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Morning Market Review for July 6, 2020

Soybeans flirt with $9/bushel benchmark. (Comments are updated by 7:30 a.m. Central Time.)

Hot and dry forecasts boost grain gains

  • Corn up 3-5 cents
  • Soybeans up 8-11 cents, soyoil up $0.427, soybean meal up $2.5
  • Wheat up 3-5 cents

*Prices as of 6:55 am CDT.

Editor’s Note: Our “Feedback from the Field” series is live! Click here to share your crop reports with other growers around the country via a short survey with freshly updated questions this week! We will update the interactive Google map with results throughout the day. You can find also check out our latest analysis on recent reader feedback here. Thank you!

Corn: A hot and dry weather forecast paired with rising energy prices sent September corn futures rising $0.045/bushel this morning to $3.48. New crop December corn futures rose $0.0425/bushel to $3.5775.

Cash corn prices fell at two central Corn Belt processing facilities last Thursday. Basis edged $0.01/bushel lower to $0.15 at a Council Bluffs, Iowa ethanol plant but was mostly unchanged elsewhere to end the holiday week. Farmer sales began to slow as the futures market fell prey to a round of profit taking after two days of strong price increases. Several elevators and ethanol plants rolled over their cash bids to the September contract on Thursday.

Corn basis and change

Bayer AG agreed to pay out over $10.5 billion in settlements over ongoing Roundup litigation lingering from Bayer’s purchase of Monsanto. Farmers are likely to bear the burden of repayment, Matthew Kruse of Commstock Investments points out. Declining innovation and accelerated market consolidation could raise input prices for farmers, despite Roundup’s benefits for reduced tillage and soil toxicity, he writes in the latest Ag Marketing IQ column.

A holiday weekend of warm weather across the country should help boost crop conditions in today’s Crop Progress report as attention shifts to silking and pollination progress. As of a week ago, 71% of the nation’s corn crop was in good to excellent condition, though only 4% of the crop had begun silking after getting off to a rocky start. The hot weekend weather should also benefit winter wheat harvest progress and soybean growing conditions.

Soybeans: Strong economic signals from China boosted futures prices in the soy complex this morning. August soybean futures traded $0.09/bushel higher to $9.0025 – the highest level in four months. August soyoil futures gained $0.42/lb to $28.51 while August soymeal futures rallied $2.5/ton higher to flirt with the $300/ton benchmark at $298.7.

Cash soybean prices dropped at a Sioux City, Iowa processor on Thursday. Basis fell $0.05/bushel to $0.02 over August futures prices at a Davenport, Iowa terminal along the Mississippi River late last week, though basis was relatively unchanged elsewhere in the Midwest. Cash sales slowed as futures prices edged back from their early week gains on lowered acreage expectations. Most locations had rolled over their cash bids to the August futures contract by last Thursday.

Soybean Basis Change

Soybean exports inched 3.2 million bushels higher for the week ending June 25 to 14.3 million bushels but remained 19.5% lower than the five-year average. Weak export pace over the past several months finally dropped year-over-year shipments 1.5% lower. USDA predicts 2019/20 U.S. soybean exports to be 1.65 billion bushels, but average weekly soybean export totals of 23.3 million bushels per week suggest that another forecast decrease in Friday’s WASDE reports may be in the cards.

Wheat:

Wheat contracts price changes

Steamy weather and economic optimism from China also brought wheat futures along for the ride this morning. Gains were muted as traders await results from Russia’s wheat harvest. A falling dollar didn’t hurt either, as the ICE Dollar Index shed 0.59% to $97.301.

Cash offerings for soft red winter wheat were mostly unchanged across the Midwest on Thursday.  

Cash hard red winter wheat prices across the Plains dipped $0.05/bushel to $0.24 and $0.36 below September futures prices in Wichita and Newton, Kansas, respectively. Basis ticked upwards farther south in Oklahoma and at a Gulf rail loading facility in Texas as slow farmer sales moved cash markets higher to attract new crop.

wheat basis, daily change

Most dealers had rolled their cash contracts into the new September contract by last Thursday.

Protein premiums for hard red winter cash wheat delivered to or through Kansas City by rail were unchanged last Thursday, as shown below:

wheat protein content, basis range, change

Russian wheat prices edged lower this morning as its wheat harvest season began. Russian consultancy SovEcon downgraded its yield estimates on the crop by 66.1 million bushels to 3.04 billion bushels on concerns over reduced yields in the drought-stricken southern regions of Russia. USDA has held firm on their 3.03 billion bushel estimate for 2020 Russian wheat production.

Russia will also keep their export quota for at least the first half of the 2020/21 marketing year, which was first enacted in the early days of the COVID-19 pandemic to ensure domestic price stability. The Russian agriculture ministry expects to export 1.3 billion bushels of wheat in the new marketing year that began on July 1. Russia is the world’s largest wheat exporter.

Weather: Another week of warm temperatures and mostly clear skies can be expected across most of the Midwest, according to NOAA's short-range forecast. Precipitation systems developing over the Northern Rockies could push some precipitation into the Northern Plains and Upper Mississippi River Valley this week, with an inch of rain possible between South Dakota and Northern Wisconsin in the next 24 hours.

Financials: Coronavirus cases in the U.S. rose by 202,142 cases since last Thursday to 2,888,729 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 129,947 deaths as of press time following the holiday weekend.

A recent infrastructure spending bill passed in the U.S. House of Representatives last week will divert $1.5 trillion into road, bridge, and school construction and repair projects, with $500 billion earmarked for roadways, over the next 10 years. However, the investment is likely to fall short for rural highways, Farm Futures’ policy expert Jacqui Fatka writes. The Highway Trust Fund (HTF) would receive $70 billion in general funds in the new legislation, which would not prevent the HTF from falling into insolvency to the tune of $6 billion by 2022.

Lack of Senate support will likely halt the bill before it reaches the White House, much to the chagrin of trade groups. “Investing in infrastructure is one of the most effective ways to promote the long-term wellness of the U.S. economy, including agriculture,” Mike Steenhoek, executive director of the Soy Transportation Coalition, said. For more, check out Fatka’s latest DC Dialogue column.

We hope you and yours had a happy and healthy Independence Day weekend! We hope you had a chance to unwind and relax over the holiday weekend and enjoy a well-deserved break. If you are trying to catch up on last week’s market activity following a vacation weekend, check out our weekly grain market round up as well as seven ag stories that you may have missed last week to be prepped for another exciting week in the grain markets.

Last week’s price rallies should help to ease profit margin concerns for U.S. farmers over the 2020 growing season. But cost cutting opportunities are ever-present and you don’t have to make drastic changes on your operation to reduce expenses. Ag credit analyst and risk management consultant Ashley Arrington advises farmers that the best way to cut costs is to start by setting small goals. She breaks down helpful tips for setting up incremental progress in the latest Next Gen Farmer Insights column.

U.S. stocks rallied this morning on news of economic recovery in Chinese markets overnight. Chinese state media threw their support behind bull markets in local economies as the economic recovery following the onset of the pandemic. But analysts remain cautious of the latest economic propaganda from the Chinese government as a new surge in global coronavirus cases, particularly in the U.S., could threaten to unravel economic recovery. S&P 500 futures rose 34.6 points or 1.11% higher on the news to $3,163.5.

Energy stocks swelled on the growing optimism from China this morning. The global benchmark Brent crude oil futures were up $0.34/barrel at last glance to $43.14. Diesel futures rose $0.0161/gallon to $1.2472.

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