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Morning Market Review for Sept. 23, 2020

Harvest pressure begins to take its toll on prices. (Comments are updated by 7:30 a.m. Central Time.)

Grains on track to post third consecutive day of declines

  • Corn down 2-3 cents
  • Soybeans down 4-5 cents, soyoil down $0.44/lb, soybean meal up $3.4/ton
  • Wheat mixed

*Prices as of 6:50 am CDT.

Quote of the Day: With 10% of the farm’s crop harvested, a Red River Valley soybean grower reported, “disappointing yields. Maybe 35 bushel per acre.” Farmers are in the thick of harvesting corn and soybean crops across the Midwest and Plains.

Our recent Feedback from the Field roundup features updates on early harvesting conditions across the country. How is harvest progress going in your neck of the woods? 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

Weather forecasts favoring rapid farmer harvesting pace, improving crop conditions, and prospects of large ending stocks sent corn futures lower in overnight trading. December futures shed $0.025/bushel to $3.6675 this morning as March futures were also on track to post a $0.025/bushel loss to $3.7625.

Harvest pressure weighed heavily on cash corn prices yesterday amid steady farmer sales off the combine. Basis was mixed at processing locations through the Corn Belt yesterday and continued to weaken at ethanol plants for a second straight day.

Location

9/21/2020 Basis (in cents/bushel)

9/22/2020 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

-16

-16

0

Processors

     

   Chicago IL

0

0

0

   Decatur IL

-5

-8

-3

   Cedar Rapids IA

0

3

3

   Blair NE

-10

-18

-8

River Terminals

     

   Toledo OH

-15

-15

0

   Seneca IL

-17

-17

0

   Savanna IL

-30

-28

2

   Davenport IA

-18

-18

0

   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

15

10

-5

   Union City IN

10

10

0

   Annawan IL

2

2

0

   Council Bluffs IA

-12

-12

0

December futures price as base.

     

Source: Refinitiv

   

 

 

The Chinese ag minister attempted to assuage fears of tightening corn supplies overnight by issuing a vague forecast of bumper crop conditions for its grain crop to be harvested in the next weeks. However, based on China’s recent corn purchases from the U.S., it seems an unlikely case. A Rabobank webinar hosted by senior grain and oilseed analyst Steve Nicholson yesterday pointed out that corn losses in China due to weather struggles could amount to 5% of its previously forecasted crop.

Weekly ethanol production data will be released today but don’t expect any significant market-moving news. Ethanol production continues to hover between 38 million – 48 million gallons/day of output over the last 11 weeks. Production is only 86% - 90% of pre-pandemic levels, due in large part to suppressed consumer fuel demand and will likely continue to struggle to return to those levels as a large part of the workforce remains homebound.

Last week’s report found a 1.6% drop in weekly ethanol production is 38.9 million gallons/day. Gasoline demand increased 3.7 million gallons/day to 356.1 million gallons/day for the week ending September 11 – a potential sign that weekly ethanol production could inch up slightly. But it likely won’t increase too much. Last week’s ending ethanol stocks fell 8.2 million gallons to 831.5 million gallons after trading in a range between 829.5 million – 877.0 million gallons over the past 11 weeks, indicating that production capacity has hit optimal levels.

South Korea eyed U.S. originators for an international corn tender released overnight. The 2.8-million-bushel tender for feed grain is due later today and includes the choice of optional origins for the South Korean feed company looking to book the sale. Viable originators include the U.S., South America, South Africa, and eastern Europe.

Soybeans

The soy complex lost ground overnight on harvest pressure despite strong demand from China. November soybean futures were down $0.025/bushel to $10.1725 while October soyoil futures retreated $0.44/lb lower to $33.23. Meanwhile, competition from Argentina and seasonal crush plant slowdowns strengthened October soymeal futures $3.4/ton to $340.70.

Soybean cash prices continued to weaken amid harvest pressure at elevators and crush facilities across the Midwest. Basis also narrowed on the Mississippi River at Savanna, Illinois yesterday. Cash sales continue to be steady as weather forecasts for harvest improved over the next two weeks.

Location

9/21/2020 Basis (in cents/bushel)

9/22/2020 Basis (in cents/bushel)

Daily Change

Elevators

     

   Cincinnati OH

-2

-5

-3

   Chicago IL

-10

-10

0

   Burns Harbor IN

-15

-15

0

Processors

     

   Decatur IL

0

0

0

   Decatur IN

-20

-20

0

   Morristown IN

-10

-10

0

   Lafayette IN

-15

-20

-5

   Sioux City IA

-55

-55

0

   Des Moines IA

-30

-40

-10

   Cedar Rapids IA

-50

-50

0

   Council Bluffs IA

-45

-45

0

   Lincoln NE

-40

-40

0

River Terminals

     

   Toledo OH

-20

-20

0

   Seneca IL

-60

-60

0

   Savanna IL

-18

-22

-4

   Davenport IA

-17

-17

0

   Morris IL

-45

-45

0

Source: Refinitiv

     

November futures price as base.

     

 

International buyers took advantage of falling commodity prices yesterday. China ordered 9.8 million bushels of 2020/21 soybeans and 5.5 million bushels of new crop corn. An unknown buyer also capitalized on the lower prices in futures markets yesterday, booking 9.7 million bushels of new crop soybeans and 12.6 million bushels of 2020/21 corn. The purchases from China are expected to continue as the world’s second largest economy shifts its food purchasing strategy from a “just in time” method to a “just in case” as they stockpile foodstuffs in apprehension of more international lockdowns.

Increasing demand from Chinese consumers and concerns about stabilizing food supplies in the pandemic era have led Chinese pork imports to double in the past year. August pork imports into the world’s second largest economy totaled 350,000 tonnes, according to customs data released overnight. Year-to-date pork imports rose 133.7% from last year to 2.91 million tonnes. The news is beneficial for two groups of U.S. ag producers who stand poised to take advantage of China’s tightening pork stocks and expanding swine sector – soybean and pork producers.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

-$0.0325

$5.5475

Kansas City HRW – December Futures

-$0.0075

$4.91

Minneapolis HRS – December Futures

+$0.005

$5.4025

 

A round of profit-taking plagued wheat markets this morning after an uptick in international activity yesterday. A stronger dollar did little to help prevent losses as the ICE Dollar Index rose 0.11% overnight to $94.120.

Cash offerings for hard and soft red winter wheat in the Southern Plains and Midwest went largely unchanged yesterday as farmers focus on corn and soybean harvests. Export demand increased slightly for hard red winter wheat in the U.S. Gulf.

International activity for wheat picked up overnight. Taiwan snapped up 3.4 million bushels of U.S. milling wheat out of the Pacific Northwest. The shipment, which will consist of soft white, hard red spring, and hard red winter wheat, will be shipped to Taiwan between November 14 and December 15 of this year. South Korea also issued a tender overnight for 2.4 million bushels of feed wheat while Japan perused the global market for 3.2 million bushels of food-grade wheat.

Russian wheat will likely source an 11.0-milion-bushel tender issued by Pakistan which closed overnight. The Russian bid was the most competitive, coming in at $7.64/bushel c&f. Russian wheat is increasingly popular on the world scene, as another 14.9-million-bushel tender from Egypt found Russia to be the lowest-cost provider of wheat in the world currently.

Dry planting conditions will likely continue to plague U.S. wheat producers as a La Niña weather pattern settles in for the 2020/21 growing year. The last La Niña cycle in 2017 stifled yields from the crop harvested in 2018. Its dry weather pattern will likely persist in the U.S. over the next three months. But also at risk are corn and soybean acreages in South America.

Argentina’s wheat crop has already taken a 36.7-million-bushel hit in the latest WASDE report, falling to 716.4 million bushels of 2020/21 production. Argentina’s corn and soy crops sown during La Niña weather events tend to err on the smaller side as the lack of moisture hinders crop development. Areas of Southern Brazil that struggled with heat stress this year are also at risk for continued dryness. Argentina is the world’s number three exporter of corn and soybeans.

Weather

Mostly dry weather will continue across the Midwest and Plains today, according to NOAA’s short-range forecasts, favoring harvest progress. The Mississippi Delta and parts of the Southern Plains will continue to battle heavy rains from Tropical Depression Beta. Rains in the Pacific Northwest could temporarily stall winter wheat sowing progress, but would be a welcome relief to depleted soil moisture levels.

Looking to NOAA’s most recent 6 to 10-day outlook, dry weather could see a reprieve in the Eastern Corn Belt next week. The likelihood for above-average rainfall early next week increases to 40% - 50% east of the Mississippi River, which could delay harvest progress in key Corn Belt states. However, showers will likely pass by the end of the week as chances of below average rainfall increase.

092320PrecipProbability.jpg

Rainfall in the Plains and Western U.S. will remain sparse through the same time period as below average precipitation probabilities range between 33% - 50%. Dryness will intensify in the West late next week.

Cooler temperatures will prevail across the Midwest and Plains next week. Chances for sub-average temperatures range between 33% - 50% through most of the week. Normal temperatures are expected in the Northern Plains early, which could limit frost damage to crops awaiting harvest in that region. But cooling temperatures approaching next weekend will likely increase chances of frost.

092320TempProbability.jpg

Financials

Coronavirus cases in the U.S. rose by 39,403 cases from yesterday to 6,897,541 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 928 lives to 200,818 deaths as of press time.

The U.S. House of Representatives bulked up aid to farm country as they passed a stopgap funding bill to avoid potential government shutdowns in the coming months. The bill, which will keep the government open through December 11, added almost $8 billion in food assistance and increased accountability so that the Commodity Credit Corporation would be limited in the amount of funds they would be able to distribute to oil refineries. The bill will head to the Senate for approval.

U.S. stock futures inched up this morning on optimism for improving manufacturing and service data expected to be released later today. Gains are capped by rising coronavirus cases in Europe and Asia. S&P 500 futures were up 0.53% to $3,316.75 in overnight trading.

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