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Morning Market Review for Sept. 21, 2020

Profit-taking mutes grain rallies. (Comments are updated by 7:30 a.m. Central Time.)

Investors cash in on last week’s highs, though losses likely capped by Chinese demand.

  • Corn down 2-3 cents
  • Soybeans down 3-4 cents, soyoil down $0.37/lb, soybean meal down $0.1/ton
  • Wheat down 2-5 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 

Harvest pressure compounded losses from a round of profit-taking overnight in the corn markets. Falling energy prices also underpinned this morning’s losses as December futures shed $0.0225/bushel to $3.7625. March ’21 futures were also down $0.0225/bushel to $3.8525.

Cash markets were largely quiet to close last week. But last week’s $0.1175/bushel rally for December futures persuaded farmers to lock in corn pricing, especially as early yield reports from Indiana and Ohio indicate strong production estimates early into the harvest season.

Corn harvest is off to the races for most Farm Futures readers. Growers participating in the Feedback from the Field series reported cutting into their first fields of the season by late last week, which should be reflected in today’s Crop Progress report. Corn harvest was only 5% complete a week ago, but it should advance rapidly in today’s report after a week of clear and dry weather favored harvesting conditions.

The corn crop continues to mature faster than average paces due to increased heat stress in August. As of last week’s report, 89% of U.S. corn had reached the dented stage, while mature corn rose 9% past the five-year average to clock in at 41% mature last week. Conditions continue to decline amid sparse rainfall accumulation across the country. As of September 13, only 60% of the U.S. crop was in good to excellent condition.

Speculators continued their bullish run on ag commodities last week, according to Commitment of Traders data released by CFTC last Friday. Money managers were particularly interested in corn, trimming a massive 15,335 short positions over the reporting week ending on September 15. Rising futures prices amid a smaller crop, increased demand from China, as well as low inflationary concerns allowed the funds to end the week as net buyers of corn to the tune of 58,556 positions.

Soybeans

Soybean futures edged lower this morning as investors cashed in on highs from last week’s rally. Markets eagerly await this morning’s Weekly Export Inspections report from USDA for more clues as to loading paces to China. Losses were capped by the expectation of continued purchases from China. November soybean futures traded $0.04/bushel lower to $10.395 and October soyoil futures shed $0.37/lb to $34.86.

Soymeal futures have surged $27.10/ton higher in the past two weeks to $336.50/ton as of this morning on the underlying soybean contract’s rally. But strengthening export demand and plant idlings due to maintenance at locations in the Midwest and South have also fueled the recent price run-up for soy meal.

The soybean rally may have lost steam overnight, but as of last Friday, cash sales continued to remain steady as futures prices surpassed pre-trade war levels. Farmers focused their sales on new crop beans they expect to harvest in the proceeding weeks.

Lingering drought conditions from August and early September sent leaf dropping pace 6% over the five-year average to 37% complete last week. Crop quality deteriorated, falling 1% to 63% good to excellent. Expect the crop to continue maturing at rapid paces in today’s Crop Progress report, as well as a first look at harvest progress across the U.S.

Money managers grew their net long position on soybeans as concerns about harvest volumes and export demand from China flourished through the week ending September 15. Speculative traders added a whopping 15,591 long positions through the September 7-15 reporting week, driven by tightening stocks reported in the September 2020 WASDE report. Hedge funds’ net buying position on soybeans swelled to 191,774 contracts on the week, with all signs pointing to continued bullish activity as futures prices continue to rally on more news of increasing Chinese exports.

However, the recent price rallies may begin to price buyers out of the market. Don’t be surprised if next week’s report finds speculators slightly less enthusiastic about soybeans than in this week’s findings.

Tightening soymeal supplies due to crush facility closures in Alabama during CFTC’s reporting week also led speculators to add 6,113 long positions on the week, growing their net buying position on soybean meal to 43,697 contracts. Money managers’ interest in soyoil was also piqued, as evidenced by the addition of 12,093 long positions through September 15. The funds widened their net long position on soyoil to 94,564 contracts along the way.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

-$0.04

$5.71

Kansas City HRW – December Futures

-$0.03

$5.0125

Minneapolis HRS – December Futures

-$0.0175

$5.495

Wheat prices bucked concerns this morning about dryness in Argentina, a lower Ukrainian crop, and slow farmer sales in Russia amid increasing demand from Egypt and Turkey, following the rest of the grains complex lower on a round of profit taking this morning. Significant dryness in key wheat-producing regions including Argentina, the European Union, and the Black Sea region will continue to factor into market pricing through the week.

Soft white wheat harvest in the Pacific Northwest and hard red spring harvest in the Northern Plains are winding down, with 95% of both harvests complete as of last Friday. The durum crop remains over 70% harvested, though progress in North Dakota and Montana is ahead of last year’s pace and expected to end within the week. As of last week, USDA reported the spring wheat crop 92% complete. This week’s report could be one of the last spring wheat harvest reports issued by USDA for the 2020 crop year.

Dry soil conditions have favored winter wheat planting progress so far this season, especially in the High Plains and Pacific Northwest. Rain in the region over the weekend likely stalled planting progress but could bode favorably for emerging crop conditions. As of September 13, 10% of the 2021 winter wheat crop had been planted, ahead of the five-year average of 8% for the same time period. USDA will report winter wheat emergence rates in today’s report.

Speculative traders eased back from long positions on soft red winter wheat futures and options in Chicago last week as the September 2020 WASDE heralded record-high production and ending stocks for the 2020/21 crop year. Money mangers trimmed 4,579 long positions on the week ending September 15, tightening their net buying position to 15,112 contracts. But rising futures prices late last week could help to reverse traders’ sentiments on SRW wheat by next week’s report.

Export demand and dryness in Argentina continued to fuel speculator interest in hard red winter wheat in Kansas City. Hedge fund managers trimmed 940 short positions for the week of September 7-15, as their net buying position swelled to 10,192 contracts – the largest long position on HRW for speculators since mid-February 2020.

Despite impending competition from the Australian crop in export channels, money managers added 1,379 long positions to Minneapolis hard red spring wheat through the week ending September 15. The funds’ net selling position of 3,008 contracts on the week was the tightest short position the funds have had on spring wheat since January 2020.

Weather: Mostly clear skies and temperatures in the 80’s across the Midwest and Plains will favor harvest progress today, according to NOAA’s short-range forecasts. Scattered showers are possible across the Plains, though no significant precipitation is expected.

Tropical storm Beta is expected to make landfall on the southeast Texas coast this morning. Maximum wind speeds were estimated at 50 miles per hour as of press time and a storm surge warning is in effect for the area over the next day and a half. The storm will linger over key oil refineries in the Houston area.

Financials: Coronavirus cases in the U.S. rose to 6,812,332 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 199,513 deaths as of press time.

President Trump announced a second round of Coronavirus Food Assistance Program (CFAP) payments late last week. CFAP2 signup will begin today and run though December 11, 2020. Up to $14 billion has been earmarked for farmers – click here for more details about this new round of aid.

Nearly 300 Wisconsin dairy farms went out of business in the first nine months of 2020. Only 7,026 dairy farms are left in the Dairy state, compared to 167,000 farms in 1930. For more details as well as other stories that made an impact in the ag world last week, check out our weekly roundup for more.

U.S. stock futures traded lower this morning on increased volatility in the trading arena. Increasing tensions between the U.S. and China over the weekend following a new round of penalties laid out by Chinese officials aimed at restricting international investments compounded weakening relations between the world’s largest economies. S&P 500 futures traded 1.61% lower to $3,262.75 while the Dow shed 1.92% to $27,071.

Energy futures fell this morning on increasing production out of Libya during a time of diminished global demand. West Texas Intermediate futures fell $0.78/barrel to $40.33. Gasoline futures slipped $0.0449/gallon to $1.1917.

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