News > Top Ag News > Midday Comments: 9/18/2020

Midday Comments: 9/18/2020

Sep 18, 2020

Grains continued to surge higher on Thursday, once again recovering from about 2.5c overnight losses in corn, 4.5c losses in beans & 1.5c losses in wheat.  Thursday’s 7:30 am release of USDA Weekly Export Sales data set the stage for the rebound, indicating strong new commitments for corn (63.351 mb), soybeans (90.283 mb) & grain sorghum (4.783 mb), but relatively disappointing sales for wheat (6.783 mb), soymeal (91,900 mt) & soyoil (100 mt).  Pre-report trader surveys had forecast export sales for corn at 29.6-86.6 mb, beans at 55.1-102.9 mb & wheat at 11.0-22.0 mb for the week ended Sept. 10.  China was again the dominant buyer of US farm products last week, purchasing 14.161 mb of corn, 4.795 mb or milo, 58.545 mb of soybeans, 48,000 bu. of  wheat, 82.5% of total cotton sales, 70.9% if total 2020 pork sales, 12.6% of total 2020 beef sales, & 84.9% of the total US beef hides sold worldwide last week. “Unknown destinations” also locked in 14,180 mb of corn & 18.346 mb of soybeans for the week. Cumulative corn sales now stand at 805.3 mb, 104.5 mb above the previous week #2 record sales of 703.8 mb set in 1995/96. Cumulative beans have reached 1,188.4 mb, 249.5 mb above the previous week #2 record of 935.7 mb set in 2014/15.  Cumulative wheat sales of 482.5 mb are the highest since 2013/14’s 627.2 mb at marketing week #15. And grain sorghum sales now stand at 101.2 mb, 38.9% of the current 260 mb export forecast for 2020/21 after just two weeks. USDA’s 8 am announcement of additional daily export sales of corn & soybeans for China & unknown destinations focused attention on Thursday’s sales data that showed China had already booked 363.771 mb of US corn & 637.940 mb of US beans for 2020/21 by Sept. 10.  Unknown destinations had added 97.929 mb of US corn & 365.668 mb of US beans for 2020/21 by that date.  Traders surmised that huge early-season commitments hinted final new-crop exports could far exceed USDA’s current 2,325 mb corn & 2,150 mb soybean export forecasts. With the Weekly Drought Monitor reporting worsening soil moisture in the eastern Corn Belt, Wednesday  night losses were quickly erased once Thursday’s regular trading session resumed at 8:30 am. With fundamentals seeming to underpin upward price action, traders continued to take aim at the next chart targets in Dec. corn at $3.90-4.05 & in Nov. beans at $10.50-10.66.  At Thursday’s close, Dec. corn futures were up 3.5c, March corn gained 3c, Nov. beans surged 17.25c higher, Jan. beans leapt up 16c, Oct. soymeal soared $9.60/ton, Oct. soyoil edged 0.03c/lb. lower, & Dec. soft red winter wheat blasted 14.25c higher & March SRW wheat jumped 13.25c.
Grains continued to surge higher in Friday’s regular trading session, building on firm overnight trends.  After having gained about 1.5c in corn, about a dime in beans & about 3.5c in wheat on Thursday night, grains pushed higher as USDA announced additional export sales of corn & soybeans to China & soymeal to unknown destinations ahead of Friday’s regular trading session. Speculative buying is again supporting grains.  Late season dry weather in the US & indications that South America, Ukraine & southern Russia are promoting ideas that global grain supplies are being trimmed even as Chinese demand is building up.  President Trump announced at a Thursday night campaign rally in Wisconsin that up to $14 billion of additional aid will be provided to farmers—just in time for the election!  The additional aid supplements a $19 billion relief program announced in April to help US farmers cope with disruptions to the food supply chain & plunging restaurant demand during the pandemic. Less than $10 billion has been paid out from that program to date. Citing low prices in January-July & ignoring the sharp grain rallies since then, Trump is using the power of the purse to remind farmers just how much he believes they need him.  Based on the government's latest harvest projections, farmers could receive about 23c/bu. for corn, ($3.427 billion) & 31c/bu. for soybeans ($1.337 billion). The program also allows farmers to apply for aid at $15 per acre for major row crops such as corn, soybeans and wheat. The new plan adds nearly 100 specialty crops like honey, ginger & macadamia nuts & eases restrictions on aid for such crops that farmers said limited the benefits of the previous payment program.  Hog farmers will be paid $23 per pig, after receiving about $1.6 billion in the first round, according to the National Pork Producers Council. As usual, the money will be borrowed & eventually be repaid by your descendants or thru inflation in coming years. Grain traders largely shrugged off the latest salvo the Trump Administration has launched to increase trade tensions with China.  The US Commerce Dept. announced on Friday morning that it will ban US updates to software provided by Chinese-owned firms for the popular TikTok & WeChat applications starting on Sept. 20.  WeChat has about 19 million users in the US, but over 2/3 of Chinese consumers use it for everything from buying goods online to making payments for everyday goods.  TikTok has over 240 million worldwide users who have been drawn to its short-form, user-generated videos.  Trump US claims the two software applications pose a security threat to the US. At 12:57 pm, Dec. & March corn futures were each up 3.25c, Nov beans were up 16.5c, Jan. beans were 17.5c higher, Oct. soymeal was up $8.10/ton, Oct. soyoil was 0.26c/lb. higher, Dec. SRW wheat was up 17.75c & March SRW wheat was up 17.25c.  Continuation charts of corn were on pace at that time to be up 13.25c, beans to be up 39.5c & for SRW wheat to be 40c higher for the week. 
In export news, USDA announced on Friday that 8.267 mb of 2020/21 US corn & 4.850 mb of 2020/21 US beans were sold to China, & 100,000 mt of 2020/21 US soymeal were sold to unknown destinations.  On Thursday, the farm agency reported  that 4.724 mb of 2020/21 US corn & 13.246 mb of 2020/21 US beans were sold to unknown destinations & an additional 9.700 mb of 2020/21 US beans were sold to China. With the exception of Sept. 2, USDA has made a daily export sales announcement every business day since Aug. 25.  In a regular weekly tender, Japan’s ag ministry bought a total of 3.853 mb of wheat from the US, Canada & Australia, & South Korean flour mills purchased 1.407 mb of wheat from the US & Canada.  Acting on a snap tender issued on Wednesday afternoon, Egypt’s state grain buyer GASC bought a total of 8.635 mb of wheat from Russia & Poland on Thursday.  Jordan purchased 4.409 mb optional-origin wheat yesterday. Tunisia was seeking milling wheat & durum wheat on Friday. 
 
Locally, corn & wheat basis levels were steady on Thursday, & soybean basis was a penny lower.  On Friday morning, St. Louis terminals were trimming the quick-ship premiums being offered for delivery by Friday, Sept 18. Barge freight has jumped about 9c/bu. this week, putting pressure on basis. 
 
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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