Morning Market Review for Nov. 9, 2020

Corn and wheat consolidate small gains ahead of tomorrow’s WASDE report

• Corn up 1 cent
• Soybeans up 9-13 cents, soyoil up $0.67/lb, soybean meal up $5.9/ton
• Wheat up 1-5 cents

*Prices as of 6:55 am CDT.

Quote of the Day: “Good corn and beans. Good harvest,” an Indiana corn and soybean grower who farms close to my alma mater of Purdue University reported as the harvest season ended. Boiler up!

As harvest wraps up in Indiana, Behind the Fencerows columnist Kyle Stackhouse reports dryland soybean yields were down 10% to 20% below average, but better than expected. Dryland corn fared somewhat better even though yields were 5% to 15% behind historical averages.

How is harvest and/or winter wheat sowing going on your farm? Click here to share your updates via a short survey. Results are updated daily in our interactive map so you can stay in the loop on harvest and planting advancement across the country.

Corn

Despite a Friday forecast from USDA predicting fewer corn acres in favor of increased soy and wheat acres for the 2021/22 marketing year, corn futures prices wobbled this morning as traders finalize their position ahead of tomorrow’s Crop Production and WASDE reports. After traded back and forth between the red and black this morning, December futures traded $0.005/bushel higher to $4.0725. March 2021 corn futures added $0.0025/bushel to $4.14.

All eyes will be on the Eastern Corn Belt’s harvest progress in today’s Crop Progress report. After prolonged rain delays, farmers in the Upper Midwest and Eastern Corn Belt charged ahead on harvest under clear skies last week.

Farmer responses to Feedback from the Field surveys were scarce last as combines raced to put the last of the 2020 corn crop on the market or in storage bins. Today’s corn harvest figure should advance well past the 82% mark reported in last week’s report, which was up 10% from the previous week and 13% ahead of the five-year average.

With more rain in the forecast this week, the delays could continue to push harvest completion out another week. But the slowed progress should be short-lived. While the Eastern Corn Belt could see a higher chance of showers early next week, dry weather will likely return by the end of next week.

Despite investor concerns about rising coronavirus cases around the globe, speculators largely ignored corn futures price decreases for the week ending November 13 to widen their long position to the second-highest volume for the time of year.

According to Commitment of Trader data released on Friday by the CFTC, money managers trimmed 8,655 short positions to grow their net buying position to 290,080. It marked the 13^th consecutive reporting week of expanding the net long position for speculators and signaled a new level of speculator price support for corn futures and options amid growing economic volatility.

Farmers continue to reward current futures price levels for corn. Friday’s Commitment of Traders report found producers adding 33,948 more short positions to their portfolios, growing their net selling position to 567,935 contracts. Farmers have steadily booked cash sales since the August 10 derecho wind storm in Iowa sent futures prices rallying.

Soybeans

Chinese demand continues to dominate upward price mobility in the soy complex, with weekend customs reports released by China showing a 41% increase in October 2020 soy imports from the previous year. Brazil and the U.S. largely source China’s rising soy imports.

Dry weather in Brazil also underpinned rising futures prices this morning. January soybeans rose $0.12/bushel to $11.135 while March futures notched a $0.1275/bushel gain to $11.12. December soyoil futures traded $0.67/lb higher to $36.01. December soymeal rallied $5.9/ton higher to $388.30.

Soybean harvest will likely near full completion in today’s Crop Progress report. A week of dry weather provided farmers primarily in the South and Eastern Corn Belt a chance to blaze ahead with the last of harvest activity.

As of November 1, 87% of U.S. soybeans had been harvested. The rain delays brought the five-year average of 83% – the narrowest margin between the actual and historical metrics all harvest season. But expect last week’s dry weather to power the November 8 total back ahead of the average.

Feedback from the Field respondents largely report a completion of soybean harvest. The most significant exceptions have been growers in the Eastern Corn Belt, Missouri, and Arkansas who combatted a wet spring and continue to fight rain delays this fall.

Faltering Chinese purchases and rising global coronavirus cases sent speculators shorting soybean futures and options for the week ending November 3. For the reporting week, hedge fund managers slashed 19,504 long contracts from their net buying position, shrinking it to 210,957 contracts.

It was the first time in 13 weeks that speculative buyers decreased their net long position on soybeans.

China’s hesitant buying paces also spooked producers into slowing down new cash sales. For the week ending November 3, commodity funds trimmed 24,478 short positions on the week to shrink their net selling position on soybeans to 370,828 contracts. Slowed barge traffic amid lower Mississippi River closures due to Hurricane Zeta narrowed cash prices at upstream terminals, disincentivizing farmers from booking new sales.

Soybean export loading paces and new export sales picked up after the reporting week deadline, sending soybean futures contracts over the $11/bushel benchmark. Next week’s Commitment of Traders report will likely show both speculators and producers widening their respective long and short positions on soybeans.

Wheat

Strong global demand for wheat continues to prop up prices in the wheat futures complex this morning as traders finalize their positions leading into tomorrow’s WASDE and Crop Production reports from USDA. Gains were capped by a slightly stronger dollar as the ICE Dollar Index rose $0.090 to $92.315.

Ukrainian grain exports are predictably 14.5% year-over-year lower since July 2020. A lackluster harvest due to severe drought in the former Soviet state reduced exportable supplies for the 2020/21 marketing year, which spans from July 2020 to June 2021.

Marketing year to date wheat exports out of Ukraine are 35.3 million bushels lower from 2019/20 to 400.8 million bushels. Corn exports fell even more dramatically in the same time frame, down 70.9 million bushels to 109.1 million bushels.

The 2020/21 wheat export quota for Ukraine stands at 643.0 million bushels, meaning that Ukraine has already loaded out over 62% of its exportable wheat supplies for the marketing year, meaning more buyers could be forced to seek wheat from other origins, including the U.S., sooner this year. Ukraine supplies the world with 16% of total global grain exports.

However, Russian January to September 2020 wheat exports increased by 76.1 million bushels from the previous year to 907.5 million bushels, according to official customs data released overnight. The steady exporting pace comes as short harvests in the European Union and Ukraine force buyers into the Black Sea for wheat.

China increased sales of wheat reserves from state stocks. It was the latest move to curb rising corn prices for local livestock feeders. Since June 22, China has auctioned off 82.5 million bushels from its state wheat reserves. About 56% of the wheat up for auction was purchased in last week’s sale.

Rainfall in the Southern Plains two weeks ago may not have been substantial enough to support crop development. Today’s Crop Progress report will provide more information as to how conditions responded to the added moisture over the past week.

As of a week ago, 43% of winter wheat acreage was reportedly in good to excellent condition. The rating was up 2% from the previous week in the early hours following the rain.

Farmers are largely reaching an end point with winter wheat planting progress. While several Feedback from the Field respondents in the Midwest indicated they would not start planting until November 1 and could have faced rain delays along the way, planting is widely expected to be complete in the Southern Plains in today’s Crop Progress report.

The November 1 Crop Progress report found 89% of intended winter wheat acreage had been planted, 3% ahead of the five-year average. Emergence rates stood at 71%, only 1% ahead of the five-year average as dry soil conditions continue to diminish yield potential on the newly planted winter wheat crop.

Rising international coronavirus cases sent speculators easing back from interest in Chicago and Minneapolis wheat last week. However, rainfall in the Southern Plains was widely regarded as too little to support the growing crop.

Speculators trimmed 3,843 short positions on the week to widen their net buying position on Kansas City hard red winter wheat futures and options to 46,859 contracts. It marked speculators’ third largest long position on Kansas City wheat for the time of year.

Weather

A week of clear weather in the Midwest will come to a screeching halt today, according to NOAA’s short-range forecasts. Rain is forecast over the Northern and Central Plains today and could be trailed by snow flurries. The system will move east into the Eastern Corn Belt by Thursday, dropping rain and snow in its path and stalling harvest progress along the way. Over an inch of precipitation accumulation is expected over the next 24 hours in the area between Kansas and Northern Wisconsin.

Financials

Coronavirus cases in the U.S. rose to 9,973,563 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 237,584 deaths as of press time.

Kansas State University agricultural policy expert Dr. Barry Flinchbaugh passed away a week ago. In an interview at the Farm Futures Business Summit last January, when asked what he would do to fix Washington, Flinchbaugh replied, “I would pay their way home just six times a year, not every weekend; I want them to stay in Washington, get to know each other, play together so they’ll work together.”

“That is rare today. The human element is removed, and when you remove that, in classrooms or Congress, your ability to rise to the occasion, compromise, and collaborate, is gone.”

Farm Futures will continue to honor Dr. Flinchbaugh’s memory by posting more articles with the famed ag policy giant in coming days, including the following on Flinchbaugh’s policy views.

Happy Monday! If you are catching up on market news as rain starts to dampen your harvest progress, here is a recap of the top market-moving events from last week. Plus – seven stories that made headlines last week.

Equities markets soared this morning as investors welcomed new progress towards a COVID-19 vaccine as well as a new presidency. Reduced uncertainty following former Vice President Joe Biden’s victory announced on Saturday was rewarded by overseas traders in the overnight sessions on hopes that a Biden administration may be more favorable to foreign policy and trade. S&P 500 futures traded 122.80 points or 3.51% higher to $3,623.50 while Dow futures rose 1,491 points or 5.29% higher to $29,695.