Morning Market Review for Oct. 30, 2020

Markets-122316-scyther5-ThinkstockPhotos-2000 scyther5/Thinkstock
Grains post modest recovery on export demand. (Comments are updated by 7:30 a.m. Central Time.)

Gains limited by rising COVID-19 cases

  • Corn mixed – deferred contracts up 1-3 cents
  • Soybeans up 7-9 cents, soyoil up $0.37/lb, soybean meal up $2.4/ton
  • Wheat up 2-5 cents

*Prices as of 6:55 am CDT.

Quote of the Day: Farmers in Ohio continue to struggle harvesting corn this fall amid heavy rains. “We have not been able to harvest any corn due to the slow ripening and now extremely wet conditions,” a farmer in Northwestern Ohio shared in the Feedback from the Field survey. “With the rain forecasted today we will be saturated just like the fall of 2018 and we had horrible harvest conditions.” 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 futures were mixed this morning, with deferred prices recovering from recent days’ selloffs. Import demand from Mexico stabilized prices before the opening bell for the last day of the October 2020 trading month. December futures traded $0.005/bushel lower to $3.98 while March 2021 futures rose $0.015/bushel to $4.03.

Cash corn prices fell at river locations along the Mississippi and Illinois rivers yesterday. The Heartland waterway system was full of grain with little capacity at the U.S. Gulf to handle more bushels, despite strong international corn demand. Hurricane Zeta also slowed shipping speeds down the Mississippi yesterday.

Basis offerings were mixed at ethanol plants across the Corn Belt yesterday.

 

Location

10/28/2020 Basis (in cents/bushel)

10/29/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

12

12

0

   Burns Harbor IN

5

5

0

   Lincoln NE

-20

-20

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

-3

-3

0

   Blair NE

-10

-10

0

River Terminals

     

   Toledo OH

-5

0

5

   Seneca IL

5

3

-2

   Savanna IL

-13

-21

-8

   Davenport IA

-4

-20

-16

   Morris IL

-20

-20

0

Rail

     

   Columbus OH

24

24

0

   Evansville IN

26

26

0

   Hereford TX

100

100

0

   Fort Worth TX

100

100

0

Ethanol Plants

     

   Linden IN

-30

-20

10

   Union City IN

0

-2

-2

   Annawan IL

0

0

0

   Council Bluffs IA

-15

-17

-2

December futures price as base.

     

Source: Refinitiv

     

 

New crop corn export sales soared in yesterday’s weekly Export Sales report from USDA, though export loading paces saw a seasonal decline. For the week ending October 22, corn export sales topped 93.6 million bushels as orders from Mexico and Japan increased. Corn export shipments to Mexico also increased by 3.3 million bushels last week to nearly 10 million bushels for the week ending October 22.

The total volume of U.S. corn loaded out of export terminals last week totaled 28.9 million bushels, a 6.4 million-bushel decrease from the previous reporting week. But the declining volume is hardly uncharacteristic of historical export activity. U.S. corn exports typically decline at the end of October as Brazilian export volumes pick up. High soybean and wheat volumes last week likely limited loading volumes for corn at U.S. export terminals as well.

Mexico booked its largest order of U.S. corn since last December yesterday. This will likely boost corn sales even higher in next week’s export sales report. Of the massive 56.4 million bushels of U.S. corn Mexico booked yesterday, 35.1 million bushels will be delivered in the 2020/21 marketing year while another 20.3 million bushels are to be scheduled for delivery in 2021/22. Mexico’s largest farmers yesterday cautioned that domestic corn supplies may fall short this year after large government spending decreases.

An unknown buyer also snapped up 5.5 million bushels of 2020/21 corn yesterday.

Soybeans

Soybean futures prices rose this morning, aided by strong export loading paces in yesterday’s Weekly Export Sales report from USDA. November futures entered the delivery period this morning $0.0675/bushel higher to $10.585. January futures notched a $0.0825/bushel gain to $10.5875. December soyoil futures followed $0.37/lb higher to $33.43 while continued strife in Argentina pulled December soymeal futures $2.4/ton higher to $379.30.

Dealers continued rolling their cash bids to the January contract yesterday. The delivery period for the November contract begins today. Cash soybean bids were mixed at crush plants yesterday. Basis trended lower at elevators and on the Mississippi River. Heavy river volumes ran into bottlenecks in the lower Mississippi as flows were slowed due to Hurricane Zeta.

 

Location

10/28/2020 Basis (in cents/bushel)

10/29/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

18

16

-2

   Chicago IL

-5

-5

0

   Burns Harbor IN

-15

-15

0

Processors

   

0

   Decatur IL

20*

16*

4

   Decatur IN

0*

0*

0

   Morristown IN

10*

10*

0

   Lafayette IN

5

5

0

   Sioux City IA

-35*

-35*

0

   Des Moines IA

-23*

-23*

0

   Cedar Rapids IA

-7*

-7*

0

   Council Bluffs IA

-42*

-32*

10

   Lincoln NE

-20*

-20*

0

River Terminals

     

   Toledo OH

-1

0*

-

   Seneca IL

-25

-25

0

   Savanna IL

-17

-21

-4

   Davenport IA

-10

-23

-13

   Morris IL

-25

-25

0

Source: Refinitiv

     

November futures price as base.

     

*January futures price as base.

 

 

 

 

Strike talks continued amongst Argentine oilseed workers yesterday. Exporting firms are hoping to offer a sufficient COVID-19 bonus payment to workers to prevent further strike activity. The meeting is scheduled for next week. Argentina is the world’s largest exporter of soy products.

Soybean export sales volumes dropped significantly in yesterday’s Weekly Export Sales report from USDA. High prices likely deterred some buyers, though the U.S. remains the world’s top supplier of the oilseed currently.

Soybean export sales fell by a quarter to 18.4 million bushels for the week ending October 22. But what the market lacked in new international orders, it more than made up in loading paces, which is arguably more important to price determination.

Weekly soybean export shipments soared to 99.1 million bushels, a 6.6 million-bushel increase from the previous week. Nearly 72% of that volume, or 71.3 million bushels, was destined for China. Year to date soybean shipping paces continue to soar 82% higher than the same period a year ago due in large part to increased demand from China.

An unlikely buyer will be featured in next week’s export sales reports. After over-exporting their soybean crop to China, Brazil ordered a cargo of U.S. soybeans earlier this week to be shipped out of the U.S. Gulf at some point in the coming months. Strengthening crush margins in Brazil have driven up soybean prices, especially as doubts are cast on the size of the 2020/21 crop amid dry planting conditions.

The Brazilian government announced a suspension of import tariffs for corn and soybean shipments from non-Mercosur (South American) countries earlier in October. This clears the way for more potential shipments of U.S. soybeans to Brazil. But volumes likely won’t be high – Brazilian ports are not equipped with enough infrastructure to receive massive quantities of grains.

President Jair Bolsonaro confirmed the purchases in a social media video. Brazilian soybean prices are nearing four-year highs as countries across the world – notably China – snap up more grain bushels in an effort to steel domestic food supplies against shortages during the pandemic.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

+$0.03

$6.0675

Kansas City HRW – December Futures

+$0.0575

$5.4775

Minneapolis HRS – December Futures

+$0.0225

$5.545

 

Wheat futures were on track to post gains this morning due to strong export demand, particularly from Mexico. A weaker dollar helped support this morning’s gains as the ICE Dollar Index fell $0.082 to $93.895. Traders are growing concerned about a drop in demand across livestock feeders and food and industrial processors due to rising COVID-19 cases and new restrictions enforced to slow the virus’ spread.

Cash wheat prices for both hard and soft winter red varieties were unchanged yesterday across the Midwest and Southern Plains. A few cash sales were booked in yesterday’s trading session, though most farmers have already sold most of their 2020 crop and remain hesitant to book many 2021 sales due to dry soil conditions.

Protein premiums for hard red winter wheat delivered into Kansas City via rail rose $0.05/bushel for wheat containing 12.0% protein levels, as shown 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%

+130/+140

+5

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

 

China’s state planner announced minimum wheat volumes for 2021 this morning. The world’s second largest economy will not purchase at a higher volume than its 2020 level of 1.4 billion bushels. China purchases wheat from farmers when break even prices dip below profitable market levels. For 2021, China will implement purchases when market prices fall below $380/tonne. China will own 51% of the world’s ending stocks in wheat by the time the 2020/21 marketing year comes to a close.

French wheat planting was two thirds complete as of Monday. At 66% complete, sowing progress rose 21% from the previous week. France is the European Union’s largest producer of wheat in the 28-country bloc.

Rainfall in Argentina over the past several days could stop the bleeding for local wheat yields. A dry growing season with weather conditions exacerbated by La Niña weather patterns has limited yield potential for the Argentine crop expected to enter export channels this month. The Buenos Aires Grain Exchange estimates the crop at 617.2 million bushels, 154.3 million bushels below its original estimates. Argentina is the world’s seventh largest producer and exporter of wheat in the world.

After a week of disappointing results, wheat export shipments improved for the week ending October 22. Wheat shipments volumes jumped up 9.2 million bushels to 16.3 million bushels on the week as loading paces for the current marketing year to date rose 12.3% over the five-year average for the same period. Slower loading paces for corn may have offered wheat exporters a chance to improve weekly shipment volumes.

New crop wheat export sales also improved from the previous reporting week. In fact, wheat export sales more than doubled on the week, up 13.9 million bushels to 27.5 million bushels. Wheat orders from top exporter Mexico led the increase in sales, as our neighbor to the South booked 2.7 million more bushels of wheat on the week, growing its outstanding wheat export sales balance to 36.9 million bushels.

Weather: After over 10 days of gloomy skies and rain, weather should clear enough in the Midwest over the weekend to allow farmers to get back out into the fields to finish 2020 harvest activity, according to NOAA’s short-range forecasts. Sunday could bring a chance of snow and rain showers to Michigan and Northeastern Ohio, though skies should remain clear elsewhere leading into next week.

Rain and snow in the Upper Midwest and Eastern Corn Belt last week lessened overall drought conditions in the U.S. last week as drought persists in the West. As of October 27, 64.42% of the U.S. was in some form of dry or drought condition, down 1.54% from the previous week.

102720-drought-monitor-1.png

Financials: Coronavirus cases in the U.S. rose by 88,430 to 8,947,862 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 974 lives to 228,675 deaths as of press time. It was the largest single-day increase in U.S. cases on record.

EPA’s Tuesday announcement that the ban on dicamba applications would be lifted until the completion of the 2025 growing season allowed farmers to breathe a sigh of relief as they look towards 2021 planting intentions. The EPA’s announcement gives farmers another option for weed management next year, ag policy expert Jacqui Fatka writes.

The Dow Jones Industrial Average will likely record its worst trading month since March as the month comes to a close today. Rising coronavirus cases in the U.S. and Europe continue to wreak havoc on the markets as well as investor anxiety over Tuesday’s presidential election. Mixed third quarter results from tech companies had little positive impact on equity stocks this morning. The Dow was on track to post a 0.70% loss to $26,372 this morning while S&P 500 futures were down 0.69% to $3,279.25.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish