Morning Market Review for Nov. 30, 2020

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Corn rises on export optimism. (Comments are updated by 7:30 a.m. Central Time.)

Rains in South America and a higher Russian export quota mute gains for soy, wheat

  • Corn up 1-2 cents
  • Soybeans down 6-8 cents, soyoil down $0.44/lb, soymeal down $0.4/ton
  • Wheat down 2-5 cents

*Prices as of 6:45am CST.

Corn

March corn futures flirted with a 16-month high this morning as the contract delivery period looms for December futures. Favorable export reports expected today buoyed corn prices as December futures rose $0.0275/bushel to $4.2825. March futures added $0.0175/bushel to $4.355.

Cash corn prices were largely unchanged on Friday as a short trading day on the Chicago Board of Trade limited price action. Basis widened on the Illinois River and a Council Bluffs, Iowa ethanol plant as several locations began rolling over cash bids to the March 2021 futures contract. Cash sales were light following the holiday, keeping a floor under strong basis offerings.

Location

11/25/2020 Basis (in cents/bushel)

11/27/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-8

-9

-1

   Burns Harbor IN

5

5

0

   Lincoln NE

-20

-20

0

   Chicago IL

-30

-30

0

   Council Bluffs IA (elevator)

-8

-8

0

Processors

     

   Chicago IL

13

13

0

   Decatur IL

24

24

0

   Cedar Rapids IA

10

10

0

   Blair NE

0

0

0

River Terminals

     

   Toledo OH

0*

0*

0

   Seneca IL

-5

-3

2

   Savanna IL

-10

-10

0

   Davenport IA

-10

-10

0

   Morris IL

-5

-3

2

Rail

     

   Columbus OH

26

26

0

   Evansville IN

28

28

0

   Hereford TX

110

110

0

   Fort Worth TX

110

110

0

Ethanol Plants

     

   Linden IN

0

0

0

   Union City IN

5*

5*

0

   Annawan IL

10

10

0

   Council Bluffs IA

3

5

2

December futures price as base.

     

*March futures price as base.

 

 

 

Source: Refinitiv

     

 

After showers early last week, corn harvest activity in Ohio could see more delays in today’s Crop Progress report. Skies cleared by this past weekend, allowing farmers to jump back into combines to finish up the 2020 crop.

Harvest progress in Ohio could retreat from the five-year average today, though a dry weather outlook for the week would likely limit the length of any extreme harvest delays. As of November 22, 87% of the corn crop in Ohio had been harvested, up 8% from the previous week. Last week’s total from USDA was only 2% lower than the five-year average. Five weeks ago, the gap was 29%.

Soybeans

Rains in Brazil and Argentina dampened U.S. soybean futures this morning. Markets are also skeptical of easing Chinese demand for U.S. soybeans, especially at current price levels. Large export sales to China this week would help curb this morning’s lower prices in the soy complex, though gains are likely to be limited as high futures prices limit demand from smaller Chinese soy processors.

January soybean futures tumbled $0.0725/bushel to $11.845. March futures traded $0.085/bushel lower to $11.8425. December soymeal fell $0.40/ton to $398.10 while December soyoil futures edged $0.44/lb lower to $38.26.

Soybean basis was largely unchanged across the Midwest on Friday as cash sales slowed despite higher futures prices following the holiday. Cash prices tumbled at a Cedar Rapids, Iowa crush facility on Friday.

Location

11/25/2020 Basis (in cents/bushel)

11/27/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-16

-21

-5

   Chicago IL

-10

-10

0

   Burns Harbor IN

-10

-10

0

Processors

     

   Decatur IL

5

5

0

   Decatur IN

5

5

0

   Morristown IN

5

5

0

   Lafayette IN

5

5

0

   Sioux City IA

-40

-40

0

   Des Moines IA

-25

-25

0

   Cedar Rapids IA

-30

-50

-20

   Council Bluffs IA

-23

-23

0

   Lincoln NE

-15

-15

0

River Terminals

     

   Toledo OH

0

0

0

   Seneca IL

-16

-16

0

   Savanna IL

-20

-20

0

   Davenport IA

-23

-23

0

   Morris IL

-16

-16

0

Source: Refinitiv

     

January 2021 futures price as base.

 

The CFTC will release Commitment of Trader data today, a day delayed due to last week’s Thanksgiving holiday. Despite soybean futures prices flirting with four and a half year highs during the reporting period, the speculators will likely remain hesitant to continue their buying streak as new Chinese export demand evaporates.

But expect producer sales to remain at some of their strongest levels in recent history for the time of year as the lucrative prices convince farmers to make profitable sales. These trends are largely expected to prevail across all major grain and oilseed commodity types when CFTC releases the weekly report today at 2:30 pm CST.

A vessel carrying 1.1 million bushels of U.S. soybeans will reach the Southern Brazil port of Paranaguá on Friday, according to local port authorities. It will be the first time in 10 years the port has received an international load of soybeans. Rising livestock feed prices and increasing concern over domestic food price stability led the world’s largest soybean producer to import U.S. soybeans after overselling its 2019/20 crop to China.                 

 Wheat

 

Contract

Price Change*

Price*

Chicago SRW – December Futures

-$0.025

$5.94

Kansas City HRW – December Futures

-$0.065

$5.55

Minneapolis HRS – December Futures

-$0.0375

$5.47

 

News of a potentially higher Russian export quota for the second half of its 2020/21 marketing year spooked potential demand interest in U.S. wheat supplies this morning. Some profit-taking was also at play in the wheat complex after the holiday weekend. The ICE Dollar Index continued lower this morning, down $0.196 to $91.605.

Cash prices for soft red winter wheat across the Midwest were largely unchanged on Friday. Some locations began rolling over their bids to the March contract, though most will complete rolling their bids until this week.

Easing hard red winter wheat export demand at the U.S. Gulf sent a Texas rail facility that feeds into export terminals at the Gulf $0.09/bushel lower to $1.46 over December Kansas City HRW futures. Basis was largely unchanged elsewhere in the Southern Plains.

Protein premiums for hard red winter wheat delivered by rail to Kansas City rose for mid-levels of protein and fell slightly for higher protein contents on Friday, as shown below.

HRW Wheat Protein Content   

Basis Range**

Change

Ordinary      

+82/+92

 

11.00%

+99/+109

 

11.20%

+102/+112

 

11.40%

+137/+147

 

11.60%

+137/+147

 

11.80%

+137/+147

 

12.00%

+137/+147

 

12.20%

+137/+147

 

12.40%

+137/+147

 

12.60%

+138/+148

+1

12.80%

+138/+148

+1

13.00%

+135/+145

-2

13.20%

+135/+145

-2

13.40%

+135/+145

-2

13.60%

+135/+145

-2

13.80%

+135/+145

-2

14.00%

+135/+145

-2

**Premium in cents/bu. over December futures

Source: Refinitiv

 

Rainfall in the Southern Plains over the weekend could provide a much-needed boost to declining winter wheat conditions. Drought continues to plague most of the U.S. to the west of the Mississippi River, with the latest drought monitor from the University of Nebraska showing 67.41% of the country in some sort of dry or drought condition.

113020DroughtMonitor.jpg

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.

Russia’s looming grain export quota, totaling 15 million metric tonnes and set to go into effect between February and June 2021, will likely open doors to residual suppliers of global wheat, namely the U.S. Reuters reports overnight hint that Russia could increase its quota to as much as 17.5 million metric tonnes.

The move favors larger traders over smaller trading companies in the world’s largest exporter of wheat. As a result, Russia is likely to lose smaller buyers such as Mongolia. As the dollar continues to fall, the U.S. could be poised to capture these customers, as long as loading capacities at U.S. export terminals are able to support rising international demand.

China issued 24.8 million bushels of wheat to national buyers in an overnight state wheat auction which occurs weekly. Chinese livestock feeders continue to turn to wheat as a source of feedstocks as rising corn and soybean prices erode into feeder margins and send crush profitability estimates into the red.

High-priced U.S. grain futures have sent Chinese buyers looking to the European Union for a cheaper source of grains for feed in the meantime. The shifting dynamic does not bode well for European livestock feeders as they compete with Chinese buyers for dwindling feedstocks amid a lackluster 2020 crop and rising global commodity prices.

Weather

A rain-snow mix will continue to batter the Eastern Corn Belt today, moving out of the region by Wednesday evening, according to NOAA’s short-range forecasts. Over an inch of precipitation accumulation is expected in the region over the next 24 hours.

Financials

Coronavirus cases in the U.S. rose by a staggering 500,053 since Friday morning to 13,386,255 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. Testing slowed over the Thanksgiving holiday weekend, so expect to see dramatic rises in caseloads over the next few days, especially in the wake of holiday gatherings. The death toll increased by 6,911 lives over the weekend to 266,887 deaths as of press time.  

Happy Monday! As we all emerge from Thanksgiving feast-induced comas, here are 7 stories you may have missed last week in preparation for holiday festivities. Of interest included articles about potential Secretary of Agriculture candidates under a Biden administration, widespread global outbreaks of African swine fever, and a report finding 1% of farms operating 70% of the world’s arable land may be driving land inequality 41% higher than previously believed.

Our Feedback from the Field series has come to a successful close as harvest and winter wheat planting activity wraps up for the 2020 season. Between the Fencerows columnist Kyle Stackhouse reflects on a wide range of yield results from his Indiana farm. Stackhouse reports irrigated corn fields with the top yields on his farm, though dryland corn and soybeans were below trendline averages and will likely trigger small insurance payments.

U.S. stocks inched lower this morning despite overnight news from pharmaceutical company Moderna that it would be applying to the FDA for approval for its COVID-19 vaccine. If approved, it would be the second vaccine available to the U.S. public potentially by the end of the year. Overwhelmingly larger increases in COVID-19 cases around the country weighed heavily on the markets this morning, despite the news of another potential vaccine option.

News of a potential merger between two of the market’s largest sources of market data, S&P Global and IHS Markit, sent S&P 500 futures lower this morning. S&P 500 futures traded 0.22% lower to $3,628.50 on rising case concerns.

Oil futures fell ahead of production meetings today and tomorrow between countries in the OPEC bloc. OPEC allies have failed to agree on January production in the leadup to this week’s meetings, causing concern of overproduction to weight on prices. West Texas Intermediate crude prices tumbled $0.42/barrel lower to $45.11 in overnight trading. Diesel futures took a $0.0196/gallon hit to $1.3609.

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