Midday Comments: 9/3/2020

Corn rebounded from overnight losses on Wednesday to end slightly higher as rainfall that rapidly crossed the Midwest was seen as too little late.  Traders shrugged off the EIA’s Weekly Petroleum Status data that showed ethanol output in the week ended Aug. 28 declined 0.97% for the week, was slightly below the previous 8-week average & 8.98% lower last year even as weekly ethanol stockpiles rose 2.32% to a 10-week high.  The EIA data was mitigated by Tuesday afternoon’s USDA Grain Crusshings data that indicated 424.370 mb of corn was processed to produce fuel ethanol in July.  That brought cumulative Sept-July corn ethanol crush to 4,435.685 mb & on track to slightly exceed USDA’s 4,850 mb fuel crush forecast for 2019/20.  Soybeans rallied as traders continued to bet that yields from South Dakota & Nebraska thru Ohio have suffered yield losses from late summer dry weather. Beans were also supported by Tuesday afternoon’s USDA oilseed crush report that indicated US soybean processors consumed 184.507 mb of beans in July—up 5.043 mb from last year & a record total for that month. The fact that both corn & soybeans will start the 2020/21 export year with record-large Sept. 1 export commitments also fed the bulls.  Even though USDA did not report any daily export sales on Wednesday, rumors that China had bought eight cargoes of US beans helped bolster bean prices. Following its previous two-day rally that added 15.25c to the December contract, soft red winter wheat was hit with profit-taking on Wednesday as some rainfall  arrived in the southern US Plains. At Wednesday’s close, Dec. corn futures edged 3/4c higher, March corn gained 1.5c, Nov. & Jan. beans each jumped 7.25c higher, Oct. soymeal lost $0.30/ton, Oct. soyoil surged up 0.63c/lb., Dec. soft red winter wheat tumbled 5.75c lower & March SRW wheat lost 5c.
 
Corn & wheat were fractionally lower, but soybeans worked higher in Wednesday night trading.  The northwestern Corn Belt growing region saw less than 0.10” of moisture from then recent 48-hour frontal system movement, again shorting its dry soils.  Although an area from Decatur thru Champaign, IL recorded 1”+ rainfall, even the eastern Corn Belt received mostly less than 0.25” over the past couple days.  Thursday morning’s USDA Weekly Export Sales report largely met expectations that predicted minimal old-crop corn (3.768 mb), grain sorghum (0.468 mb), soybean (1.345 mb net cancelled, soymeal (113,800 mt) & soyoil (5,000 mt) sales.  But sales of new-crop corn (94.055 mb), milo (4.980 mb), soybeans (64.772 mb), wheat (21.513 mb), soymeal (228,800 mt) & soyoil (3,000 mt) were robust.  New-crop corn sales were a 4-wk high & brought cumulative 2020/21 sales & undelivered old-crop commitments to a record-high 698.33 mb for Sept 1. Although new-crop bean sales were a 4-low, cumulative 2020/21 sales & undelivered old-crop sales brought new-crop commitments to a record-high 1,017.9 mb for Sept. 1.  While wheat sales were at a 2-week low, year-to-date sales of 458.88 mb are the highest at week #13 since 2013/14.   When combined with Thursday’s release of the Census Bureau’s “official” July export data, final 2019/20 US corn exports will be about 1,760 mb (vs. USDA’s 1,795 mb forecast), old-crop milo exports will total about 203 mb (vs. USDA’s 210 mb projection), & 2019/20 soybean exports will come to about 1,665 mb (vs. USDA’s 1,650 mb forecast). China was again a strong factor in last week’s US export results, buying 2.838 mb of old- & 45.470 mb new-crop corn, 0.468 mb of old- & 4.980 mb new-crop milo,  3.279 mb of old- & 39.762 mb of new-crop beans, 4.593 mb of hard red winter & 4.622 mb of hard red spring wheat,61,400 running bales of 2020/21 & 3,400 rb of 2021/22 upland cotton, 28,700 mt of 2020 pork, 1,800 mt of 2020 beef, & 280,700 of the total of 357,200 beef hides that the US sold worldwide.  At the 7:45 am pause in electronic trading, Dec. corn futures were down 1c, March corn was 3/4c lower, Nov. beans was up 3.5c, Jan. beans was 3.25c higher, Oct. soymeal was up $1.40/ton, Oct. soyoil was 0.37c/lb. higher, Dec. SRW wheat was 1/4c lower & March SRW wheat was down 1/2c.
 
Corn & wheat extended their overnight losses, but soybeans added to their Wednesday night gains during Thursday’s regular trading session.  With sharp equity market losses—the worst in 3 months—adding a negative tone to financial markets, traders took back some of grains recent rallies even as they added to their long positions in the soy complex.  Ahead of the Sept. 11 USDA crop production & supply-demand revisions, traders seem willing to assume that soybean supplies will tighten even as global corn & wheat supplies remain ample. Soybeans also benefitted from a USDA daily export announcement that 11.684 mb of 2020/21 US beans were sold to China & an additional 4.850 mb of new-crop beans were sold to unknown destinations.  Reports that Japan’s ag ministry bought a total of 3.929 mb of milling wheat from the US, Canada & Australia were likely countered by news that Egypt’s state grain firm GASC purchased on 2,021 mb of Russian milling wheat from a snap tender issued Wednesday afternoon. At Thursday’s close, Dec. corn futures dropped 5c, March corn lost 4.5c, Nov. & Jan. beans each rose 4c, Oct. soymeal gained $2.70/ton, Oct. soyoil declined 0.25c/lb., & Dec. & March SRW wheat were each 5c lower.
 
Locally, soybean & wheat basis levels were steady on Wednesday, but corn basis tumbled 5c lower. Basis levels have been erratic to start the month of September, but a strong early season export program & the continued closure of the Illinois River into mid- to late October should support St. Louis terminal basis levels during the upcoming harvest.  
 
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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.