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Midday Comments: 10/21/2020

Oct 21, 2020

Recapping Tuesday’s price action, speculative buying lifted grains as slow planting progress in Brazil, harvest delays in the US Corn Belt, rising wheat prices in Russia & a weaker US dollar provided price optimism.  Corn & wheat each posted fresh market-year highs, but soybeans remained well below its early-October peak. Record-high early season corn & soybean export sales are providing fundamental support to those grain while dry weather in Russia & the USW Southern Plains are underpinning expectations that wheat supplies will decline next year. Speculative money flow continues to be the marginal driver for current rally.  At Tuesday’s close, Dec. corn futures jumped 3.5c, March corn gained 2.75c, Nov. & Jan. beans each surged 9.75c higher, Dec. soymeal eased $1.30/ton lower, Dec. soyoil blasted 0.78c/lb. higher, Dec. soft red winter wheat gained 5c & March SRW wheat rallied 6c.
After leading corn & wheat higher in overnight trading, soybeans have continued to be the price leader on Wednesday morning. Unlike corn & wheat that set new market-year highs this week, soybean futures have been unable to exceed the multi-year highs they set following in reaction to the Oct. 9 WASDE report.  Early in Wednesday’s trading session, Nov. beans rallied 13c, but fell 2.75c shy of their Oct. 9 highs. Prices then drifted back toward their 7-9c overnight gains. After initially struggling to exceed overnight highs, Dec. corn futures extended its recent rally, reaching levels last seen in June 2019.  Corn prices are trading at levels that have been exceeded only 7% of the time since June 2014 with weekly chart resistance at $4.10-4.17 now being tested. Corn prices rallied despite disappointing weekly ethanol data.  Wednesday morning’s EIA Weekly Petroleum Status report showed ethanol output declined to 268.422 last week, down 2.56% for the week, the least output in 3 weeks & 8.33% below last year’s same-week results.  Ethanol inventory declined 11.634 (-1.38%) to 828.702  That’s the third-smallest stockpile since Dec. 30, 2016.  Wheat gains were limited by news that the Russian grain harvest is continuing rapidly and that year-on-year grain output has been larger. Wheat continues to derive support from weather trends that have brought only 10-20% of normal rainfall during the past two months to the Black Sea wheat production region.  That has cut winter wheat seeding in Russia, & threatens to weaken the viability of planted crops as they head into dormancy.  At the 7:45 am pause in electronic trading, Dec. corn futures were up 3.75, March corn was 2.75c higher, Nov. beans were up 9.75c, Jan. beans were 10c higher, Dec. soymeal gained $7.00/ton, Dec. soyoil was up 0.12c/lb., Dec. SRW wheat was 1.75c higher & March SRW wheat was up 2.25c. By 1:10 pm, Dec. corn futures were up 4.5c, March corn were 2.75c higher, Nov. beans were up 8.25c, Jan. beans were 8c higher, Dec. soymeal was up $6.70/ton, Dec. soyoil was 0.09c/lb. lower, Dec. soft red winter wheat was down 2.75c & March SRW wheat 1.5c lower.
Thursday’s USDA Weekly Export Sales report for the week ended Oct. 15 is expected to show sales of corn at 31.5-55.1 mb, beans at 44.1-91.9 mb & wheat at 7.3-22.0 mb. The report should confirm that corn export commitments are the highest since at least 1979, & soybean export sales are the highest ever by mid—October.  Traders remain optimistic about US grain exports to China. Chinese authorities noted overnight that Chinese domestic corn prices are trending higher, but also said they have no plans to intervene. Corn harvest in the key northeastern production region is about 80% complete.  Harvest there has been slowed by typhoon damage that is requiring some corn to be picked by hand.  Authorities still expect a bumper harvest that will be completed by the end of October. Feed demand is stronger as Chinese pork output continues to recover from the African swine fever setback.  Chinese officials believe pork supplies will be up 30% year-on-year compared to last year’s Lunar New Year holiday in February.   
In export news, USDA did not report any daily export sales on Wednesday. On Tuesday, the farm agency announced that 4.850 mb of 2020/21 US soybeans were sold to unknown destinations.
Locally, corn basis improved a penny, soybean basis rose 2c & wheat basis was steady on Tuesday. Barge freight declined on Tuesday, pushing terminal cash corn, beans & wheat to fresh market- year highs.  With the regional corn harvest wrapping up & the bean harvest delayed by a multi-day rain event, basis levels continued to firm on Wednesday morning. St. Louis barge freight has likely peaked for the season, but Wednesday’s basis gains were tied to higher Gulf corn & beans bids.
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 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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