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Morning Market Review for Oct. 27, 2020

Wheat recovers on poor condition ratings. (Comments are updated by 7:30 a.m. Central Time.)

Rains in Brazil spell out losses for soybeans

  • Corn up 1-2 cents
  • Soybeans unchanged to down 1 cent, soyoil down $0.04/lb, soybean meal up $1.5/ton
  • Wheat up 1-4 cents

*Prices as of 6:55 am CDT.

Quote of the Day: A Minnesota corn grower about 60% complete with 2020 harvest will “have a hard time getting the rest out because of 8” of snow.”  Check out our latest responses from the Feedback from the Field 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

Corn prices inched up this morning as harvest progress fell slightly behind analyst expectations in yesterday’s weekly Crop Progress report. Wet weather forecasted in the Eastern Corn Belt also raised concern about potential delays in an area that already had a slow start to the growing season. December futures rose $0.0175/bushel to $4.195 on the news while March 2021 futures also added $0.0175/bushel to $4.2025.

A potential label change for gasoline with higher blends of ethanol is being considered by the U.S. Environmental Protection Agency (EPA). E15 gasolines could see new labels that reduce rhetoric concerning potential engine damage to older vehicles from E15 blends, as the EPA contemplates appeasing Trump voters in farm country in the week leading up to the 2020 presidential election.

Despite a week of soggy and cold weather across much of the Midwest and Northern Plains, corn harvest advanced 12% on the week to 72% complete as of October 25 according to yesterday’s weekly Crop Progress report from USDA. Analyst estimates placed harvest further along at 73% complete. Progress is 16% ahead of the five-year average for the same time period, easing concerns about long-term crop damage.

Attention in coming weeks will focus largely on progress in the Eastern Corn Belt, where a cool and wet spring delayed planting. Ohio (32%), and Pennsylvania (48%) are all slightly behind the five-year average of 52% complete for both states.

Northern U.S. states receiving substantial snowfall over the past week, including Minnesota (72%), North Dakota (73%), and South Dakota (79%) lost little ground despite last week’s snow and rain delays. But it likely matters little. Each state is 25% - 42% ahead of the five-year average. And with warmer weather expected by the end of the week, it seems likely corn harvest will continue at a rapid clip in the region.

Corn exports have soared in recent weeks on steady Chinese demand. But shrinking acreage, weather damage, international production struggles, and alleviating U.S freight costs have increased corn’s attractiveness on the world stage, Advance Trading’s Larry Shonkwiler writes. The perfect storm of factors could send 2020/21 U.S. corn exports towards 2.6 billion bushels, surpassing 2017/18’s total of 2.4 billion bushels as the largest on record, Shonkwiler forecasts in the latest Ag Marketing IQ column.

Farm Futures’ latest corn outlook is now live! Our latest analysis digs into some of the top factors moving corn markets currently, including export demand, fund interests, ethanol’s recovery, and harvest progress. Check it out for more insights about where the corn market is headed as harvest winds down.

Soybeans

Rains in Brazil alleviated investor concern about Brazil’s 2020 production volumes. Soybean futures were unchanged to lower on the news as the November contract fell $0.005/bushel to $10.8725. December soyoil futures followed $0.04/lb lower to $34.42. December soymeal futures rose $1.5/ton to $391.10.

Rainfall in Brazil has allowed planting progress to pick up momentum as much-needed precipitation replenishes soil moisture levels. For the week ending October 22, 13.8 million acres of soybeans were planted, or 23% of projected 2020/21 acreage.

Soybean harvest saw a slightly bigger delay from last week’s snow and rain storms across the Heartland. Progress only advanced 8% on the week to 83% complete as of Sunday. The five-year average of 73% complete closed in on the week’s progress. The progress surprised market analysts, who had pegged the weekly total at 86% complete.

But the largest stragglers are in areas that have less potential for snow accumulation this early in the year and are more susceptible to warmer autumn temperatures. Kansas (78%), Arkansas (62%), Kentucky (51%), Missouri (50%), and Tennessee (51%) all have plenty of time for dry weather to revive harvest paces this week.

As the Eastern Corn Belt dries out this week, expect harvest to move at a faster clip in next week’s report. Many top-growing soybean states, including Illinois (90%), Iowa (94%), North Dakota (97%), and South Dakota (95%), are approaching the end of soybean harvest season and other states will likely follow quickly behind.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

+$0.0425

$6.2425

Kansas City HRW – December Futures

+$0.01

$5.53

Minneapolis HRS – December Futures

+$0.0275

$5.6775

 

Futures prices in the wheat complex rose this morning as poor winter wheat conditions raised concerns about 2021 yields. Planting progress also slowed last week, adding another layer of concern to the wheat complex. A weaker dollar also supported the morning’s gains as the ICE Dollar Index fell $0.144 lower to $92.910.

Wheat planting progress inched up 8% from the previous week to 85% complete for the week ending October 25. Rains and snow in the Upper Midwest and Eastern Corn Belt last week slowed planting progress, bring the five-year average within 5% of the weekly completion rate.

Last week’s precipitation did little to adequately alleviate dry soil conditions impacting emergence rates. While 62% of the planted winter wheat crop was emerged as of Sunday – 11% more than the previous week – the five-year average of 60% closed in on the weekly completion rate as dry soils continue to take a toll on the young crop.

USDA’s first week of condition ratings for the winter wheat crop also indicated potential yield damage with the newly planted crop. As of October 25, 41% of winter wheat acreage was rated in good to excellent condition. During the same reporting week a year ago, 56% of the crop was rated good to excellent as dry weather continues to take its toll.

Weather

Snow and rain systems developing in the Southern Plains today and tomorrow could bring rain into the Eastern Corn Belt by Thursday afternoon, according to NOAA’s short-range forecasts. Areas of the Southern Plains could see one to three inches of precipitation accumulation today, which would be a welcome respite to the newly planted hard red winter wheat crop amid depleted soil moisture conditions.

Hurricane Zeta made landfall over Mexico’s Yucatan Peninsula last night and is expected to reach the Northern Gulf coast by tomorrow. As of this morning, the storm was 560 miles south of the Mississippi River and had clocked wind speeds of 70 mph. Storm surge warnings have been issued to areas of Louisiana surrounding the Mississippi River.

Financials

Coronavirus cases in the U.S. rose by 68,018 to 8,705,127 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 500 lives to 225,739 deaths as of press time as the virus continues to ravage rural America.

Farmers across the country often question how to turn over the reins to the younger generation. Water Street Solutions’ Darren Frye offers a few helpful tips in the latest Finance First column. Understanding how the new generation learns, providing varied resources and learning mediums to them, and making a sound transition plan are all positive ways to transfer operations to the next generation on the farm.

An interim report of trade progress on the Phase One trade deal was released on Friday by the Office of the U.S. Trade Representative (OTR) and USDA. The report estimates that 71% of outlined targets in Phase One have been reached as China has purchased over $23 billion in agricultural products since the calendar year began.

But the report is “wishful thinking” says Joe Glauber, USDA’s former chief economist. The report, which touts outstanding export sales, does not actually measure export shipments. The volume of bushels loaded out of U.S. ports is arguably more significant in impacting grain price movement than outstanding orders, which are subject to cancellations and/or postponements.

“Are these good, positive sales? Absolutely,” Glauber told Bloomberg. “These are really positive numbers but if you’re looking at this phase-one deal, I think we will fall short. But it will be a good year.”

U.S. stock futures rose this morning after yesterday’s slide on rising coronavirus cases in the U.S. and Europe. But investors aren’t inclined to believe the U.S. is out of the clear just yet.

“The key thing that we’re watching at the moment is going to be the Covid numbers. More importantly, how countries are responding to them,” Seema Shah, chief strategist at Principal Global Investors, told the Wall Street Journal this morning. “The way that governments have stopped reprioritizing opening and gone back to lockdowns: that’s what’s freaking out markets.”

Investors are anxiously awaiting new guidance from the U.S. and Europe about potential COVID-19 outbreak mitigation strategies. Additional restrictions have already been enacted in European countries including Spain, Italy, and Russia.

Expectations for strong third quarter earnings reports from tech companies lent strength to markets this morning. The S&P 500 Index rose 0.46% to $3,409.00 amid the contrasting sentiments.

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