Midday Comments: 10/30/2020

Grains have given back some of their solid Thursday night gains in the Friday morning trading with outside markets & rainfall in previously dry wheat production regions continuing to weigh on grains. Overnight, corn futures were 2-4c higher, beans were up 5-10c & wheat was 1-3c higher as traders clawed back some of the mid-week price carnage.  Speculation that the recent sell-off may have gone too far too fast bolstered sentiment, but the last trading day of the month also likely encouraged some position adjustments.  Evidence that the La Nina weather pattern could bless central & northern Brazil with good growing conditions but bring too dry weather to southern Brazil & Argentine particularly supported soybeans.  Grains eased from early session highs as crude oil struggled to its lowest level since June, equity markets continued to sell-off ahead of Tuesday’s elections & the US dollar worked higher for the fourth day this week.  At 1:10 pm on Friday close, Dec. corn futures were 1.25c lower, March corn was up 1c, Nov. beans was 3.5c higher, Jan. beans was up 4.5c, Dec. soymeal was up $1.00/ton, Dec. soyoil was 0.45c/lb. higher, Dec. soft red winter wheat was down 6.25c & March SRW wheat was 3.5c weaker. Weekly continuation corn charts were looking at potential key-week downward reversals & about a 22c loss, soybeans were heading for about a 28c weekly loss & SRW wheat was set for about a 34c loss for the week as markets headed into Friday’s month-end close. 
 
The biggest regional news of the past 24 hours was Thursday’s collapse in Oct.-Nov. southern Illinois corn & soybean basis.  After having benefited from the closure of the Illinois River throughout the 2020 harvest, regional cash prices plunged on Thursday on the anticipation that the reopening of barge traffic on the Illinois River would unleash backlogged grain supplies from that region.  St. Louis basis levels for Oct. delivery plunged 9.5c on corn & 13c on soybeans Thursday, & those losses reverberated into country elevator bids as well.   
 
In export news, USDA announced on Friday morning that 4.464 mb of 2020/21 US soybeans were sold to unknown destinations.  On Thursday, the farm agency reported that 35.098 mb of 2020/21 & 21.298 mb of 2021/22 US corn were sold to Mexico & 5.511 mb of 2020/21 US corn were sold to unknown destinations.  (In some early reports, I mistakenly reported the unknown corn sale as a bean sale.) Grain merchants reported on Friday that South Korean feed mills purchased 5.157 mb of US corn for Feb. delivery & 2.559 mb of optional origin corn for March arrival.  South Korean flour mills also bought .838 mb of US & .147 mb of Canadian milling wheat for March delivery on Friday. 
 
In production news, the London-based International Grains Council trimmed its global 2020/21 grain production forecast by 1 mmt to 2,227 mmt & its world corn production estimate by 4 mmt to 1,160 mmt on Thursday.  IGC analysts lowered its corn projections for the US, China & the EU, but upwardly revised expected output for Brazil & Argentina.  Wheat production was increased by 1 mmt to 764 mmt. Corn usage was reduced by 2 mmt to 1,176 mmt due to lower industrial use, particularly for biofuel.  But overall grain consumption was increased by 3  to 2,220 mmt & total grain carryover stocks were lowered by 10 mmt to 619 mmt. 
 
Locally, corn basis declined 9c, soybean basis dropped 13c & wheat basis was steady on Thursday.  January delivery basis levels were 1c lower on corn & 3c weaker on beans. 
 
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"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.