Markets-122316-scyther5-ThinkstockPhotos-2000 scyther5/Thinkstock

Morning Market Review for Sept. 25, 2020

Soybeans fight for $10/bushel. (Comments are updated by 7:30 a.m. Central Time.)

Wheat falls on rainy forecasts for Ukraine, Argentina

  • Corn up 1-2 cents
  • Soybeans mixed, soyoil up $0.30/lb, soybean meal down $1.1/ton
  • Wheat down 1-2 cents

*Prices as of 6:55 am CDT.

Quote of the Day: Soybean yields in Arkansas have varied significantly so far this harvest season with one Farm Futures reader reporting via the latest Feedback from the Field survey, “550 acres harvested so far. Yields range from 42 bpa to 70 bpa.” Yield estimates continue to roll in from across the country with early numbers varying significantly.

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

Strong exports underpinned slightly higher corn prices this morning as traders take a break from the week’s sell off. December futures prices rose $0.0175/bushel to $3.6525. March futures added $0.0125/bushel to $3.735.

Hedge fund money rapidly sold off their long positions on grains this week as corn, soybean, and wheat prices tumbled lower after Monday’s selloff. It seems highly likely that speculators’ net buying positions on grains over the past few weeks will significantly diminish going forward, especially after record-high net short positions were reported by producers. Today’s CFTC Commitment of Trader’s report should provide a clear indication of fund interest in the wake of the week’s lower commodity prices.

USDA releases monthly Cattle on Feed inventories this afternoon. Supplies will likely remain well-stocked, though historical trends would expect to see absolute inventory numbers to likely drop from August 1 inventories. The expected month-over-month decline is characteristic of seasonal consumer trends as summer grilling season begins to wind down.

But analyst estimates peg today’s total at 11.344 million head of cattle in feedlots with 1,000-plus head, which if realized would be an unseasonal increase in inventory levels. The estimates is 60,406 head higher than August 1 inventories. Total cattle on feed inventories are likely to be 3.3% higher than a year ago, due in large part to the slaughterhouse backlog that continues to plague the meat supply chain in the pandemic era.

Further evidence of this phenom is prevalent in August placement estimates, which are 5.8% higher than a year ago at 1.993 million head as cattle producers continue to liquidate inventories. Total marketings in August were 3.4% lower than a year ago at 1.887 million head as meat packers continue to struggle to staff enough operators on fabrication lines to efficiently move meat products through the supply chain.

This continues to be a problem for U.S. corn growers. As plants operate understaffed and struggle produce demanded volumes, the reduced slaughtering pace increases the amount of time cattle are fed out in feedlots. Producers have been trimming rations and liquidating stocks to stay afloat, which reduces demand for livestock corn consumption, which is projected to account for 43.5% of 2020/21 corn production.

Soybeans

Prices in the soybean complex wobbled this morning as Chinese demand fought to overpower steady harvest paces. November futures teetered at the $10/bushel benchmark, falling $0.0075/bushel to $9.9925 while deferred contracts for next spring inched a penny higher. October soyoil futures followed nearby soybean contracts $0.30/lb higher to $32.65. October soymeal futures shed $1.1/ton in overnight trading to $332.70.

 China backed off soybean export loading paces from Brazil in August, but soy imports from Brazil were still 22% higher than August 2019. Favorable margins led China to import 299.4 million bushels of soybeans from Brazil on the month, up 54 million bushels from a year ago. Monthly soy shipments from Brazil to China fell by a mere 1 million bushels from July 2020 as China begins to turn to the U.S. as the supplier of choice going into the 2020 U.S. harvest season. Shrinking crush margins on rising soybean prices could limit buying demand from China going forward, at least at higher soybean prices.

Soybean exports showed their first sign of fundamental weakness yesterday amid the recent rally. USDA’s daily announcement of flash sales went unannounced for the first day in two weeks. It was only the fourth day in September that USDA did not issue a sales announcement. Similarly, export shipments – the most telling sign of loading paces – fell by over a quarter to 47.1 million bushels for the week of September 11-17.

Loading paces to China overwhelmingly surpassed volumes to any other country for the week at 28.3 million bushels. Shipments to Indonesia were a distant second at 3.3 million bushels.

November futures prices rose $0.365/bushel to $10.285 in that time frame, which likely decreased international interest in U.S. soybeans. Monday’s export inspections report will provide more insight as to whether falling prices this week incentivized foreign buying interest in soybeans this past week.

Wheat

Contract

Price Change*

Price*

Chicago SRW – December Futures

-$0.0175

$5.48

Kansas City HRW – December Futures

-$0.0125

$4.8175

Minneapolis HRS – December Futures

-$0.0075

$5.34

Rains replenishing soil moisture levels in Ukraine and Argentina largely offset higher Russian export prices in the wheat complex this morning. The dollar continued higher amidst rising global uncertainty surrounding world-wide economic recovery from the pandemic as well as increasing coronavirus cases. The ICE Dollar Index rose 0.11% overnight to $94.565, erasing two-year lows on the lingering uncertainty in the markets this week.

Cash prices were largely unchanged yesterday as farmers continue to battle dry winter wheat planting conditions in the Southern Plains.

Wheat export loading paces also weakened from their previous volumes a week ago. Weekly export shipments fell 3.5 million bushels to 17.2 million bushels for the week ending September 17. Japan rounded out the top of the list for U.S. soybean destinations with 3.5 million bushels.

Weather 

Rains will continue across the Pacific Northwest today through tomorrow evening, according to NOAA’s short-range forecasts, which could temporarily stall winter wheat planting but would be a welcome relief to depleted soil moisture levels. Skies are expected to remain mostly clear through the weekend across the Corn Belt, favoring rapid harvest paces. Showers are possible in the Upper Great Lakes Region this evening through Sunday with accumulation ranging between 1/10 to 1 inch, which could delay harvest progress in the region.

The University of Nebraska Drought Monitor was released yesterday and found 58.52% of the U.S. to be in a dry and/or drought condition. This was a 1% increase from the previous week, led primarily by persistent dryness in the West. The dryness, which potentially damaged corn and soybean yields during late July and August, is now favorable for harvest activity but could become problematic as winter wheat planting begins.

Drought Monitor

Financials: Coronavirus cases in the U.S. rose by 44,523 cases from yesterday to 6,979,937 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 907 lives to 202,827 deaths as of press time. The national caseload is expected to exceed the 7 million case benchmark later today.

U.S. stock futures ticked lower this morning, with the S&P 500 falling 0.53% to $3,221.00 en route to its worst September performance since 2011. Investors remain jittery on concerns about the presidential election, rising COVID-19 cases, and a slow and uneven global economic recovery.

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