News > Top Ag News > Midday Comments: 11/23/2020

Midday Comments: 11/23/2020

Nov 23, 2020

With dry weather in South American providing the fuel for the rally, grains surged in the opening moments of Sunday night trading, triggering buy-stops that sent corn & beans to new contract highs.   Corn edged above its post-WASDE peak, Jan. soybeans pegged $12.00 for its overnight high, & Dec. soft red winter wheat jumped back above $6.00 during the Sunday night session, but trading eventually stalled with prices near recent highs.  Weekend rainfall in Brazil was limited to areas north of the main growing areas.  Although good precipitation fell in southern Buenos Aires province, the rest of Argentina’s crop region was mostly dry.  Hot temperatures are expected in key areas of central Brazil this week that will compound dry conditions.  November rainfall has been 50% or more below normal in central Argentina & south-central Brazil, 75% or more below normal in Uruguay & southern-most Brazil & 20% or more below normal in much of Mato Grosso, Goias & Mato Grosso do Sul in Brazil.  With the La Nina weather event raising crop production risks, speculative capital continued to flow into the grain complex to start the holiday-shortened week.  Friday afternoon’s USDA monthly Cattle-on-Feed report & weekly CFTC Commitments of Traders data were modestly supportive to Sunday night grain trading.  USDA reported that US feedlots had 1.33% more cattle on feed on Nov. 1 than last year even though Oct. feeder cattle placements were 10.97% smaller year-on-year.  Oct. cattle marketings edged 0.11% lower compared to last year. CFTC data reported that managed trading funds were modest net sellers of corn, soybeans, soymeal, soft red winter wheat, & hard red spring wheat & were net buyers of soyoil & hard red winter wheat in the weekly period ended Nov. 17. Funds remain heavily net long corn, HRW wheat & the soy complex, but are only moderately net long SRW & HRS wheat.  Traders saw the report as confirmation that the trend-following funds still believe grain trends are higher.  At the 7:45 am pause in electronic trading, Dec. corn futures were up 5c, March corn was 5.5c higher, Jan. & March beans were each up 14c, Dec. soymeal was $5.40/ton higher, Dec. soyoil was up 0.34c/lb., Dec. SRW wheat was up 9.25c & March SRW wheat 8c higher.
 
Grains struggled to exceed overnight highs as Monday’s regular trading session resumed, but traders also proved willing to buy prices on dips.  USDA’s Weekly Grain Export Inspections data for the weekly period ended Nov. 19 released at 10 am were within pre-report trade expectations, & did not move prices much.  Corn inspections (32.779 mb) were at two-week lows & far below the 56.3 mb needed weekly to reach USDA’s 2020/21 export target of 2,650 mb.  Cumulative inspections of 364.2 mb are 143.2 mb better than last year, but 154.2 mb below the 2018/19 shipment pace.  Mexico (11.595 mb), China (7.908 mb), Colombia (5.520 mb) & Japan (4.562 mb) were the principal corn destinations last week.  Soybean inspections slipped to a 7-week-low 73.854 mb, but that far exceeded the 32.1 mb needed weekly to reach USDA’s 2,200 mb export forecast.  USDA also upwardly revised the previous week’s inspections by 8.332 mb to 90.636 mb.  China (51.027 mb) was the dominant shipper last week, but 7 other nations also took at least 1 mb.  Cumulative soybean inspections now stand at 897.2 mb, 91.1 mb above the previous week #12 record pace set in 2016/17.  Grain sorghum inspections eased to 4.767 mb, down from the previous week’s upwardly revised total (7.376 mb, +2.769 mb) & slightly below the 5.3 mb needed weekly to reach USDA’s 260 mb export projection. China took all of last week’s milo shipments.  Cumulative sorghum inspections now stand at 43.2 mb, up 25.3 mb from 2019’s early season pace.  Wheat inspections remained somewhat disappointing at 13.157 mb, up 7.1% from the previous week’s upwardly revised 12.287 mb (+0.310 mb), but below the 18.6 mb needed weekly to reach USDA’s 975 mb export forecast.  Mexico (2.523 mb) & China (2.315 b) led the list of 8 nations that shipped at least .515 mb of US wheat last week.  Grains largely traded within their overnight price ranges during Monday’s regular session with volumes likely to thin the rest of the week.  At 12:46 pm, Dec. corn futures were up 2c, March corn was 3.5c higher, Jan. beans was up 8.75c, March beans was 9c higher, Dec. soymeal was up $0.30/ton, Dec. soyoil was 0.11c/lb. higher, Dec. SRW wheat was up 5.75c & March SRW wheat was 5.25c higher.
 
Grain & livestock futures exchanges will be closed on Wednesday night, Thursday & Thursday night, & Friday will be a shortened session.  If history is a guide, most elevators are likely to be closed on both Thursday & Friday.
 
Recapping Friday’s trading, concerns about dry South American weather trends were countered by chart-based selling against round-number price resistance levels, & grains settled far below Thursday night highs.  Sellers emerged as corn tested & was unable to overcome mid-week highs, soybeans couldn’t penetrate $12 & wheat failed to surmount $6.  The price recovery seen in recent weeks is proof that South American weather is now the key fundamental factor in prices.  At Friday’s close, Dec. corn futures edged 3/4c higher, March corn gained 1c, Jan. beans rallied 36.5c, March beans jumped 5.75c, Dec. soymeal was up $1.00/ton, Dec. soyoil lost 0.15c/lb., Dec. soft red winter wheat was up 1.5c & March SRW wheat rose 3/4c. For the week, continuation charts of corn gained 12.75c to post its highest end-week close since July 19, 2019, beans surged 33c higher to its highest weekly close since Aug. 8, 2014, & wheat ticked 1/4c lower to its lowest Friday settlement in 7 weeks.
 
In export news, USDA announced on Monday morning that 13.149 mb of 2020/21 US were sold to unknown destinations.  On Friday, the farm agency reported that 2020/21 US corn was also sold to Mexico (6.231 mb) & unknown destinations (5.157 mb).  Grain merchants report that Pakistan bought 12.493 mb of milling wheat, & Tunisia was seeking 2.756 mb of durum, 3.380 mb of milling wheat & 3.445 mb of feed barley.  Saudi Arabia announced it had bought 14.096 mb of wheat from its farmers, nearly double the total purchased in 2019. China sold 25.958 mb of wheat from state-owned stockpiles on Monday morning, just 17.6% of what was offered at auction.  Chinese customs officials reported they imported 1.14 mmt of corn in October, the most ever for that month.  January-October corn imports totaled 7.804 mmt.  With two months left in the year, corn imports already exceed China’s 7 mmt tariff-rate quota for 2020.  China also imported .630 mmt  of wheat, the highest October total in 6 years. Pork imports reached 330,000 mt in October, up 80% vs. last year. Grain sorghum imports surged to .530 mmt—up 373% from last October.  Cumulative 2020 pork imports (3.621 mmt) are up 126% from 2019, & year-to-date milo imports (4.02 mmt) are up 449% from last year. 
 
Locally, corn basis eased a penny lower on Friday, but soybean & wheat basis levels were steady.  For the week, Nov. delivery cash corn prices soared 39c higher, cash beans rocketed 64c higher & wheat was down 2c.  Spot delivery corn & beans surged to multi-year highs as futures rallied & barge freight costs plunged.
 
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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