Midday Comments: 12/3/2020

Corn & soybeans have extended Wednesday night gains, but wheat has mostly held on to overnight losses during Thursday’s regular trading session.  After posting 1.25-1.75c gains in corn, & 8.75c gains in beans in the electronic session, corn & beans doubled those rallies by Thursday’s noon hour as short-covering from the early week sell-off & hope for additional grain sales to China underpinned prices.  UDSA’s Weekly Export Sales data for the holiday week ended Nov. 27 were strong for corn (53.994 mb vs. 31.5-51.2 mb expected), for wheat (16.395 mb vs. 9.2-18.4 mb) & for grain sorghum (9.393 mb), but a bit disappointing for soybeans (14.951 mb vs. 14.7-42.3 mb), for soymeal (164,000 mt vs. 100,000-300,000 mt) & for soyoil (2,500 mb vs. 5,000-30,000 mt).  Not only were corn sales above expectations & almost twice the average needed to reach USDA’s 2020/21 export forecast, corn shipments were the highest since Aug. 13.  Milo sales were about 4.5 times the average weekly sales needed.  While soybean weekly sales were still twice the average needed to reach USDA’s export projection, 2020/21 bean sales were the lowest since July 2, & total multi-year weekly sales were the least since April 16.  Year-to-date commitments remain record-setting, the best ever by 388.2 mb at marketing week #13.  While soymeal sales barely exceeded that weekly average needed to reach current export forecasts, soyoil sales were far below the weekly pace required.  While corn, soybean & wheat sales are running well above the sales percentage seen in the previous 5- & 25-year averages, soy products are each slightly below sales versus the final shipments pace seen in the previous 5- & 25-year periods. China was again an active buyer last week, booking 6.094 mb of corn, 17.523 mb of soybeans (including 14.551  switched from unknown), 0.110 mb of wheat, 10.889 mb of milo (including 4.173 switched from unknown) 131,200 running bales of  cotton, 8,800 mt of the total 35,500 mt of pork that was sold, 900 mt of the total 16,900 mt of beef that was sold & 150,500 of the total 267,400 cattle hides that were sold last week.  So far in 2020/21, China has bought 440.109 mb of corn, 1,090.141 mb of beans, 142.879 mb of milo, & 75.644 mb of wheat. Grains have been supported by continued weakness in the US dollar, now at lows not seen since April 2018. At 1:12 pm, March corn futures were up 2.75c, July corn was 2.5c higher, Jan. beans was up 16.25c, March beans were 16.75c higher, Jan. soymeal was up $4.70/ton, Jan. soyoil was 0.81c/lb. higher, March soft red winter wheat was down 4c & July SRW wheat was 3c lower.
 
Recapping Wednesday’s price action, wheat expanded its overnight rally to lift corn into the green & help beans halve Tuesday’s losses.  Wheat appears to have benefitted from both short-covering as well as end-user pricing with unconfirmed rumors of Chinese buying also circulating. After having sagged to double-digit losses in the overnight session, soybeans nearly erased those losses by mid-morning only to drift back to solid, mid-range losses after 11 am South American weather maps continued to call for rain over the next week. Hot temps remain a problem in central Brazil that should be allayed when an expected cold front arrives this weekend.  Beans’ downward momentum was slowed by Argentine 90-day forecasts that called for below normal rainfall & above normal temperatures in December-February.  Soybeans bounded off chart support lines drawn from August lows as traders remain aware that South American production is more likely to fall below than exceed current USDA forecasts.   Corn rebounded back above the August-Sept. uptrending chart support line it violated overnight, catching some traders in a “bear trap.”  Rumors that China was looking for more US corn circulated without confirmation, but that helped cushion the sell-off.  Traders mostly shrugged off Wednesday morning’s disappointing EIA Weekly Petroleum Status report that indicated US ethanol output declined 4.704 mil.gal. (mg) to 286.356 mg last week, but ethanol stockpiles on Nov. 27 were still 15.708 mg (+1.79%) higher for the week at 892.080 mg—their highest since June 12.  Same-week ethanol output was the lowest since **2015** & ethanol stocks were 25.24 mb (+2.91%) more than last year, a bleak combination.  Corn & soybean prices also reacted minimally to USDA’s monthly corn & soybean crush reports that indicated soybean crush (196.569 mb) was the largest ever for any month in October, & that corn crush for fuel ethanol (432.713 mb) rebounded sharply (+31.181 mb) from Sept. Oct. corn crush was still 6.403 mb below last year & the smallest Oct. total since 2014.  At Wednesday’s close, March corn futures rallied 3c, July corn gained 2c, Jan. beans tumbled 9c lower, March beans declined 8.25c, Jan. soymeal dropped $4.60/ton, Jan. soyoil edged 0.09c/lb. lower, March soft red winter wheat surged up 11.25c & July SRW wheat rose 9c.
 
In export news, USDA did not report any daily export sales on Thursday, the third straight day without a sales announcement. Grain merchants reported that South Korean feed mills bought 5.236 mb of corn for June arrival on Thursday, & tendered for 132,000 mt  of soymeal for Dec-May shipment. 
 
Locally, corn & soybean basis levels jumped 3c higher & wheat basis was steady on Wednesday. Corn & soybean bids for January remain significantly higher than for spot delivery, but market carries weaken thereafter. St. Louis barge freight costs have declined about 2c/bu. this week.
 
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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.