23 -1.35%
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