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Morning Market Review for Sept. 28, 2020

Harvest pressure weighs on corn. (Comments are updated by 7:30 a.m. Central Time.)

Soybeans wobble on harvest progress and a Chinese holiday

  • Corn down 2-3 cents
  • Soybeans unchanged to slightly higher, soyoil down $0.02/lb, soybean meal up $0.1/ton
  • Wheat down 1-2 cents

*Prices as of 6:55 am CDT.

Quote of the Day: Combines continue to roll through fields in the Midwest, with one Feedback from the Field farmer in Iowa who endured the derecho wind gusts noting that the “last large rain saved us.” Corn and soybean harvests continued en masse across the country this weekend, as dry conditions help reduce extra drying costs.

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 prices fell this morning in anticipation over reports of steady harvest paces expected from USDA’s Crop Progress report later today. Rain delays today and likely tomorrow had little effect on prices this morning, though increasing concerns about rising global coronavirus cases weighed on the corn market, as December futures fell $0.0275/bushel to $3.625. March 2021 futures dropped $0.0225/bushel to $3.71.

Argentine dock workers went on strike overnight after the labor union representing them against private port owners failed to come to an agreement on a collective work compromise. While the strike is only expected to last 24 hours, it could still disrupt trade flows out of the world’s leading exporter of soymeal for livestock feed.

Warm and dry weather conditions favored rapid planting harvest last week. Scattered showers in the Upper Great Lakes region over the weekend could stall harvest progress in Northern Minnesota and Wisconsin, though farmers likely will not remain exiled from their fields for long. Today’s Crop Progress report will likely reflect the fast harvest paces after last week’s report found 8% of the crop harvested, up 2% from the same period in 2019, but 2% below the five-year average.

Crop conditions continue to rapidly mature in the dry and warm fall weather. With 95% of the crop dented as of last week, USDA will likely shift focus to maturation rates, which soared 10% over the five-year average at 59% complete in last weeks report, as well as harvest rates. Corn condition ratings improved 1% last week to 61% good to excellent as relatively quiet weather and moderate temperatures provided relief after nearly two months of heat stress and wind damage.

Cattle on Feed inventory levels as of September 1 surpassed analyst estimates in Friday’s monthly report, coming in at 11.394 million head, nearly 50,000 head higher than expected. The total cattle inventory for September 1 was the highest since USDA began tracking the metric in 1996.

Cattle placements in feedlots were 4.1% higher than expected at 2.06 million head while the volume of cattle marketed was 0.4% higher than anticipated at 1.09 million head as meat processing companies continue to recover slaughtering capacities after the fallout from the pandemic. That is a positive sign for U.S. corn growers as the improved slaughter paces mean a potential rebound for the U.S. cattle herd – and subsequent corn demand for feed.

Despite by a significant market selloff driven by speculators and profit-takers early in the reporting week and reduced weekly export numbers, money managers trimmed 21,229 short positions during September 16 – 22 in CFTC’s latest Commitment of Traders report released on Friday afternoon. The funds widened their position as net buyers of corn to the tune of 95,912 positions, up from 58,556 contracts the week prior.

Speculators also added 16,127 long positions to their tally for the week. It was the largest increase in long positions since the June 30 acreage report from USDA found 5 million fewer acres of corn planted in the U.S. in 2020 than what the March Planting Intentions survey had originally outlined.

Soybeans

Soybean futures remained mostly unchanged as rapid harvest progress and a Chinese holiday muted buying interest in the oilseed. November soybean futures were unchanged as they struggled to maintain $10.025/bushel – just above the key $10/bushel benchmark for soybeans. October soyoil futures inched $0.02/bushel lower to $32.82.

Strong export demand – due in large part to a 24-hour strike in Argentina – and reduced supplies amid routine plant closures for maintenance fueled a strengthening soymeal complex this morning, with October soymeal futures rising $0.10/ton to $337.00.

Germany, the European Union’s largest pork producer, found another wild boar infected with African Swine Fever (ASF) in Eastern Germany over the weekend. The new case brings the total amount of German wild boars infected with the disease to 35 since September 10. China has since banned German imports over fears of the disease resurging in China, where over half of the hog herd was decimated between late 2018 and 2019 due to the highly contagious swine disease. As German ag officials weigh farm relief, pork prices in China surged on lower German imports, which could signal opportunity to U.S. pork and soybean producers as China’s herd and appetite for animal protein expands.

Brazilian soybean prices flirted with eight-year record highs to close out last week, supported by tightening soybean stocks. But farmers may be hard pressed to take advantage of rising prices, which have gained 6.44% on the month. A weak Brazilian real encouraged heavy cash selling early in the crop year beginning February 1, with farmers having forward sold 60% of the 2020/21 soybean crop. With planting season slated to begin soon in Brazil, the higher prices will likely encourage another strong Brazilian soybean crop in 2021.

Soybean harvest is expected to rapidly rise in this afternoon’s weekly Crop Progress report. While rain over the weekend in the Upper Midwest may slow harvest progress in Northern Minnesota and Wisconsin, clear weather across the larger U.S. soybean growing area kept farmers busy harvesting at fast paces last week. Areas in the South could also cause the national harvest average to level out as the Southeast attempted to dry out following heavy showers from Hurricane Sally and Tropical Depression Beta over the past week.

As of September 20, 59% of U.S. soybeans were reportedly dropping leaves, soaring 22% higher than the prior week and well ahead of the five-year average of 50%. About 6% of the soy crop had been harvested, in line with the five-year average for the same time period.

Speculators largely shrugged off a funds-driven selloff last Monday and slightly lower export loading paces over the reporting week to grow their net long position on soybeans for a seventh straight week, according to CFTC Commitment of Traders report data. Money managers added 14,089 long positions for the week ending September 22, widening their net buying position on soybeans to 211,143 contracts. Last week’s bullish numbers are highest on record for the time of year, edging 2012 totals for the same reporting week by a mere 1,268 contracts.

Similarly, hedge fund managers increased their bullish prospects on soybean meal as routine plant closures for maintenance limited supplies and seasonal increases in poultry production neared the horizon. Speculators snapped up 14,217 long positions on the week, swelling their net buying position to 65,248 contracts.

The run-up in soybean prospects also trickled over to soybean oil sentiments, with speculators adding 5,716 long positions to their net buyer status for the week. Money managers ended the week as net buyers of soyoil to the tune of 101,702 contracts – the widest speculative long position on record for the time of year.

Wheat:

Contract

Price Change*

Price*

Chicago SRW – December Futures

-$0.0475

$5.395

Kansas City HRW – December Futures

-$0.0525

$4.70

Minneapolis HRS – December Futures

-$0.025

$5.2725

 

Wheat prices fell amid weakening Russian wheat prices. A weaker dollar capped this morning’s losses as the ICE Dollar Index fell 0.48% to $94.225.

Dry weather continues to plague Russian wheat farmers scrambling to plant their 2021 wheat crop before winter begins. Russian wheat prices fell for the first time in a month last week due to falling Chicago soft red winter wheat futures prices and a strengthening dollar.

Russian farmers remain slow to sell their 2020 wheat crop as plentiful cash stocks entice them to hold out for higher cash prices. But they may not need to wait long. Even though livestock and export demand is strong, a rising Russian rouble may incentivize more farmers to book sales in the coming days.

Hard red spring wheat harvest only had less than 4% of the crop remaining in the fields as of last Friday, according to a report by U.S. Wheat Associates. Warm and dry weather paved the way for durum harvest to surge to 90% complete by Friday, up nearly 20% from a week prior. USDA will not report on spring wheat harvest in weekly Crop Progress updates going forward, as the crop is largely complete for the year.

Rains in the Pacific Northwest last week slowed down winter wheat planting progress in the region, but likely came as a welcome reprieve from dry soil conditions. Dry conditions across the Plains could have significant impacts to the 2021 hard red winter wheat crop, though it may be too early in the planting season to quantify the exact effects.

At any rate, the dry soil conditions favor rapid planting progress. As of last week’s Crop Progress report, 20% of the nation’s winter wheat crop was in the ground, ahead of the five-year average of 19%. A mere 3% of the planted wheat had emerged, 1% above the five-year average.

Export prices for grains on the Mississippi River are driving profitable margins for the nation’s top grain traders as rising export demand from China cements the strongest grain export volumes in the past three years. Industry experts expect nearly $0.50 of every bushel of soybeans sold goes back into processors’ pockets as buyers race to book export cargoes during the peak harvest season.

The increased volume of corn and soybean at U.S. Gulf export terminals limits capacity for wheat exports. But because wheat at the Gulf remains in high demand, cash wheat prices at the U.S. Gulf have surged since the summer. Prices could remain strong this fall as wheat exports continue to compete with corn and soybean volumes.

As Chicago soft red winter wheat futures prices backed off six-month highs on a rising dollar, speculators added 1,881 short positions on the week to narrow their net long on SRW wheat to 14,543 contracts. However, export demand seemed to offset the effects of the falling dollar on hard red winter wheat as money managers trimmed 5,938 short positions from their net long on the week. The funds grew their net buying position to 18,463 contracts for the week ending September 22.

Money managers lessened their bearish stance on Minneapolis hard red spring wheat for a seventh consecutive week as they inched slightly closer to a net long position on the commodity. For the reporting week of September 16-22, speculators added 451 long positions to their overall net short position. They shrunk their net selling position on hard red spring wheat by 710 contracts to end the week at 2,298 short contracts – the funds’ narrowest net short position on Minneapolis wheat since early April 2019.

Weather: Rains will continue to move across the Eastern Corn Belt through this evening into tomorrow morning, according to NOAA’s short-range forecasts. With over an inch of precipitation expected in most areas east of the Mississippi River, harvest progress will likely come to a halt over the next day or two as farmers wait for soils to dry out. Clear skies are forecast across the High Plains, allowing harvest and winter wheat planting progress to continue as normal in that region.

Financials: Coronavirus cases in the U.S. rose to 7,116,456 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 204,762 deaths as of press time.

Happy Monday! If rain delays are allowing you to catch up on marketing news, our team has rounded up a few stories that will help you get back on track after the flurry of last week’s early harvest activity. Click here for last week’s top marketing insights as you gear up for another hectic week of harvest.

Investors were poised to take advantage of rapid market shifts amid election season this morning, as U.S. stock futures ticked up following four straight weeks of declining values. “It’s a very different environment than that we’ve seen for any other election,” James McCormick, a strategist at NatWest Markets, told the Wall Street Journal this morning. “As an investor, you have to protect yourself because you just don’t know how this is going to swing.”

The S&P 500 gained 42.70 points or 1.30% overnight on traders’ bets for long-term expansion in the face of increased market volatility to $3,330.00.

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