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Morning Market Review for Sept. 18, 2020

Soybean rally props up corn, wheat gains. (Comments are updated by 7:30 a.m. Central Time.)

Strong export data sends beans rallying to pre-trade war price levels

  • Corn up 1-2 cents
  • Soybeans up 10-12 cents, soyoil up $0.35/lb, soybean meal up $2.6/ton
  • Wheat up 3-5 cents

*Prices as of 6:55 am CDT.

Editor’s note: Our first Feedback from the Field respondent reported harvest progress underway in Iowa as of Monday! Check out our interactive map for the latest updates on harvest progress and yield estimates in your area. Want to participate in our reader-sourced map? Click here to share your crop updates via a short survey. The map is updated to showcase crop and harvest development across the country. Thank you!

Corn

Corn prices tailed soybean gains this morning, as December futures rose $0.0175/bushel to $3.77. March futures added $0.015/bushel to $3.855.

Cash corn prices dipped on the Mississippi River yesterday as closures in the Gulf due to Hurricane Sally stalled export demand. Basis also edged lower at processing facilities across the Corn Belt while strengthening at an elevator and ethanol plant in Council Bluffs, Iowa.

Location

9/16/2020 Basis (in cents/bushel)

9/17/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-10

-10

0

   Burns Harbor IN

-15

-15

0

   Lincoln NE

-20

-20

0

   Chicago IL

-45

-45

0

   Council Bluffs IA

-30

-16

14

Processors

     

   Chicago IL

5

0

-5

   Decatur IL

5

5

0

   Cedar Rapids IA

12

5

-7

   Blair NE

-10

-10

0

River Terminals

     

   Toledo OH

-15

-15

0

   Seneca IL

-18

-18

0

   Savanna IL

-12

-30

-18

   Davenport IA

-18

-20

-2

   Morris IL

-45

-45

0

Rail

     

   Columbus OH

16

16

0

   Evansville IN

16

16

0

   Hereford TX

95

95

0

   Fort Worth TX

95

95

0

Ethanol Plants

     

   Linden IN

30

30

0

   Union City IN

13

13

0

   Annawan IL

5

5

0

   Council Bluffs IA

-14

-12

2

December futures price as base.

     

Source: Refinitiv

     

 

Managed money funds have been fueling the recent uptick in grains futures prices after becoming net buyers of corn, soybeans, soybean meal, soybean oil, Chicago soft red wheat, and Kansas City hard red wheat in recent weeks. Traders could reverse their short positions on Minneapolis hard red spring wheat in this week’s CFTC Commitment of Traders report, due out this afternoon. Speculators have become increasingly bullish on Minneapolis wheat in the weeks following the hedge funds’ run-up of ag commodities.

Speculators may be just getting started buying into agricultural commodities. Goldman Sachs group CEO Lloyd Blankfien said pointed to commodities as a lucrative investment option in the pandemic era. “From an inflation point of view,” Blankfien posited at a virtual meeting hosted by the CME Group Inc.’s metals division on Wednesday, “as an investor, I think investing in material sectors while they’re underappreciated is not a bad thing now.”

Commodities can be a safe have for inventors during periods of increased inflation, which is eventually expected to follow the largest monetary stimulus in history as central banks across the globe turned to monetary easing to combat the pandemic’s economic fallout. But inflation rates continue to hover near zero and markets continue to be rife with uncertainty in advance of November’s presidential election. With the Federal Reserve expected to keep low interest rates in place until 2023, high inflation will likely be kept at bay in the short term, providing plenty of profit opportunities for commodity investors.

Weekly corn export shipping paces increased dramatically last week, due in large part to increased shipments to China. Weekly volumes increased 25.8 million bushels to 35.5 million bushels for the week ending September 10. Mexico and China topped the list for corn export volumes, with 8.4 million bushels and 8.3 million bushels of U.S. corn, respectively, destined to each country. A USDA daily flash sale of 4.7 million bushels supported strengthening weekly loading paces yesterday as well.

President Trump announced another tranche of COVID-19 aid for farmers at a Wisconsin campaign rally last night, adding another $13 billion. But could some of that farm aid go to reimbursing refineries for ethanol blending credits? Former Secretary of Ag Tom Vilsack does not expect any funds will be diverted to refineries before the election, Farm Futures policy editor Jacqui Fatka writes in the latest DC Dialogue column. “My hope is resources dedicated to those who need it most,” said Vilsack.

Soybeans

Another day, another price rally continuation upwards for soybeans due to strong Chinese export demand. Prices soared overnight on the sentiment, with November soybean futures rising $0.10/bushel to $10.385. October soyoil futures posted a $0.35/lb gain to $35.26 and October soymeal futures rose $2.6/ton to $333.00.

Soybean basis dropped on the Mississippi River due to export terminal closures at the Gulf due to Hurricane Sally. Basis weakened at processing facilities in the Western Corn Belt but strengthened in the East.

Location

9/16/2020 Basis (in cents/bushel)

9/17/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

3

3

0

   Chicago IL

-10

-10

0

   Burns Harbor IN

-12

-15

-3

Processors

     

   Decatur IL

15

15

0

   Decatur IN

-20

-20

0

   Morristown IN

-15

5

20

   Lafayette IN

-5

-5

0

   Sioux City IA

-55

-55

0

   Des Moines IA

-10

-20

-10

   Cedar Rapids IA

-50

-50

0

   Council Bluffs IA

-50

-50

0

   Lincoln NE

-45

-55

-10

River Terminals

     

   Toledo OH

-20

-20

0

   Seneca IL

-45

-45

0

   Savanna IL

-5

-16

-11

   Davenport IA

-3

-13

-10

   Morris IL

-45

-45

0

Source: Refinitiv

     

November futures price as base.

     

 

Weekly soybean exports soared through the week ending September 10. Shipments rose 44 million bushels from the previous week to 63.7 million bushels due in large part to increased loading paces to China. Over 40 million bushels of soybeans left U.S. ports destined for China between September 4-10.

Between the larger export shipment volumes to China and more new crop soybean flash sales yesterday (9.7 million bushels to China and 13.2 million to an unknown buyer), November futures prices have risen over $0.355/bushel on the week – the first time since the beginning of the trade war that prices have traded higher than $10/bushel. Could beans rise past $10/bushel? Total Farm Marketing’s Naomi Blohm outlines yield estimates that would take futures prices to that level in the latest Ag Marketing IQ column.

Soybean acreage could lose ground to attractively priced corn in the Pampas Grain Belt region in Argentina this year. Soybean is typically Argentina’s top cash crop, but lucrative profitability options for corn and dry weather conditions exacerbated by a La Niña weather pattern could result in a significant acreage shift to corn for the 2020/21 growing season. Planting will begin in Argentina during September for corn and October for soybeans.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

+$0.035

$5.5975

Kansas City HRW – December Futures

+$0.0475

$4.9225

Minneapolis HRS – December Futures

+$0.025

$5.44

In an unprecedented move, Algeria opened a tender to Black Sea markets overnight, sending prices in the Black Sea region soaring. Algeria typically purchases soft wheat from France, but the recent harvest downgrades in the European Union’s top wheat-producing country has led to a significant decline in exportable supplies.

The news of increased international activity sent futures prices in the wheat complex soaring, with some support also carrying over from the soybean price rally. Prices were also underpinned by a slightly weaker dollar overnight as the ICE Dollar Index weakened 0.03% to $92.940.

Cash prices for soft red winter wheat were largely unchanged across the Midwest yesterday. Basis for hard red winter wheat at a Texas rail facility loading into U.S. Gulf export terminals weakened $0.05/bushel to $1.54 over the nearby Kansas City HRW futures contract. HRW basis was largely unchanged elsewhere in the Southern Plains.

Wheat export shipments dipped slightly last week, but overall export loading paces continue to support strengthening prices. For the week ending September 10, wheat exports dipped 22% to 20.7 million bushels. But marketing year-to-date loading paces remain 6% ahead of shipment volumes for the same time in 2020/21. Yesterday’s reduced volumes may be indicative of increased competition from Canadian wheat, though that will be made clear if shipments decline in next week’s export report.

Weather: Clear skies and moderate temperatures will give farmers plenty of opportunity to advance harvest progress over the weekend, according to NOAA’s short-range forecasts. Showers in the Pacific Northwest will move into the Northern Plains late tomorrow night, which could slow spring wheat harvests in both areas.

Temperatures will be seasonally cooler across the Midwest this weekend, though frost remains unlikely. As fall begins on Sunday, chances for frost will increase in the Northern Plains. The National Weather Service points out that the first freeze in the region typically occurs between September 21 – 30. While the region saw frost activity earlier this month, farmers will need to factor in cooler temperatures going forward as they race to put the 2020 crop into bins.

Median date of first frost

Financials: Coronavirus cases in the U.S. rose by 44,842 to 6,676,410 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 824 lives to 197,655 deaths as of press time.

U.S. stock futures wobbled this morning as simultaneous futures and options contract expirations caused a new round of market volatility in overnight trade. The volatility could be offset by advances in COVID-19 vaccine trials as well as the advancement of a bipartisan spending bill to prevent a government shutdown in November. Investors continue to seek out riskier equity assets as Federal Reserve monetary policies suppress bond yields at low levels. S&P 500 futures traded 0.14% higher to $3,355.75 this morning while Dow futures shed 0.13% to $27,784.

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