News > Top Ag News > Closing Comments: 9/17/2020

Closing Comments: 9/17/2020

Sep 17, 2020

Rebounding from overnight profit-taking weakness, soybean futures led corn & wheat higher on Wednesday as continued Chinese export demand, late season flooding in northeastern China & dry weather in Ukraine & parts of both the western & eastern Corn Belt fueled expectations that 2020/21 production & potential ending stocks are dwindling compared to what USDA forecast for the US & world in its Sept. 11th WASDE report. Traders mostly shrugged off a 1.59% weekly decline in ethanol output since ethanol stocks dropped 0.98% to their second-lowest level since Dec. 30, 2016. Last week’s ethanol output was only slightly below the average weekly pace needed to reach USDA’s current corn crush forecast.  Rumors that China will import 3- to 4-times more corn in 2020/21 than USDA currently expects—perhaps 25-30 mmt rather than the 7 mmt USDA currently expects—emboldened buyers to push corn prices higher.  With domestic Chinese corn prices more than double US prices & the Chinese hog herd rapidly expanding, economics favor more US corn exports if China is willing to provide supply competition to its own farmers.  Soybeans once again soared as USDA confirmed that China again bought US beans. Wheat followed along to modest gains as talk that Ukraine farmers would reduce winter wheat acreage due to ongoing drought provided a lift.  At Wednesday’s close, Dec. corn futures jumped 5.745c, March corn rallied 5.25c, Nov. beans soared 19.75c, Jan. beans surged 19.5c higher, Oct. soymeal gained $6.50/ton, Oct. soyoil blasted 0.86c/lb. higher, Dec. soft red winter wheat rose 3.75c & March SRW wheat was 6.5c higher. In true bull market fashion, nearby contracts gained on deferred months yesterday.
 
Grains have continued to surge higher on Thursday, once again recovering from overnight losses.  At the 7:45 am pause in electronic trading, Dec. corn futures were down 2.25c, March corn was 2.75c lower, Nov. beans were down 4.75c, Jan. beans was 4.5c lower, Oct. soymeal was down $1.60/ton, Oct. soyoil was 0.15c/lb. lower, Dec. soft red winter wheat was down 1.5c & March SRW wheat was 1.75c weaker.  Overnight losses persisted despite Thursday’s 7:30 am release of USDA Weekly Export Sales data that was again strong for corn (63.351 mb), soybeans (90.283 mb) & grain sorghum (4.783 mb).  By contrast, sales were disappointing for wheat (6.783 mb), soymeal (91,900 mt) & soyoil (100 mt).  Pre-report trader surveys had forecast export sales for corn at 29.6-86.6 mb, beans at 55.1-102.9 mb & wheat at 11.0-22.0 mb for the week ended Sept. 10.  China was again the dominant buyer of US farm products last week, purchasing 14.161 mb of corn, 4.795 mb or milo, 58.545 mb of soybeans & 48,000 bu. of  wheat.  China also bought 440,100 of the total 519,600 running bales of upland cotton, 12,600 of the total 28,000 running bales of pima cotton, 35,900 mt of the total 50,600 mt of 2020 pork sales, 1,800 mt of the total 14,300 mt 2020 beef sales, & 364,500 of the total of 429,500 US beef hides sold worldwide last week. “Unknown destinations” also locked in 14,180 mb of corn & 18.346 mb of soybeans for the week. Cumulative corn sales now stand at 805.3 mb, 104.5 mb above the previous week #2 record sales of 703.8 mb set in 1995/96.  Cumulative beans have reached 1,188.4 mb, 249.5 mb above the previous week #2 record of 935.7 mb set in 2014/15.  Cumulative wheat sales of 482.5 mb are the highest since 2013/14’s 627.2 mb at marketing week #15. And grain sorghum sales now stand at 101.2 mb, 38.9% of the current 260 mb export forecast for 2020/21.
 
As was the case on Wednesday, overnight losses were quickly erased once Thursday’s regular trading session resumed at 8:30 am.  Grains found support from this week’s US Drought Monitor map that showed spreading dryness in the eastern Corn Belt.  That fueled worries of soybean losses in that region. USDA’s 8 am announcement of additional daily export sales of corn & soybeans for China & unknown destinations led traders to place more emphasis on the fact that China has already booked 363.771 mb of US corn & 637.940 mb of US beans for 2020/21.  Unknown destinations has also added 97.929 mb of US corn & 365.668 mb of US beans for 2020/21.  Those huge early-season commitments are strong enough to allow traders to dream that final US sales can go much above USDA’s current 2,325 mb corn & 2,150 mb soybean export forecasts.  With fundamentals seeming to underpin upward price action, traders continued to take aim at the next chart targets in Dec. corn at $3.90-4.05 & in Nov. beans at $10.50-10.66.  At Thursday’s close, Dec. corn futures were up 3.5c, March corn gained 3c, Nov. beans surged 17.25c higher, Jan. beans leapt up 16c, Oct. soymeal soared $9.60/ton, Oct. soyoil edged 0.03c/lb. lower, & Dec. soft red winter wheat blasted 14.25c higher & March SRW wheat jumped 13.25c.
 
In export news, USDA announced on Thursday morning that 4.724 mb of 2020/21 US corn & 13.246 mb of 2020/21 US beans were sold to unknown destinations & an additional 9.700 mb of 2020/21 US beans were sold to China. On Wednesday, the farm agency reported that 12.015 mb of 2020/21 US beans were sold to China. USDA has made a daily export sales announcement every business day since Aug.
25 except for Sept. 2.
 
Locally, corn, soybean & wheat basis levels were steady on Wednesday, but St. Louis bean basis levels slid as much as 8.5c lower on Wednesday.  Some St. Louis terminals continue to offer a quick ship premium of up to 6c on corn & 4c on beans for grain that arrives by Friday of this week.
 
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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