News > Top Ag News > Midday Comments: 11/19/2020

Midday Comments: 11/19/2020

Nov 19, 2020

Pressured by solid rainfall totals in Mato Grosso, Brazil, soybeans led corn & wheat futures lower on Wednesday night.  Although rainfall in other production regions was more limited, the fact that Brazil’s largest producing corn & soybean state took some of the steam out of the recent rally. Speculators probably didn’t need much of an excuse to book some profits with next week’s holiday likely to thin out trading ranks.  Grains came off their overnight lows following the 7:30 am release of USDA’s Weekly Export Sales report for the week ended Nov. 12.  Export sales of corn (42.856 mb), soybeans (50.989 mb), grain sorghum (7.319 mb) & soyoil (45,100 mt) exceeded trade expectations & were well above the weekly average rates needed to reach current USDA forecasts for 2020/21.  Sales of soymeal (182,100 mt) were within pre-report trade guesses, but also exceeded the average needed.  Sales of 2020/21 wheat (7.066 mb) were a disappointment, sagging to their lowest since April 30 & falling well short of the 12.1 mb pace needed weekly to reach USDA’s export projection.  At the 7:45 am pause in electronic trading, Dec. corn futures were down 4.75c, March corn was 4.25c lower, Jan. beans were down 9c, March beans were 9.25c lower, Dec. soymeal was down $3.20/ton, Dec. soyoil was 0.07c/lb. lower, Dec. SRW wheat was down 1.75c & March SRW wheat was 2.25c lower.  Malaysian palm oil futures were solidly higher overnight as traders reacted to forecasts for excessive rainfall thru the end of December.  Just as La Nina weather events typically bring drier than normal weather to southern Brazil & Argentina, the pattern often causes too much rain that curbs palm oil production in Malaysia & Indonesia.  Gains in soyoil have been key to the recent rise in soybean futures.
Corn & soybeans futures trimmed their losses during Thursday’s regular trading session, but wheat extended its overnight losses.  Although export customers have likely front-loaded their US grain purchases to avoid potential yield reductions in South America as well as market disrupting purchases by China, traders continue to be impressed by the record-high sales pace seen in corn & soybeans.  Cumulative corn sales (1,388 mb) remain the highest since at least 1979 thru the second of November.  Cumulative bean sales (1,884.5 mb) are the highest ever at marketing #11 by 470.5 mb!  Despite the recent slowdown in sales, cumulative wheat sales (633.6 mb) are still the best since 2016/17 at week #24 & are 57.9 mb above the five-year average pace. Cumulative soymeal sales (4.7992 mmt) are at 2-year high & soyoil sales (155,000 mt) are the highest since 2015/16 at week #7.  A decline in the US dollar is helping offset some of this year’s price rally.  That is especially true for China,  where a sharp rise in the yuan has made US goods cheaper to buy.  China was again an active buyer of US farm products, booking 6.878 mb corn, 38.978 mb of beans,  4.593 mb of white wheat, 5.165 mb of old- & 2.670 mb of new-crop milo. No US soymeal or soyoil was sold to China last week. So far in 2020/21, China has bought 431.027 mb of corn, 1,051.359 mb of soybeans, 63.298 mb of wheat & 120.152 of milo.  Chinese purchases of non-grain ag products slowed last week.  It cancelled 24,200 running bales of previous upland cotton commitments. China added only 2,100 mt of 2020 US pork, a small percentage of the total 28,900 mt of pork that was sold last week. It added only 1,900 mt of US beef, just 4.1% of the total 46,400 mt of beef that was sold globally.  Cattle hide purchases also slowed to 131,100 of the 273,300 total that was sold.  In past weeks, China has often bought up to 80% of total US hide purchases.  Whether China will meets its Phase One ag purchase targets for 2020 is still highly uncertain.  So far, it has fallen short.  If & when they buy a lot of US ethanol & dried distillers grains, we’ll know they are serious in meeting its obligations.  At 1:05 pm, Dec. corn futures were down 3.75c, March corn was 4c lower, Jan. beans were down 1/4c, March beans were 1c lower, Dec. soymeal was down $2.00/ton, Dec. soyoil was 0.34c/lb. higher, Dec. soft red winter wheat was down 7c & March SRW wheat was 8.5c lower.  Wheat charts continue to show a pattern of lower highs & lows, corn charts have struggled to extend their post-report gains & soybeans are also looking a little toppy over the past couple days. South American weather remains the key to how high markets can rise in the first quarter of 2021.
Recapping Wednesday’s price action, soybeans again led corn & wheat higher on Wednesday as dry weather in South America continued to capture traders’ attention.  Virtually the entire growing region of South America has received subpar moisture for the past 90 day.  Although some rain was in the short-term forecast, the 6-14 day weather prognosis for southern Brazil & most of Argentina was for continued limited precipitation.  Beans got an additional boost from estimates by the US Soybean Export Council that China will import about 100 mmt of soybeans in 2020, beating the previous record of 95.54 mmt set in 2017.  The nation imported 83.21 mmt in January-October, & November-December imports are forecast at 9 mmt per month.  As China transitions to large-scale hog production from small farms that often feed food waste, soymeal demand is rising as China’s hog population repopulates from losses caused by the African Swine Flu. Corn traders shrugged off disappointing weekly ethanol production & usage data.  Wednesday morning’s EIA Weekly Petroleum Status report indicated that ethanol output declined 4.410 (-1.54%) to 282.828 in the week ended Nov. 13. That broke a string of 3 straight weeks of rising production, was 6.87% below last year, & the smallest same-week output since 2013.  Despite declining production, ethanol stockpiles still rose 1.848 (+0.22%) to an 11-week-high 848.526 as fuel demand was pared by resurgent COVID-19 restrictions.  Ethanol stockpiles are down 1.52% from last year, but that is the highest year-on-year percentage comparison since June 12.  Corn futures edged to new contract highs by 11:45 am as trader searched for buy-stops, but prices faded when few were found.  Soybean peaked by 9:25 am, & pulled back more than a dime below the new 53-month highs set at that time.  At Wednesday’s close, Dec. corn futures gained 5.5c, March corn rose 3.75c higher, Jan. beans rallied 6c, March beans were 6.25c higher, Dec. soymeal declined $0.90/ton, Dec. soyoil jumped 0.96c/lb. higher, Dec. soft red winter wheat was up 2.5c & March SRW wheat was 3.5c higher.
In export news, USDA did not announced any daily export sales on Thursday.
On Wednesday, the farm agency reported that 5.511 mb of 2020/21 US corn were sold to unknown destinations.  South Korean feed mills purchased 5.197 mb of corn to be sourced from either the US or South America on Thursday for May delivery.  Japan’s ag ministry sought a total of 3.742 mb of milling wheat from the US & Canada on Thursday in a regular weekly tender.  Taiwanese flour millers will seek 3.021 mb of US milling wheat next Wednesday. South African exporters may be in a better position to sell corn in the coming months as final 2019/20 corn production is expected to rise 36% compared to 2018/19’s drought-hit crop.  Analysts surveyed by ThomsonReuters look for South Africa’s Crop Estimates Committee to report final 2020 corn output near 15.4 mmt, including 8.746 mmt of white food corn & 6.632 mmt of yellow feed corn.
Basis levels for Nov. delivery continued to rebound on Wednesday as barge freight again weakened.  Locally, corn basis surged 5c higher, soybean basis soared 8c higher & wheat basis was steady on Wednesday. St. Louis terminal cash corn prices were the highest since June 27, 2019 & cash beans were the highest since July 1, 2016 on Thursday. 
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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