Midday Comments: 9/15/2020

Grains continued to rally on Monday with soybeans again taking the lead.  A robust start for exports in the 2020/21 attracted speculative buying with markets also underpinned by concerns that both corn & beans have suffered yield losses from an early frost in the northwestern Corn Belt & ongoing dry weather in the eastern Corn Belt. Weekly export inspections were near the upper end of traders’ pre-report expectations, & USDA continued to report fresh daily export sales of corn & soybeans.  Early session gains were trimmed with corn ending mostly fractionally higher, beans settling with mud-range gains & wheat with modest, upper range rallies.  At Monday’s close, Dec. corn futures gained 1c, March corn rose 3/4c, Nov. beans were 3.5c higher, Jan. beans were up 4c, Oct. soymeal declined $2.90/ton, Oct. soyoil surged 0.62c/lb. higher, & Dec. & March soft red winter wheat each rallied 3.75c.  Sept. grain futures expired at 12:05 pm on Monday with Sept. corn down 7.5c, beans up 13.75 & SRW wheat up 14.75c.
 
Profit-taking emerged on Monday night in corn & wheat futures, but soybeans worked higher, supported by continued crop worries & evidence of strong export interest.  Corn struggled even though USDA’s Weekly Crop Progress data for the week ended Sept. 13 lowered crop conditions by 1% to 60% good-excellent.  Ratings deterioration in Iowa, Indiana, Michigan, Minnesota, North Dakota, Ohio & Pennsylvania more than offset improvement in Illinois & Southeastern states.  Corn was rated 55% G-E at this time last year.  Traders paid more attention to the fact that 41% of the 18-state corn crop is now mature & that 5% of the crop has now been harvested.  Maturity is running 9% ahead of the 5-year average & harvest is equal to the 2015-2019 pace. Soybeans were bolstered overnight by USDA’s report that bean conditions dropped 2% to 63% G-E. That’s still a much higher rating than the 54% G-E rating reported for Sept. 13,2019. Declining conditions in North Dakota & Minnesota offset ratings improvement in eastern Corn Belt states, including Illinois.  The Nov. 2020 soybean contract pushed above $10 for t6he first time since early 2017 on Monday, but overnight gains could not exceed Monday’s peak.  That set the stage for some profit-taking in all the grains as Tuesday’s regular session approached.  At the 7:45 am pause in electronic trading, Dec. & March corn futures were each down 1.75c, Nov. beans were up 2.5c, Jan. beans were 3.25c higher, Oct. soymeal was up $0.50/ton, Oct. soyoil was 0.15c/lb. higher, & Dec. & March SRW wheat were each 3.75c lower.
 
Corn & wheat futures extended their overnight losses & soybeans turned lower as Tuesday’s regular trading session evolved.  Inability to exceed Monday’s highs triggered some “Takeback Tuesday” profit-taking even though USDA reported another round of corn & soybean export sales & European & French ag officials each trimmed their grain yield forecasts due to erratic summer weather.  News that the WTO had ruled Pres. Trump’s imposition of stiff tariffs on goods from China violated international trade rules may have caused some caution this morning.  China has bought a huge amount of US grain in the past 45 days, & trade tensions remain elevated.  Traders continue to worry that a blow-up in trade talks could still happen prior to the election, dramatically changing the demand for US exports.  That said, there are plenty of reasons to believe China actually needs US grain to rebuild depleted grain stockpiles & provide feed for its rapidly recovering hog herd.  Chinese officials reported overnight that its hog herd is 31.3% above the August 2019 total with the sow herd 37% higher than last year.  The huge increase comes as efforts to provide loans & other incentives to hog producers bears fruit.
At 1:08 pm, Dec. & March corn futures were each 3.25c, Nov. beans were down 7.25c, Jan. beans were 6.75c lower, Oct. soymeal was down $2.50/ton, Oct. soyoil was 0.17c/lb. lower, & Dec. & March SRW wheat were each down 8c.
 
The National Oilseed Processors Assn. reported on Tuesday morning that its members crushed 165.055 mb of soybeans during August.  That was down 7.739 mb from July, 3.030 mb below last year & the first year-on-year smaller NOPA monthly crush since last November. Soymeal exports declined to 754,634 tons, down 121,525 tons from July, but 55,422 tons above last year.  End-August soyoil stockpiles dropped to 1.518.540 mil.lbs., down 110.414 mil.lbs. for the month, but 117.894 mil.lbs. higher than last year.  Soybean futures had already fallen to their daily lows prior to the 11 am release of the NOPA data, but the slightly disappointing report provided little fodder for bulls.
 
In export news, USDA announced on Tuesday morning that 4.850 mb of 2020/21 US soybeans were sold to China, & that 4.850 mb of 2020/21 US beans & 4.724 mb of 2020/21 US corn were sold to unknown destinations. On Monday, the farm agency reported that 4.173 mb of 2020/21 US corn were sold to Japan, that 11.684 mb of 2020/21 US beans were sold to unknown destinations, & that 19.290 mb of 2020/21 US corn & 4.740 mb of 2020/21 US soybeans were sold to China. USDA has reported daily export sales on 13 of the 14 business days since Aug. 25 with China or unknown destinations the dominant listed buyer.  Pakistan, Turkey, Jordan & Ethiopia are all seeking to lock in some milling wheat supplies in the coming days, but the US won’t likely be their preferred sources.
 
Locally, corn basis was a penny higher, soybean basis declined 2c & wheat basis was steady on Monday. Barge freight continued its seasonal rise to start the week as harvest along the lower Mississippi River picks up. 
 
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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.