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Afternoon Market Recap for Aug. 3, 2020, 04.08.20

Export demand lifts soybeans again.

Corn also takes modest gains, while wheat tumbles lower

Grain markets were mixed to start the week. Soybean prices were steady to firm, thanks to another large export sale reported this morning. Corn prices also tacked on small gains on a round of bargain buying today. Wheat contracts tumbled as much as 2.7% lower, in contrast, after improving forecasts from Russia served as a fresh reminder that the U.S. is still sitting on a large domestic stockpile and faces stiff overseas competition.

Expect drier conditions developing across the central U.S. between Tuesday and Friday, with large portions of Illinois and northern Indiana not likely to see any measurable rainfall during this time, per the latest 72-hour cumulative precipitation map from NOAA. Other parts of the Corn Belt could gather another 0.25” or so during this time. Further out, NOAA’s 8-to-14-day outlook predicts seasonally wet weather likely east of the Mississippi River from August 10 to August 16, with warmer-than-normal conditions returning to the central U.S.

Rising tech stocks gave Wall St. some added buoyancy to start the week, with the Dow trending more than 250 points higher this afternoon to 26,686. Energy futures were also in the green, with crude oil up 2% to move back above $41 per barrel. Diesel climbed 1.4%, while gasoline shot up 3.6%. The U.S. Dollar firmed moderately.

Last Friday, commodity funds were net buyers of most grain contracts, including corn (+1,000), soybeans (+7,000), soyoil (+6,000) and CBOT wheat (+2,000) but were net sellers of soymeal (-1,000).

Corn prices found moderate gains on a round of technical buying, with prices closing about 0.5% higher today. Mostly favorable weather moving through the Corn Belt later this week will make it hard to find much forward momentum moving forward, however. September and December futures each picked up 1.75 cents to close at $3.1775 and $3.2875, respectively.

Corn basis bids were mixed Monday, moving as much as 6 cents lower at an Ohio elevator and as much as 3 cents higher at an Iowa processor today.

Corn export inspections reached 15.8 million bushels for the week ending July 30, which was 15% below the prior week’s total, landing on the very low end of trade estimates. Japan led all destinations, with 12.8 million bushels. Cumulative totals for the 2019/20 marketing year are still majorly behind last year’s pace with only a month to go, reaching 1.494 billion bushels.

Analysts are expecting corn quality ratings to hold steady at 72% rated in good-to-excellent condition in USDA’s next weekly crop progress report, out later this afternoon. Individual trade guesses ranged between 71% and 74%.

European Union corn imports between July 1 and August 2 reached 39.8 million bushels, which is trending 53% lower year-over-year.

Brazilian corn exports reached 163.4 million bushels in July, sliding 15% lower year-over-year, per recently released governmental data.

Preliminary volume estimates were for 205,096 contracts, moving slightly higher than Friday’s final count of 193,314.

Soybean prices held steady to slightly firm Monday on a round of light technical buying that followed another large export sale announced earlier today. Favorable weather forecasts across most of the Midwest this week kept a lid on gains. August futures finished today’s session unchanged, at $8.9750, while September futures picked up 1.5 cents to $8.9175.

Soybean basis bids held steady across the central U.S. Monday. Sales have picked up somewhat in recent weeks as futures prices have stayed near $9 per bushel.

This morning, private exporters reported to USDA the sale of 9.6 million bushels of soybeans for delivery to unknown destination. The bulk of that grain is for delivery during the 2020/21 marketing year, which begins September 1, with a slim remainder for delivery in 2019/20.

Soybean export sales outpaced the prior week’s tally by 9.3% after reaching 20.3 million bushels and landing in the middle of trade guesses that ranged between 13.8 million and 25.7 million bushels. China was the No. 1 destination, with 2.6 million bushels. Cumulative totals for the 2019/20 marketing year remain slightly behind the prior year’s pace, with 1.447 billion bushels.

Ahead of this afternoon’s weekly crop progress report from USDA, analysts expect the agency to hold its soybean quality ratings steady, with 72% of the crop rated in good-to-excellent condition.

European Union soybean imports so far in the 2020/21 marketing year, which began July 1, have reached 50.3 million bushels through August 2, sliding 6% below last year’s pace so far. EU canola imports have tumbled 68% lower year-over-year, meantime, with EU soymeal and palm oil imports also down from a year ago.

Brazilian soybean exports topped 381 million bushels last month, moving 39% higher compared to last July.

Preliminary volume estimates were for 142,841 contracts, up slightly from Friday’s final count of 130,796.

Wheat prices cratered Monday, with most contracts closing more than 2% down on a wave of technical selling spurred by improving production prospects from Russia, the world’s top wheat exporter. September Chicago SRW futures fell 10.75 cents to $5.2050, September Kansas City HRW futures tumbled 12 cents to $4.3050, and September MGEX spring wheat futures lost 7.25 cents to $5.0675.

Wheat export inspections slipped 8% lower week-over-week to land at 18.4 million bushels. That total landed on the lower end of trade estimates, which ranged between 16.5 million and 24.8 million bushels. Still, cumulative totals for the 2020/21 marketing year are still trending moderately above last year’s pace after reaching

170.2 million bushels. The Philippines led all destinations last week, with 3.8 million bushels.

Ahead of the next weekly crop progress report from USDA, out later this afternoon, analysts expect the agency to show spring wheat harvest progress inching forward from 7% a week ago to 8% through August 2. Analysts expect a little more progress from the 2019/20 winter wheat harvest, moving from 81% a week ago up to 89%.

Russian consultancy IKAR has raised its 2020 wheat production estimates by 1.9% to 2.921 billion bushels on expected yield improvements in the country’s central regions. This tally is still moderately higher than Russia’s agriculture ministry, which is projecting a total of 2.756 billion bushels. Russia is the world’s No. 1 wheat exporter.

European Union soft wheat exports for the 2020/21 marketing year (which started July 1) have reached 23.3 million bushels through August 2, which is 68% down from a year ago. EU barley exports are also down 60% year-over-year.

Preliminary volume estimates were for 128,647 CBOT contracts, moving moderately ahead of Friday’s final count of 90,895.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
20-Sep 318.25 315 317.5 1.75
20-Dec 329 326 328.5 1.75
20-Aug 903 893 897.5 0
20-Sep 896.25 889 893 1.5
Soymeal                $/ton        
20-Sep 291.6 288.4 289.3 -2.1
Soyoil                    cents/lb        
20-Sep 31.34 30.36 31.22 0.79
Wheat                    $/bushel        
20-Sep 528.25 517 521 -10.75
20-Dec 535.75 525.25 529.25 -10
KC Wheat        
20-Sep 439.5 426.25 430.75 -12
20-Dec 450 437.25 441.5 -11.75
MPLS Wheat        
20-Sep 510.5 505.25 506.5 -7.25
20-Dec 524.5 519 520.25 -6.75
Live Cattle             cents/lb        
20-Aug 103.425 102.55 103.05 0.225
Feeder Cattle         cents/lb        
20-Sep 147.55 145.6 147.075 0.85
Lean Hogs             cents/lb        
20-Oct 49.375 48.05 48.575 -1.05
Crude Oil  $/barrel *Energy prices may not represent final settlements      
20-Sep 41.24 39.58 40.97 0.7
20-Sep 1.2516 1.2111 1.2398 0.0158
Unleaded Gasoline   $/gallon        
20-Sep 1.2287 1.1557 1.2149 0.0438
Natural Gas        
20-Oct 2.291 2.003 2.237 0.28
Ethanol Futures        
20-Sep     1.11  
U.S. Dollar Index        
  93.98 93.295 93.535 0.214
Gold                      $/ounce        
20-Sep 1992.1 1958.5 1966.1 3.3
20-Aug 2.912 2.835 2.907 0.048
Fertilizer Swaps     (as of 7/24)  
DAP Tampa-index              316.5 0
DAP-New Orleans              357.2 6
Urea-New Orleans              229.3 2
Urea-Middle East              245.0 9
Urea-Black Sea              222.0 7
UAN (32%) New Orleans              129.0 0

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