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Morning Market Review for Oct. 28, 2020

Wheat leads overnight grains selloff on rising rainfall. (Comments are updated by 7:30 a.m. Central Time.)

Corn falls on profit-taking; Beans tumble on Brazilian rains

  • Corn down 6-9 cents
  • Soybeans down 10-17 cents, soyoil down $0.68/lb, soybean meal down $7.4/ton
  • Wheat down 6-12 cents

*Prices as of 6:50 am CDT.

Quote of the Day: “Harvest will be at a standstill for quite a while for those still needed to harvest soybeans,” in Ohio, according to a local Farm Futures reader. “The fields are even getting too wet for picking corn!” 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

December corn futures fell $0.0875/bushel to $4.0725 this morning as traders took profits from yesterday’s 14-month highs. Traders were also concerned about slow export demand from China in recent days. March 2021 futures shed $0.0775/bushel to $4.0875 on the overarching sentiments.

Cash corn prices trended higher at rail locations, processors, and elevators yesterday as end users raised prices to compete against export demand. Cash offerings for ethanol plants ended yesterday mixed. Cash sales were steady, though farmers did not sell as high of volumes as that of soybeans.

Location

10/26/2020 Basis (in cents/bushel)

10/27/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

12

14

2

   Burns Harbor IN

0

0

0

   Lincoln NE

-25

-25

0

   Chicago IL

-40

-40

0

   Council Bluffs IA

-15

-15

0

Processors

     

   Chicago IL

22

22

0

   Decatur IL

20

20

0

   Cedar Rapids IA

0

0

0

   Blair NE

-11

-11

0

River Terminals

     

   Toledo OH

-5

-5

0

   Seneca IL

0

5

5

   Savanna IL

-8

-8

0

   Davenport IA

-6

-4

2

   Morris IL

-25

-20

5

Rail

     

   Columbus OH

10

24

14

   Evansville IN

8

26

18

   Hereford TX

100

100

0

   Fort Worth TX

100

100

0

Ethanol Plants

     

   Linden IN

-30

-30

0

   Union City IN

7

0

-7

   Annawan IL

4

4

0

   Council Bluffs IA

-18

-15

3

December futures price as base.

     

Source: Refinitiv

     

 

Ethanol data expected today from the U.S. Energy Information Administration (EIA) will seek to recover last week’s losses after fuel demand dipped to its lowest point over four months. Last week’s Petroleum Inventory Status report from EIA found American consumers demanded 3.3% less gasoline during the week ending October 16, which sent weekly ethanol production down 1 million gallons/day to 38.3 million gallons/day.

In the pandemic era, ethanol production continues to track about 10%-17% lower than early January 2020 output rates. With a large part of the U.S. and global workforce now based remotely and a resurgence of coronavirus restrictions, the production cuts could continue as fuel demand shoulders the burden of reduced travel.

Brazilian corn prices broke 2007 highs yesterday as dry planting conditions reduced 2020 production outlooks for the South American grains powerhouse. Corn prices topped $14.49 per sack and have risen 28.05% higher during October on increased concerns about this summer’s production prospects. Brazil is the second largest corn exporter in the world and expected to ship nearly 800 million fewer bushels into international export channels in 2020/21 than the U.S.

Soybeans

Rains helped depleted soil moisture levels in Brazil recover amid planting season earlier this week. Demand concerns from China also led November soybean futures $0.15/bushel lower to $10.6725 this morning. December soyoil futures shed $0.68/lb to $33.43 while December soymeal futures were on track to post a $7.4/ton loss to $376.60.

Soybean basis trended higher at elevators and crush plants across the Midwest yesterday. Dwindling stockpiles at crush plants drove processors to offer more competitive rates to sustain crush volumes. Export demand at the U.S. Gulf remained strong, underpinning price strength for other end users.

Farmers continued booking steady sales yesterday as November futures prices inched closer to the $11/bushel benchmark. Farmers had more incentive to sell soybeans straight off the combine than divert bushels into storage.

Location

10/26/2020 Basis (in cents/bushel)

10/27/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

18

19

1

   Chicago IL

-5

-5

0

   Burns Harbor IN

-15

-15

0

Processors

     

   Decatur IL

15*

20*

5

   Decatur IN

-5*

0*

5

   Morristown IN

5*

10*

5

   Lafayette IN

5

5

0

   Sioux City IA

-35*

-35*

-

   Des Moines IA

-23*

-23*

-

   Cedar Rapids IA

-15*

-11*

4

   Council Bluffs IA

-42*

-42*

-

   Lincoln NE

-25*

-25*

-

River Terminals

     

   Toledo OH

-5

-1

4

   Seneca IL

-25

-25

0

   Savanna IL

-14

-14

0

   Davenport IA

-8

-6

2

   Morris IL

-25

-25

0

Source: Refinitiv

     

November futures price as base.

     

*January futures price as base.

 

 

 

 

Soybean prices hit four-year highs over the past week, Farm Futures contributing analyst Bryce Knorr points out. Chinese demand has largely fueled the recent run-up in prices. But dry planting conditions in Brazil and economic turmoil in Argentina are also contributing to higher soybean prices.

Cash basis averaged its highest level in October since 2013 and crush margins are at a two-year high. It’s a great time to book profitable sales, Knorr suggests in the latest Ag Marketing IQ column, where he outlines several marketing strategies for the high prices.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

-$0.0925

$6.0625

Kansas City HRW – December Futures

-$0.115

$5.3775

Minneapolis HRS – December Futures

-$0.0625

$5.5525

 

Wheat futures tumbled as rains in the Southern Plains recharged dry soils, offering a renewed outlook for winter wheat conditions recently planted in the region. Rains in the Black Sea region also improved yield prospects in Russia and Ukraine, further contributing to this morning’s selloff. A stronger dollar amid rising uncertainties surrounding the pandemic was the final nail in the coffin for recent wheat rallies as the ICE Dollar Index rose $0.578 to $93.505.

Cash prices for soft and hard red winter wheat in the Midwest and Southern Plains yesterday. Farmer sales were scarce as futures prices eased. Most growers booked 2020/21 sales during the last month’s rallies. However, many remain hesitant to book sales on the 2021/22 crop especially amid depleted soil moisture conditions in the Southern Plains.

Protein premiums for hard red winter wheat delivered by rail to Kansas City have remained unchanged for several trading sessions, as noted below.

HRW Wheat Protein Content   

Basis Range**

Change

Ordinary      

+85/+95

 

11.00%

+105/+115

 

11.20%

+110/+120

 

11.40%

+110/+120

 

11.60%

+110/+120

 

11.80%

+122/+132

 

12.00%

+125/+135

 

12.20%

+130/+140

 

12.40%

+130/+140

 

12.60%

+130/+140

 

12.80%

+130/+140

 

13.00%

+135/+145

 

13.20%

+135/+145

 

13.40%

+135/+145

 

13.60%

+135/+145

 

13.80%

+135/+145

 

14.00%

+145/+155

 

**Premium in cents/bu. over December futures

Source: Refinitiv

 

European Union and United Kingdom soft wheat exports for the current marketing year to date have dropped by nearly a third from the same time a year ago on a smaller 2020 crop which limits exportable supplies. Soft wheat shipments to buyers outside the European Union between July 1 and October 25 totaled 236.6 million bushels, 30% below loading paces during July 1 through October 27 of last year.

Weather

Temperatures will warm today as clear skies allow farmers in the Northern U.S. to inch a little closer to the end of corn harvest, according to NOAA’s short-range forecasts. Rains in the Southern Plains are expected to replenish depleted soil moisture levels with one to four inches expected over the next 24 hours. The rain system, exacerbated by Hurricane Zeta, will shift into the Eastern Corn Belt early Thursday morning which will cause further corn and soybean harvest delays in the region.

Hurricane Zeta is expected to make landfall in Southeastern Louisiana today. The National Weather Service is calling Zeta a “fast-moving hurricane that brings a life-threatening storm surge and strong winds.” Winds are clocked at 70 mph with even higher gusts reported. It will likely weaken over the Southeast by tomorrow.

Warmer temperatures are on the way for areas waiting to return to the fields after last week’s snow events. The probability of above average temperatures in the Northern and Central Plains is currently forecast at 35% - 70% for the first week of November 2020, according to NOAA’s 6 to 10-day outlook.

6-10 day. outlook temperature probability

Temperatures will remain at average to below-average levels in the Eastern Corn Belt as harvest activities wind down. Warmer temperatures will cover the entire continental U.S. next weekend, providing farmers a chance wrap up a fast harvest season.

Dry weather is also forecast through the entirety of next week. Much of the U.S. will experience a 33% - 50% chance of below average rainfall during the time period. The dry conditions are expected to last through next weekend as farmers race to finish harvest 2020.

6-10 day precipitation probability

Financials

Coronavirus cases in the U.S. rose by 74,667 to 8,779,794 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 989 lives to 226,728 deaths as of press time as the virus continues to ravage rural America.

The U.S. Environmental Protection Agency approved farmer use of the formerly banned herbicide dicamba yesterday. Dicamba, which was banned by a U.S. appellate court in June amid peak planting and application times, will be allowed to be distributed by Bayer AG and other companies for five years. The decision was met with high praise from the U.S. farm community, but critics admonished the EPA for sacrificing environmental protections in favor of business interests so close to next week’s presidential election.

U.S. stock futures are poised to take another massive hit today as rising COVID-19 cases continue to plague investor confidence in the economy. The rising caseload has required increasingly limited restrictions to be enacted to combat virus transmission. The recent collapse of stimulus talks between Congress and the White House also discouraged trader optimism. S&P 500 futures traded 1.44% lower at last glance to $3,334.25.

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