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Morning Market Review for Oct. 19, 2020

Wheat flirts with six-year highs on dry weather. (Comments are updated by 7:30 a.m. Central Time.)

Corn surpasses $4/bushel benchmark on weather delays

  • Corn up 2-4 cents
  • Soybeans up 7-8 cents, soyoil down $0.28/lb, soybean meal up $27.1/ton
  • Wheat up 8-10 cents

*Prices as of 6:50 am CDT.

Quote of the Day: “First time in 41 years I had to combine my corn cross ways because it was tangled so bad in one field,” an Iowa farmer observed of corn harvesting conditions amid derecho wind damage. Check out our latest responses from the Feedback from the Field and Between the Fencerows series to see how your farm stacks up against other growers’ harvest progress across the country.

How is harvest going on your farm? Click here to share your crop updates via a short survey. Results are updated daily in our interactive map so you can stay in the loop on harvest development across the country.

Corn

December corn futures rose $0.04/bushel to $4.06 this morning on rain and snow delays amid harvest season as well as strong export prospects. March 2021 corn futures rose $0.0325/bushel to $4.1025.

Quick harvest paces last week came screeching to a halt in northern U.S. states over the weekend as a rain-snow mix blanketed areas of Minnesota and Wisconsin still in the early phases of corn harvest. Today’s Crop Progress report will more closely reflect the dry harvest conditions in the Midwest and Plains earlier last week before the early winter storms settled in over the weekend.

With 94% of the crop matured as of last week, the window for harvesting before more winter weather sets in and starts to erode yields. As of October 11, the U.S. corn harvest was 41% complete. As of last Sunday, harvest was 11% ahead of the five-year average.

Paces in today’s report will likely continue to pull away from the five-year average, though corn conditions could erode due to the weekend’s snow in the north. The crop was rated as 61% good to excellent in last week’s report, a 1% decrease from the previous week.

Speculators flocked to corn futures en masse in Friday’s weekly Commitment of Traders report from the CFTC after USDA narrowed new crop ending stocks on reduced harvested acreage. For the reporting week of October 7 – 13, speculators added 19,389 long positions to their net buying position. The reporting week, which encompassed the October 9 WASDE report, found money managers swelling their net buying position to 179,869 contracts, their widest long position since May 2018.

Similarly, producers added 41,191 short positions to their portfolios as December futures rose $0.0675/bushel during the reporting period. Growers continued booking sales, though at a slightly lower rate than during the previous week’s rally. Commodity funds’ net selling position grew to 388,968 futures and options contracts on the week, the fourth highest net short level on record for the time of year.

Soybeans

Strong economic recovery in China lent price support to soybeans this morning. Dry planting conditions persist in Brazil. Recent showers have done little to replenish soil moisture levels in the South American country and further crop reductions will increase international dependence on tightening U.S. soybean stocks. November soybean futures rose $0.0675/bushel to $10.5675 on the sentiment. December soymeal futures followed suit, rising $7.1/ton to $374.60. December soyoil futures shed $0.28/lb to $32.71.

With only a few weeks of soybean harvest left in the books for 2020, today’s Crop Progress report will likely show a rapid continuation of combining paces on clear weather last week. The weekend’s winter precipitation system will likely have less impact on harvesting paces in the Northern Plains where soybean harvest is further ahead of corn harvest.

As of a week ago, 93% of U.S. soybean plants were dropping leaves. Soybean harvest will likely continue to pull away from the five-year average thanks to clear skies for the majority of last week. As of October 11, 61% of the U.S. soy crop was harvested, 19% higher than the five-year average.

The weekend’s snow will likely have a negative effect on quality ratings for the soybean crop, but probably not as severe as corn. Soybean ratings stood at 63% good to excellent in last week’s Crop Progress report, down 1% from the week prior.

China’s pork industry continues to rapidly recover following shortages due to the African swine fever (ASF) outbreak that has plagued the nation’s hog herd for the past two years. Chinese pork production grew 18% in the third quarter from a year ago, but growing demand for animal protein among Chinese consumers has still left pork stocks at tight levels. Year-to-date Chinese pork production remains 10.8% lower than a year ago, but higher than an anticipated 20% decline expected at the beginning of 2020.

Speculators’ interest in soybeans backed off a peak for the week ending October 13 despite recent rallies. November futures gave up $0.3150/bushel the day before the last day of the reporting period, driving money managers to trim 7,781 long contracts on the week. The funds shrunk their net buying position from their seasonal record long highs to 226,444 contracts. 

Meanwhile, producers also curbed their record volume of sales for the week after rain were forecast in Brazil, restoring prospects for a large crop next February. Commodity funds added 28,870 long positions to their net selling position, shrinking their net short to 365,579 futures and options contracts. Despite the slight retraction on the week, producers remain net short on soybeans at the second-highest level, behind only last week’s all-time record high selling volume.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

+$0.0975

$6.35

Kansas City HRW – December Futures

+$0.09

$5.6775

Minneapolis HRS – December Futures

+$0.09

$5.6875

 

Wheat futures rallied this morning as dry weather across the globe reduced yield prospects in key wheat-growing regions. Rains in Russia over the weekend helped growing conditions but were likely not enough to significantly improve yield prospects at this time. Chicago wheat futures flirted with six-year highs as the ICE Dollar Index fell 0.47% to $93.240.

Dry weather continues to plague planting conditions in the Southern Plains and Midwest. But the depleted soil moisture levels have been a minimal barrier to planting progress. In last week’s Crop Progress report, 68% of the nation’s winter wheat crop was planted, 7% ahead of the five-year average. Clear skies over the last week will likely continue to advance sowing progress in today’s weekly report.

Emergence rates are likely to be a more direct indicator of the impact dry soils are having on planting progress. As of October 11, 41% of the planted winter wheat crop was emerged, 6% higher than the five-year average. Today’s report will provide more clues about the state of winter wheat amid the nation’s increasing drought conditions.

Persistent dry conditions in key major wheat growing areas left speculators more bearish on Chicago soft red winter wheat futures and options for the week ending October 13. For the reporting week, money managers added 4,642 long contracts to widen their net buying position to 38,590 positions.

The managed money funds echoed similar sentiments with Kansas City hard red winter wheat, adding 3,240 long positions to grow the funds’ net long to 32,192 contracts, as well as Minneapolis wheat. Speculators added 1,863 long positions on the week, shrinking the funds’ net selling position on spring wheat to 1,774 contracts – the tightest short position by hedge fund managers since late March 2019.

Producers strengthened their net selling position on all varieties of wheat in last week’s report as rising cash prices on dry global weather conditions offered wheat growers their most profitable prices in five years.

Weather

Fall and winter weather has finally arrived. Snow today in the Northern Plains and rain in the Eastern Corn Belt will halt harvest and winter wheat planting progress in both regions, according to NOAA’s short-range forecasts. Showers in the Eastern Corn Belt could top an inch today, abating slightly tomorrow but continuing on Friday as the snow system over the Plains today shifts into the Upper Mississippi River Valley.

Financials

Coronavirus cases in the U.S. rose to 8,155,894 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 219,676 deaths as of press time.

Happy Monday! Catch up on last week’s top market news before markets open back up this week to stay ahead on the most relevant topics in ag marketing right now. Also, check out these 7 stories you may have missed amid top headlines last week. And finally, as early voting rolls out across the country, here’s  how President Donald Trump and challenger Joe Biden differ on key topics relating to ag.

China reported a 4.9% increase in GDP in the third quarter of 2020, missing analyst expectations but reclaiming all the losses incurred during the pandemic. U.S. stock futures steadily rose on the news, with the S&P 500 futures index up 0.81% this morning to $3,490.25. Renewed investor optimism for a potential U.S. stimulus bill also buoyed traders’ sentiments in overnight trade.

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