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Morning Market Review for May 26, 2020

Soybeans rise on technical buying. (Comments are updated by 7:30 a.m. Central Time.)

Corn gains on renewed ethanol demand

  • Corn up 1-2 cents
  • Soybeans up 3-6 cents, soyoil up $0.34, soybean meal up $0.9
  • Wheat mixed
  • *Prices as of 6:50 am CDT.

Corn: July corn futures prices inched up $0.02/bushel to $3.20 this morning following an uptick in energy prices after the holiday weekend kicked off what is typically a driving-intensive summer season. The optimism for a return to “normal” driving activities carried gains in September futures as well, which rose $0.0175/bushel to $3.245 in early morning trading.

Cash corn prices were mostly steady ahead of Memorial Day weekend. Basis bids were mixed at both river terminals and ethanol plants on Friday as export demand adjusted and flooding continued on the Illinois River. Ethanol plants saw a third straight week of production rebounds, stimulating country corn demand.

Corn basis and change

All eyes will be on planting progress in North Dakota in today’s Crop Progress report. The Peace Garden State enjoyed several continuous of clear weather last week after spending most of the spring fighting off seasonal rain and snow showers while trying to complete the remaining 6% of corn acres to be harvested from the 2019 crop.

The first prevent plant dates for North Dakotan corn were yesterday. As of last Monday, the Roughrider State still needed to plant 2.65 million acres of corn to match their 3.2-million-acre planting estimate for the spring from USDA. Regardless of the outcome of today’s report, it is increasingly likely that USDA’s early season estimate on 97 million acres of corn could quickly drop closer to 95 million acres after a second consecutive tough spring in the Northern Plains.

Elsewhere in the Corn Belt, planting progress in today’s report will likely remain ahead of the five-year average pace. The Eastern Corn Belt may begin to deviate closer to the five-year average as they recovered from heavy rains over a week ago. About 80% of the corn crop was planted last week and if previous weeks’ progress is any indication, today’s national total may creep closer to the 100% mark.

Soybeans: The soy complex rose this morning on a round of bargain-buying after closing at a one-month low on Friday. Political tensions between China and the U.S. capped gains after the Politburo tightened its grip on Hong Kong in recent weeks. July soybean futures prices were up $0.0525/bushel to $8.385 this morning. July soyoil futures rose $0.34/lb to $26.98 and July soymeal futures prices added $0.9/ton to $285.

Friday’s mostly steady cash soybean bids across the Midwest was a likely precursor for weekend news. River terminals closed the week with the most action, with mixed spot basis bids on the Mississippi River at Savanna, Illinois and Davenport, Illinois. Flood conditions will likely persist on the Illinois River this week, well over a week after Central Illinois experienced up to eight inches of rain in areas.

Soybean Basis Change

Following a week of mostly clear weather across the Midwest, today’s soybean planting progress will likely continue upwards at a fast pace. As of May 17, 53% of the crop had been planted, ahead of the five-year average of 38%. Much of the Eastern Corn Belt, particularly Central Illinois, spent much of last week drying out after heavy rains, so those areas may deviate closer to the five-year average in today’s report. North Dakota remains woefully behind the five-year average pace as well, with only 9% of their soybeans planted as of May 17.

China continues enjoy cheap and plentiful South American soybeans this year. Chinese customs data show that April soybean imports from Brazil rose 2.6% from April 2019 to 218.2 million bushels. In fact, April soy shipments from Brazil nearly tripled March shipments after rain delays exacerbated Chinese soybean shortages.

China is expected to remain a steady buyer of South American soybeans through July, with monthly forecasts topping out at over 330.7 million bushels per month. Meanwhile, the U.S. soy complex has struggled to offer competitively priced soybeans to China. While April soybean shipments from the U.S. totaled 24.5 million bushels, Chinese demand for U.S. soybeans in April 2020 was down 62% from the previous year.

Wheat:

Wheat contracts price changes

The wheat complex was mixed this morning as a weaker dollar tried to offset favorable rains in key wheat-producing regions of Europe. Spring wheat planting progress concerns in North Dakota, Minnesota, and Montana weighed on Minneapolis futures prices this morning. The ICE Dollar Index weakened 0.72% in pre-market trading.

Cash offerings for soft and hard red winter wheat were mostly unchanged across the Midwest and Southern Plains on Friday afternoon.

Protein premiums for hard red winter cash wheat delivered to or through Kansas City by rail rose for wheat containing 11.0% to 11.4% protein on Friday afternoon on increased demand from flour millers, as shown below:

wheat protein content, basis range, change

Ukraine has maxed out its wheat export quota, according to agricultural consultancy APK-Inform. As of this morning, the Black Sea exporter had reached its 742.1-million-bushel limit but would likely continue to export wheat. The export quota was enacted at the onset of the coronavirus pandemic to ensure domestic food price stability and availability. But the government is confident in ending stocks being able to provide for local food processors for another six months after harvesting 1.07 billion bushels of wheat in 2019. Ukraine will begin its wheat harvest in July.

Spring week planting could see an improvement in planting pace in today’s report after North Dakota experienced a week of dry weather. Similar to corn and soybean planting progress, the Roughrider state had only planted 41% of their crop as of May 17, down significantly from the five-year average of 76%. As of the most recent Crop Progress report, 60% of the spring wheat crop had been planted, weighed down primarily by North Dakota and Minnesota’s progress.

Weather: It could shape up to be a wet weak across much of the Corn Belt. A rain system over the Plains today will settle over the Eastern Corn Belt for the remainder of the week. Rainfall along the Mississippi River Valley today is expected to range between a half inch and an inch, according to NOAA's 24-hour precipitation monitor.

Financials: Coronavirus cases in the U.S. as of this morning totaled 1,662,768 cases, according to the Johns Hopkins Coronavirus Resource Center. The death toll flirted with the 100,000-mark, rising to 98,223 deaths as of press time.

Positive developments in the race for a coronavirus vaccine spurred global stock gains this morning. Strength was also underpinned by reopening progress across the U.S. following the holiday weekend. Monthly consumer confidence data is expected to be released this morning, providing insights as to how U.S. households are perceiving the economic threat of COVID-19.

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