News > Top Ag News > Midday Comments: 10/19/2020

Midday Comments: 10/19/2020

Oct 19, 2020

Rain in Brazil prompted pre-weekend profit-taking in soybean futures that spilled over to corn on Friday, but wheat rallied on continued Russian crop worries. Traders largely shrugged off USDA’s Weekly Export Sales data that showed corn & soybean export sales were still on record paces.  At Friday’s close, Dec. corn futures declined 1.75c, March corn lost 1c, Nov. beans tumbled 12.25c lower, Jan. beans dropped 11.75c, Dec. soymeal fell $4.60/ton, Dec. soyoil eased 0.18c/lb. lower, Dec. SRW wheat jumped 7c higher & March SRW wheat gained 4c.  Grain price action was mixed for the week.  Weekly continuation charts of corn rallied 7c to settle at its highest end-week close in 14-months, but continuation soybeans declined 15.5c to reverse about one-third of the previous week’s upsurge.  Wheat prices moved sharply higher with SRW wheat surging 31.5c to post its highest weekly close since Dec. 19, 2014.
 
Grains traded on both sides of unchanged on Sunday night with Chinese grain markets & weather providing mixed signals.  Dalian Exchange corn futures closed 15c/bu. higher to a new record high of $9.86/bu. on Monday, prompting hopes for more US corn exports to China.  Reports that Chinese hog output had jumped 18% to 8.4 mmt in July-Sept. 2020 versus last year were moderated by the fact that Chinese hog production is still far below levels seen prior to the  August 2018 African swine fever outbreak. That said, year-on-year quarterly output was higher year-on-year for the first time in two years.  Russia recorded good moisture over the weekend that will aid winter wheat that was planted in the dust, but central Brazil received only scattered showers.  Both nations need more & regular rainfall than has been seen thus far.  Grain traders have been building into prices delayed planting progress for several weeks.  In Brazil, the private analyst AgRural estimates that only 7.9% of intended soybean acres have been planted as of Oct. 15, the slowest pace in a decade.  Delays in soybean planting will also delay the availability of Brazilian bean exports & slow the planting of the Safrinha corn crop that is seeded after soybeans are harvested in Dec-February. Moisture that was received on Friday will help farmers play catch up.  In Russia, private analyst IKAR noted that long awaited moisture arrived in winter wheat areas over the weekend, but additional rainfall is needed there, too.  For now, traders are wary of a trend towards wetter weather in Brazil, & that has particularly weighed on soybeans after its recent rally. Friday afternoon’s CFTC Disaggregated Combined Futures & Options Commitments of Traders report reiterated that managed trading funds continue to provide support to the grain complex.  At the close of trading Oct. 13, managed funds owned their largest highest long/short ratio (4.1949:1) in the major grains since April 1, 2014.  At the 7:45 am pause in electronic trading, Dec. corn futures were up 2.75c, March corn was 2.25c higher, Nov. beans were up 4.25c, Jan. beans were 4.5c higher, Dec. soymeal was up $6.00/ton, Dec. soyoil was 0.36c/lb. lower in sympathy with overnight losses in palm oil, Dec. soft red winter wheat surged 9.25c higher & March SRW wheat was up 7.25c.
 
Grain prices drifted back to small losses early in Monday’s regular trading session, but prices rebounded following the 10 am release of USDA’s Weekly Grain Export Inspections report.  USDA reported inspections of corn (35.865 mb, a 5-week high) & soybeans (79.863 mb, second only to the previous week as the highest since Nov. 8, 2017) that were at the top of trade expectations.  Inspections of grain sorghum (2.939 mb) rebounded from the previous week’s near-zero shipments, but the total was still roughly half the average shipments needed weekly to reach USDA’s export forecast.  Wheat inspections (8.807 mb, the least since Jan. 23) were well below trade expectations that ranged 14.7-22.0 mb.  China was again the top destination for US corn (14.166 mb), soybeans (64.048 mb) & milo (2.748 mb), but no US wheat was shipped to them in the weekly period ended Oct. 15.  With seven weeks now completed in the 2020/21 marketing year, cumulative corn inspections (214.792 mb) are at a two-year high, bean inspections (423.245 mb) are the fastest ever by 61.545 mb, & grain sorghum inspections (21.166 mb) are the highest in five years. With 20 weeks now completed in its 2020/21 marketing year, cumulative wheat inspections (392.326 mb) are at a three-year high.  At noon, Dec. corn futures were up 3.5c, March corn 4c higher, Nov. beans was up 4.075c, Jan. beans was 4c higher, Dec. soymeal was up $6.90/ton, Dec. soyoil was 0.48c/lb. lower, Dec. SRW wheat was up 6.5c & March SRW wheat was 5.75c higher.

In export news, USDA announced on Monday morning that 4.842 mb of 2020/21 US corn were sold to Mexico & an additional 13.582 mb of 2020/21 US corn were sold to unknown destinations.  On Friday, the farm agency reported that 2020/21 US soybeans were sold to Mexico (4.703 mb) & to unknown destinations (14.372 mb).  Japan’s ag ministry bought a total of 3.223 mb of milling wheat from the US & Canada last week in a regular weekly tender. South Korea reportedly purchased 2.388 mb of feed wheat from the US on Friday for Feb-March arrival as well as 2.205 mb of optional-origin feed wheat for March delivery over the weekend. Pakistan bought 12.493 mb of milling wheat late last week for January delivery.  In an effort to restrain rising domestic food prices, Brazil said it was relaxing import tariffs on corn, soybeans, soymeal & soyoil from non-Mercosur nations.  Mercosur, also known as the Common Market of the South, is a bloc between member nations Brazil, Argentina, Paraguay & Uruguay that provides preferential trade, economic & cultural ties.  Venezuela’s membership in Mercosur was suspended in 2016 for human rights violations & a turn from democratic elections.  US corn & soybeans are not likely to make substantial inroads into Brazil due to freight costs, but Brazil has been a good wheat customer in years when Argentina has experienced crop woes.  Brazil’s overly aggressive exports of corn & beans to China have whittled down their inventories enough to push domestic food prices higher. 
 
After corn & bean basis each rose 2c/bu. on Thursday, locally, corn, soybean & wheat basis levels were steady on Friday. Cash corn prices for nearby delivery rose 11c, soybeans declined 11c & wheat prices soared 31c higher for the 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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