Morning Market Review for Nov. 24, 2020

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Profit-taking plagues grains in overnight trade. (Comments are updated by 7:30 a.m. Central Time.)

Corn and soybeans fall off yesterday’s highs

  • Corn down 3-6 cents
  • Soybeans down 10-14 cents, soyoil down $0.77/lb, soybean meal up $0.7/ton
  • Wheat down 1-3 cents

*Prices as of 6:55 am CDT.

Corn

After notching a 16-month high yesterday, December corn futures stumbled in the overnight markets as technical resistance levels triggered a round of profit-taking. Low trade volumes due to holiday vacations could exacerbate losses. December corn futures fell $0.0625/bushel to $4.2025. March 2021 corn futures also slipped $0.0625/bushel to $4.27.

With corn harvest largely complete across the U.S. Heartland, USDA has ceased officially reporting harvest progress in the weekly Crop Progress report. But attention remains focused on harvest progress in the Eastern Corn Belt.

Ohio and Pennsylvania struggled against cool and wet planting conditions during planting season, severe dryness during the summer, and rain delays throughout harvest. But several windows of dry weather in the past couple weeks allowed grain farmers to catch up to historical paces.

As of November 22, 87% of the corn crop in Ohio had been harvested, up 8% from the previous week. Yesterday’s total was only 2% lower than the five-year average. Four weeks ago, the gap was 29%. Rain is expected in Ohio tomorrow, which could cause further harvest delays. But for a brief moment, the corn growing season is finally on track in the Buckeye state for the first time in two years

Soybeans 

Despite persistent dry weather in South America, which will likely continue through the week, soybeans also fell victim to the latest round of profit-taking after recording four and a half year highs yesterday. It marked the first loss in eight trading sessions for January soybeans, which traded $0.12/bushel lower to $11.795. March soybeans shed $0.115/bushel to $11.81.

December soyoil futures fell $0.77/lb to $37.78 while December soymeal futures added $0.7/ton to $395.60.

Everyone makes mistakes in grain marketing, Advance Trading’s Fred Dietz points out. But there are valuable lessons to be gleaned from such experiences as farmers move forward with a new year’s marketing plan. Dietz observes that prices typically move much higher or much lower than producers expect and recommends that farmers stay consistent in managing price floor protection levels in a disciplined manner in the latest Ag Marketing IQ column.                 

 Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

-$0.02

$5.9675

Kansas City HRW – December Futures

-$0.0125

$5.50

Minneapolis HRS – December Futures

-$0.015

$5.41

 

Wheat futures followed corn and soybean prices lower this morning, but losses were capped by dry growing conditions in the U.S. Plains and across the globe. Warm autumn weather in the U.S. and Russia has helped to prevent further yield damage to the global winter wheat crop. The ICE Dollar Index weakened 0.10% to $92.405.

Ukraine finds itself in another tight export situation again this year, only this time it’s happening about six months earlier than in the 2019/20 marketing year. Thus far in the 2020/21 marketing year, Ukraine has already exported 427.3 million bushels or 66.5% of its wheat supplies earmarked for international channels so far this year.

Ukraine’s 2020/21 wheat export quota stands at 643.0 million bushels. Despite running over the quota last year, the country still shipped out 753.2 million bushels last year. But a smaller crop this year due to drought conditions could mean that the country’s wheat quota will be more strictly enforced this year.

Next year doesn’t bode much better for the Ukrainian wheat crop as conditions currently stand. As winter wheat planting comes to a close in the region, the Ukrainian economy ministry reports that acreage will see a 9% drop in 2020/21. Dry conditions led to planting delays, which shrunk the crop to 15.1 million acres, down 1.5 million acres from 2019/20.

Only 10% to 15% of Ukraine’s arable acreage was fertile enough to plant winter wheat crops in September. Forecasters noted planting conditions were most unfavorable in the past 10 years. The Black Sea country provided 16% of global grain exports to the world market in 2019/20.

As the last of the winter wheat crop continued to emerge last week, crop conditions faded amid dry growing conditions across the U.S. About 89% of the planted winter wheat crop had emerged as of November 22. It marked a 4% increase from the previous reporting period and remained 1% above the five-year average.

But strong emergence rates may not be telling the whole story of the developing winter wheat crop. Good to excellent ratings for the winter wheat crop fell 3% to 43% for the week ending November 22, surprising analysts who predicted a 1% increase in weekly ratings. Spotty showers across the Southern Plains were likely not enough to reduce potential yield damage to the young winter wheat crop.

With 64.63% of the U.S. in some sort of dry or drought condition and much of those conditions focused on top wheat growing regions, winter wheat conditions could continue to suffer in the coming weeks without any substantial precipitation.

Weather

Showers will cover the Central Plains and Upper Midwest today, according to NOAA’s short-range forecasts. Snow is likely in Wisconsin and Michigan, as well as parts of the Plains along the Central Rockies. The Central Plains and Central Mississippi River Valley will likely see over an inch of precipitation accumulation in the next 24 hours as the system rolls through the region.

The precipitation will shift into the Eastern Corn Belt tomorrow, which could lead to another round of harvest delays just as harvest progress catches up with historical averages. But the clear skies should emerge across the entire Heartland by Thanksgiving Day.

Financials

Coronavirus cases in the U.S. rose by 172,467 to 12,421,995 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 909 lives to 257,707 deaths as of press time.

It’s Thanksgiving week! And that makes it a perfect time to reflect on the joys of working in agriculture. Water Street Solutions’ Darren Frye points out that challenges should not be diminished in this process, but that awareness of these issues can help farmers to focus on big picture goals. It is also an opportunity to examine your leadership skills, Frye advises in the latest Finance First column.

U.S. stock markets rose overnight as the Trump Administration agreed to cooperate with President-elect Joe Biden’s transition team. Investors breathed a sigh of relief as this chapter of political uncertainty came to a close, sending S&P 500 futures rising 0.70% to $3,601.00 in overnight trading.

Wall Street also celebrated Biden’s selection for Treasury secretary – former Federal Reserve Chair Janet Yellen. The market is hopeful Yellen will work to minimize the damage already inflicted upon the economy during the pandemic.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish