Midday Comments: 12/1/2020

Grains attempted to rally on Monday night, but wheat led corn & soybeans lower by late Tuesday morning.  Reports from Russia’s weather service that 78% of the Russian wheat crop is in % good or satisfactory condition, a boost in the Australian wheat production estimate, & USDA’s Weekly Crop Progress report that increased US wheat conditions by 3% to 46% good-excellent all weighed on wheat, sending that commodity to 9-week lows.  Egypt bought 2 cargoes of Russian & 1 cargo of Ukraine wheat overnight. Aggressive exports from Black Sea suppliers was a reminder that US wheat still faces stiff competition.  Corn & beans mostly maintained small gains until late morning. Those grains broke lower following the midday release of South American weather forecasts that added more rainfall for next week.  Monday afternoon’s holiday-delayed CFTC Disaggregated Combined Futures & Options Commitments of Traders data added to market nervousness after it showed managed trading funds added to their already hefty net long positions in corn, hard red winter wheat & soyoil & only modestly reduced large net long positions in soybeans & soymeal in the weekly period ended Nov. 24.  Weather trends in South America remain the key to grain prices as the size of their corn & soybean output will dictate how strong US export demand & ending stocks will be in April-August. At 1:09 pm, March corn futures were down 4.5c, July corn was 4.25c lower, Jan. beans was down 5.25c, March beans was 5.5c lower, Jan. soymeal was up $0.20/ton, Jan. soyoil was down 0.44c/lb., March soft red winter wheat was 7.5c lower & July SRW wheat was down 7c.
 
Recapping Monday’s price action, grains opened with strength on Sunday night as no first notice day deliveries were made against Dec. corn, soy products, SRW or HRW wheat futures. Prices peaked around 2 am, & then eroded thru the balance of the overnight session. Weekend rainfall in southern Brazil were as expected. The cold front associated with that rain is expected to move northward, bringing near-normal rainfall over the next couple weeks. Although South American soils will remain moisture deficit if the forecast verifies, rain prospects prevented corn from holding the new contract highs set Sunday night & Jan. soybeans from exceeding last week’s $12 high. Wheat was pressured by talk Russia may increase the amount of wheat it will allow to be exported from Feb.17-June 30 by 2.5 mmt to 17.5 mmt. That would compete with late season US wheat exports.  Corn quickly extended 0.50-1c overnight losses, beans amplified 10.75-11.5c losses & wheat magnified 5.5-7c overnight weakness as Monday’s regular trading session resumed.  Despite 6-week highs in corn export inspections (35.039 mb), still strong soybean shipments (an 8-week low 74.825 mb), 28-week highs in grain sorghum shipments (9.679 mb), & a 7-week high in wheat export inspections (18.474 mb), grains were hit with end-month profit-taking that also impacted energy markets & global equity prices.  At Monday’s close, March corn futures declined 7.75c, July corn lost 7.5c, Jan. & March beans each crashed 23.25c, Jan. soymeal dropped $5.80/ton, Jan. soyoil tumbled 0.94c/lb., March soft red winter wheat plunged 21c & July SRW wheat plummeted 18.25c.  Corn & soybeans upward momentum had stalled the past couple weeks. Corn, soybeans & soymeal each formed key-day chart reversals on Monday as low-range losses after overnight strength made short-term trends even more toppy.  Wheat sagged to an 8-week low on Monday, continuing the downtrending pattern of lower highs & lower lows seen since mid-October intact. 
 
In export news, USDA did not report any daily export sales on Tuesday. On Monday, the farm agency announced that 13.543 mb of 2020/21 US corn were sold to unknown destinations. Following a snap tender issued on Monday afternoon for optional-origin wheat, Egypt’s state grain buyer GASC announced on Tuesday that it had purchased 4.042 mb of Russian & 2.205 mt of Ukraine wheat for Jan. 26-Feb. 5.  Egypt paid $7.48-7.50/bu., delivered.  Vietnam is seeking 68,000 mt of soymeal, & Thailand feed processors have tendered for 4.409 mb of feed wheat for Feb.-March arrival.  Two major Argentine unions representing oilseed workers & grain inspectors launched indefinite national strikes on Tuesday, demanding wage increases to offset high Argentine inflation rates.  US bean crush rates have been supported by elevated exports, gained in part from Argentine export woes.
 
Locally, corn basis was up 1c, & soybean & wheat basis was steady on Monday.
 
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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.