News > Top Ag News > Midday Comments: 8/5/2020

Midday Comments: 8/5/2020

Aug 05, 2020

Grains extended their Monday night losses as Tuesday’s regular trading session resumed as sell-stops below Monday’s lows were triggered as expectations for large US & global crops increased.  Monday afternoon’s USDA Weekly Crop Progress data that left condition ratings steady for corn (72% good-excellent) & improved on soybeans (73% G-E%, +1%) & spring wheat (73% G-E, +3%) & showed advanced corn & soybean development combined with a record-high private 2020 US corn & soybean yield estimates to send grain futures plummeting.  Brokerage house StoneX (formerly known as INTL FCStone) was the major catalyst for the session losses.  StoneX analysts projected 2020 US corn production at 15,320 mb on yield of 182.4 bu/ac. & soybean output at 4,496 mb on yield of 54.2 bu/ac. If realized, the much higher yields would more than offset improved Chinese buying of those commodities & boost Aug. 31, 2021 corn carryover back towards 3,000 mb & bean carryover near 800 mb.  Corn futures sagged to fresh contract lows as traders took aim at the continuation corn chart low set at $3.0025 in late April.  Beans & wheat each tumbled to double-digit losses as traders targeted the weekly soybean chart low of $8.765 set in mid-July & weekly wheat chart support near $5.00  At Tuesday’s close, Sept. corn futures crashed 9.25c lower, Dec. corn dropped 8.25c, Sept. beans plummeted 13.25c, Nov. beans plunged 14.5c, Sept. soymeal lost $3.50/ton, Sept. soyoil declined 0.17c/lb., & Sept. & Dec. SRW wheat each careened 12.75c lower.
Grains mounted a muted rebound attempt in Tuesday night trading as export buyers were tempted by Tuesday’s sell-off.  South Korean feed mills issued tenders for corn & Egypt launched a snap tender for wheat & vegetable oil in the wake of Tuesday’s losses. Forecasts for hotter temperatures that could cause crop stress in the southern Plains & parts of the western Corn Belt also prompted some profit-taking, but expectations for big crops amid questionable demand limited price recovery.  Global crop news was a mixed influence overnight. The French ag ministry lowered its soft wheat production forecast by 1.6 mmt to 29.7 mmt & its barley output projection by 1.0 mmt to 11.3 mmt, but forecast rainfall in Western Australia was likely to boost Aussie wheat yields & 13% above-average summer monsoon rains in India would bolster rice, soybean & corn production there.   At the 7:45 am pause in electronic trading, Sept. corn futures were up 1.5c, Dec. corn was 1c higher, Sept. beans were up 1.25c, Nov. beans were 1c higher, Sept. soymeal was up $1.10/ton, Sept. soyoil was 0.17c/lb. lower, Sept. SRW wheat was up 3.25c, & Dec. SRW wheat was 2.5c higher.
Corn largely maintained its overnight rally on Wednesday morning, but soybeans turned lower & wheat was mixed by the noon hour.  This morning’s EIA Weekly Petroleum Status data reported that ethanol output in the week ended July 31 was 273.714, down 7.938 (-2.82%) from the previous week & 32.046 (-10.48%) from same-week results last year.  Same week ethanol production was the lowest since 2014, but tied for the second-highest weekly output since March 20.  Ethanol stockpiles edged 3.108 (+0.37%) higher to 854.532 That is still the fifth-lowest stocks since Jan. 6, 2017.  The EIA data also indicated that commercially-owned crude oil stocks eased to their lowest level since April 10, underpinning both crude oil & corn futures.  Soybeans were pressured by forecasts for scattered showers across the Corn Belt that would offset warmer temps that should arrive by the weekend.  Census Bureau data that confirmed that monthly US soybean exports (66.130 mb) in June fell to their lowest level since June 2017 were a reminder that Phase 1 purchases by China have focused on new-crop & old-crop soybean exports are struggling to reach USDA’s 2019/20 export forecast.  Census data indicated that June exports of corn were 198.227 mb, of sorghum were 22.708 mb & of wheat were 83.891 mb.  Cumulative Sept-June 2019/20 corn exports totaled 1,422.5 mb—down 415.4 mb from last year.  Cumulative Sept-June soybean exports were 1,432.6 mb, down 9.8 mb from last year.  And cumulative Sept-June milo exports reached 168.8 mb, up 96.3 mb compared to 2018/19.  With one month now completed in its 2020/21 marketing year, wheat exports of 83.9 mb are 4.7 mb ahead of last year’s initial pace.  At 1:13 pm, Sept. & Dec. corn futures were each up 2.75c, Sept. beans were down 3.5c, Nov. beans were 3c lower, Sept. soymeal was down $0.90/ton, Sept. soyoil was 0.02c/lb. higher, Sept. SRW wheat was up 2.75c, & Dec. SRW wheat was 1c higher.
In export news, USDA announced on Wednesday morning that 7.055 mb of 2020/21 US soybeans were sold to China.  The farm agency did not report any daily export sales on Tuesday.  South Korean feed processors bought 5.1097 mb of South Hemisphere corn on Wednesday, less than one-third the total they sought. Egypt sought optional-origin wheat for Sept. shipment, at least 3,000 mt of soyoil & 2,000 mt of sunoil for October delivery.  Russian & Ukraine wheat were the only supplies offered.  Reports suggest the explosion in Beirut destroyed their port facility, a location that houses their strategic food reserves.  A ship was unloading Ukraine wheat when the blast occurred with fireworks now said to be the most likely cause for the ignition of 2750 mt of ammonium nitrate that was stored at a warehouse as a 6-year legal dispute wore on over its ownership.
Locally, corn & soybean basis levels declined a penny & wheat basis was steady on Tuesday.
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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