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Midday Grain Comments: 11/20/19

Grains saw some “Turnaround Tuesday” chart-based buying starting on Monday night that continued into Tuesday’s regular session.  Oversold charts were an excuse for traders to lighten up their short positions as prices tested late-September lows. USDA’s Weekly Crop Progress report was also a catalyst for the rebound, indicating that corn harvest advanced 10% to be 76% completed & soybean harvest expanded 6% to reach 91% finished as of Nov. 17. While those numbers were close to trade expectations, they confirmed the difficulty farmers face in getting the 2019 crop into the bin.  Corn harvest is still 13% behind last year & 16% below the 5-year average with North Dakota (23% done), Michigan (39%), Wisconsin (44%) & South Dakota (53%) far behind normal.  Corn harvest completion in Illinois (80% done), Indiana (80%), Iowa (77%), Minnesota (77%), Nebraska (85%) & Ohio (75%) are near or above the national completion rate, but most of those states remains behind average by double-digit percentages with high-moisture corn limiting the speed of harvest.  Monday’s USDA report indicated US soybean harvest is now equal to last year’s pace, but is still 4% behind the 2014-18 average. One would normally expect most the uncut beans to be in the South by mid-November, but there were still 24% of Michigan, 23% of Wisconsin, 16% of North Dakota & 5-10% of Illinois, Indiana, Iowa & Ohio bean acreage to be harvested.  USDA also reported that winter wheat planting advanced 3% to 95% completed—3% ahead of last year & equal to the 5-year average.  Wheat germination improved 5% for the week to be 83% emerged—3% greater than last year, but 3% behind average.  Driven by dry conditions in the southern Plains, USDA lowered its wheat condition rating by 2% to 52% good-excellent.  That’s 4% below last year’s rating, & equal to same-week 2017 conditions.  Prices peaked by midmorning, but faded by the close as hedge pressure continued to be a factor. At Tuesday’s close, Dec. corn futures gained 2.25c, March corn rose 3.5c, Jan. beans were up 1.25c, March beans were 1.5c higher, Dec. soymeal edged up $0.80/ton, Dec. soft red winter wheat rallied 1.75c, & July SRW wheat gained 3.5c. At the highs, corn was 5c+ higher, & beans & wheat were up 7-8c.

 

Corn & wheat retreated in Tuesday night trading, but soybeans were slightly higher.  Worries about additional harvest delays did little to blunt concerns about uncertain trade negotiations.  Corn & beans turned lower by midday after a Thomson-Reuters report indicated that a Phase 1 US-China trade deal may not be completed this year. China is said to be pressing for more extensive tariff roll-backs, but US officials see continuing tariffs as needed to insure China will agree to more extensive reforms on intellectual property & technology transfers.  Forecasts for above-normal rainfall in South America were also a factor pressuring grains by midday.  Weather conditions have improved after early-season dryness in central Brazil delayed planting, & that is keeping prospects for record-high soybean output still possible.  Corn futures derived little support from the EIA Weekly Petroleum Status report that showed ethanol production edged 0.29% higher to 303.702 mil.gal. in the week ended Nov. 15, but ethanol stocks dropped 19.782 mil.gal. lower to 861.588 mil.gal.—the lowest level since Jan. 6, 2017.  Ethanol processing margins have improved dramatically from their late summer lows, but a lot of processing capacity is going unused to make that happen.  Weekly output was still 0.86% below last year, & cumulative output since Sept. 1 has been 4.33% lower year-on-year.  In its Nov. 8 WASDE forecasts, USDA projected that 2019/20 corn processing for fuel would edge just 0.02% lower than last year.  At 12:55 pm Dec. corn futures were down 3c, March corn was 3.25c lower, Jan. beans were down 5c, March beans were 4c lower, Dec. soymeal was down $1.70/ton, Dec. soft red winter wheat was 2.5c higher, & July SRW wheat was up 3/4c.

 

In export news, USDA did not report any daily export sales on Wednesday. During the first two business days of the week, the farm agency

announced that a total of 12.716 mb of 2019/20 was sold to unknown destinations.  International grain merchants reported on Wednesday that 5.118 mb of optional-origin corn had been bought by South Korean feed mills for Dec-Feb. shipment.  On Tuesday, Tunisia purchased 2.756 mb of unknown origin milling wheat & 3.380 mb of unknown origin durum wheat.  In a regular weekly tender, Japan’s ag ministry is in the market for 4.409 mb of milling wheat from North America or Australia. Syria will seek Russian milling wheat on Dec. 148 for Jan-Feb. delivery.  Finally, India has launched a tender for 3.937 mb of non-GMO corn from Ukraine.

 

Locally, corn basis declined 2c, soybean basis lost 1c & wheat basis was steady on Tuesday.  Reports of very poor quality corn in the northern Corn Belt that suffers from sub-50# test weights & 30%+ moisture has not lifted local prices the past two days.  St. Louis basis losses more than offset Tuesday’s futures price rally, leaving cash prices in that market lower.

 

Would you like CBOT futures prices reported to your phone? Top Ag can send you nearby & harvest futures prices for corn, soybeans & wheat at 9:45 am, 11:15 am & 1:45 pm each day.  We provide the service for free, but you may have to pay for text messages--depending upon your phone plan. Call Scott or Jacob at Okawville at 243-5293 or Mike at Trenton at 224-7332 & we'll get you set up! 

 

"Closing Comments" are written by David Marshall, First Choice Commodities LLC, Nashville, IL.  To learn more about his farm marketing advisory or commodity brokerage services, contact him at dmarshall@firstchoicecommodities.com or call (618) 327-4370 (voice/fax) or (618) 314-0918 (cell). This commentary is not intended for specific trading strategies. We strive to insure this information is reliable, but we cannot guarantee its accuracy or completeness.  Commodity trading involves risks. You should fully understand those risks before trading.

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