News of new covid variant spooks stocks and energy markets – will grain prices suffer the next blow?
- Corn: Steady
- Soybeans: Steady
- Wheat: Steady
*Prices as of 6:50am CST.
**Markets closed overnight
Grain markets could enjoy a quiet session on Friday. After all, markets were closed on Thursday for Thanksgiving and only reopen for a few short hours today. However, overnight news rocked the stock markets and will likely negatively affect grain prices later today. Brace for impact as investors and traders absorb headlines about a newly discovered, highly mutative variant of Covid-19. Countries are already taking protective measures against it, including some early instances of travel restrictions.
Overseas stock markets faced a big drop on this news. Most Asian markets closed with losses of around 2.5%, and European markets were down as much as 3.5% in midday trading. On Wall St., Dow futures tumbled 761 points lower ahead of Friday’s opening bell to 34,988. Energy prices also saw substantive cuts overnight. Crude oil crumbled 6.6% lower to fall below $74 per barrel. Diesel and gasoline also dropped more than 6%. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA show a bit of scattered rains and snows possible for some parts of the upper Midwest and Great Lakes region between today and Monday, but very few places could expect to see much more than 0.1”. Official 6-to-10-day forecasts still predict widespread seasonally dry, warm weather for the Midwest and Plains between December 1 and December 5.
On Wednesday, commodity funds were net sellers of most major grain contracts, including corn (-1,000), soybeans (-4,000), soymeal (-4,000) and CBOT wheat (-11,500) but were net buyers of soyoil (+4,000).
Corn prices have seen some forward momentum in recent sessions, but the broad selloff in stocks and energy futures on Friday could throw a monkey wrench into grain markets today. A new round of export sales data is coming from USDA later this morning, but expect that to be largely ignored as traders fight off a tidal wave of bearish sentiment from outside markets. It’s a shame, as prices have been edging back towards the $6 benchmark, which hasn’t been seen since early July.
On Wednesday, corn basis bids tracked 2 to 5 cents higher at two Midwestern ethanol plants and firmed 4 cents at an Ohio elevator while holding steady elsewhere across the central U.S.
Ahead of this morning’s export report from USDA, analysts expect the agency to show corn sales ranging between 31.5 million and 61.0 million bushels for the week ending November 18.
Brazil’s Agroconsult is predicting the country’s 2021/22 corn production will reach 4.882 billion bushels, which would be a substantial rebound (more than 44%) from last season’s drought-addled crop. Brazilian corn plantings are expected to tilt 5.6% higher this season.
The European Commission slightly raised its forecast for 2021/22 EU corn production to 2.693 billion bushels. The group left EU corn imports unchanged from a month ago, with estimates holding steady at 570.8 million bushels.
In France, 97% of the 2021 corn crop has now been harvested through November 22, up from 91% a week earlier, per the country’s FranceAgriMer farm office.
South Africa’s Crop Estimates Committee reported that the country’s 2020/21 corn production is expected to improve 6.1% over last year’s output, with an estimated 639.1 million bushels. Roughly 53% of the crop is white corn for human consumption, while the remainder is yellow corn grown for animal feed.
The preliminary report from the CBOT showed daily futures volume moderately increased to 601,436, but open interest fell by 31,781. Options volume nearly doubled to 120,577 and more heavily favors calls (79,30) over puts (41,237). Implied volatility for near-the-money December contracts held steady at 19.6%, and expires today.
Soybean prices will likely share the same fate as corn Friday – moderate inroads that have been made in recent sessions are now in jeopardy by what is likely to be a widespread commodity selloff later today. For now, prices have remained relatively strong at above $12.50 per bushel but would need ample, sustained bullish news to get anywhere remotely close to 2021’s highs, which were captured back in early May.
Soybean basis bids firmed 4 cents at an Ohio elevator and an Illinois river terminal while holding steady elsewhere across the Midwest on Wednesday.
Ahead of the next USDA export report, out later this morning, analysts expect the agency to show soybean sales ranging between 33.1 million and 68.0 million bushels for the week ending November 18. Analysts also think USDA will report soymeal sales ranging between 100,000 and 370,000 metric tons, plus another 5,000 to 70,000 MT of soyoil sales.
Brazil’s Agroconsult is now predicting the country’s 2021/22 soybean production will reach 5.302 billion bushels – easily a record-breaking effort, if realized. Brazilian soybean acres are expected to climb another 4.2% higher this season.
In Argentina, the Buenos Aires Grains Exchange reports that soybean plantings for the 2021/22 season have reached 39%, with an initial production estimate of 1.617 billion bushels. Recent rains in key production regions “have been good for corn and soy planting,” according to a meteorologist at the Applied Climatology consultancy.
Egypt purchased 30,000 metric tons of soyoil in an international tender that closed on Thursday, which is for arrival during the second half of January.
The preliminary report from CBOT showed daily futures volume moved slightly higher to 126,916 while open interest was also down another 3,651. Options volume was for 37,831 and still favors puts (21,286) over calls (16,545). Implied volatility in near-the-money January contracts fell to 16.8% with another 27 days until expiration.
Wheat prices continue to show plenty of strong demand fundamentals, but today’s outside market news may incite a round of technical selling and profit-taking. Ahead of Friday’s open, winter and spring wheat prices hovered at or near multiyear highs on tightening global stocks, along with production challenges in the United States and abroad.
Ahead of this morning’s weekly export report from USDA, analysts expect the agency to show wheat sales ranging between 9.2 million and 21.3 million bushels for the week ending November 18.
The European Commission raised its common wheat export estimates for the 2021/22 season by 6.7% to 1.260 billion bushels, citing “the dynamics of the soft wheat market” since the beginning of this marketing year. Estimates for 2021/22 EU wheat ending stocks, in turn, fell 8.6% from October to 466.6 million bushels.
The Buenos Aires Grains Exchange reported yesterday that Argentina’s 2021/22 wheat crop could reach a record production of 745.9 million bushels. Harvest is already underway and progressing faster than usual, with 33% complete so far.
Turkey has made provisional purchases of around 14.1 million bushels of milling wheat in an international tender that closed on Thursday. The grain is for shipment between January 10 and January 31.
The preliminary report from CBOT showed daily SRW volume firming to 159,932, with open interest dropping by 2,495. Options volume firmed to 43,506 and still moderately favors calls (28,444) over puts (15,062). Implied volatility for December near-the-money options fell to 23.3% and expires today.
Volume in HRW wheat improved to 75,949, with open interest trending 338 higher. Options volume is at 10,424 and still heavily favors calls (8,226) over puts (2,198).
Get our top content delivered right to your inbox. Subscribe to our morning and afternoon newsletters!