The following marketing analysis is for the week ending Oct. 25.
CORN — Corn has been stuck in a range from $3.78.25 to $4.02.5 per bushel since Oct. 1. An indication of how flat we traded this week, this week’s closing prices ranged from $3.86.75 to $3.88 per bushel. Prices eased lower in the first half of the week, but a technical reversal mid-week turned into consolidation.
Harvest continues to creep along, but we are running well behind the average with a frost over most of the corn belt to arrive early in November. As of Oct. 20, corn harvest was 30 percent complete, well behind the 47 percent average. Eighty-six percent of the crop was mature and conditions improved 1 percent to 56 percent good/excellent. Growers are pushing to find fields to combine, but cooler temperatures are limiting the speed of dry down in the field.
Export demand for corn continues to struggle. This week’s sales were on the lower side of expectations at 19.3 million bushels. Sales are 49 percent behind last year at 427.4 million bushels. We need 31.5 million bushels of sales per week to hit the U.S. Department of Agriculture’s 1.9-billion-bushel target. There were 3.6 million bushels of new crop sales, bringing the total to 8.6 million bushels vs. 3.9 million bushels last year. Weekly ethanol production increased 25,000 barrels to 996,000 barrels this week. Ethanol stocks fell 700,000 to 21.4 million barrels. Ethanol crush margins improved a penny to 12 cents per gallon.
Argentina’s corn planting is 34.6 percent complete vs. 34.4 percent last year and 26 percent average. Their soybean planting has yet to begin compared to 2 percent complete last year. Brazil’s first corn crop was reported at 47 percent planted vs. 54 percent average.
Outlook: Corn basis was firm as harvest moves along slowly and growers have not been inclined to make additional sales. The weekly export sales number was okay, but there were no daily flash sales announced this week. If yields or harvested acres decline, some of the decline will be offset by weak demand. Weather forecasts for early November are mixed with some rain and/or snow predicted. Below-normal temperatures should cover the Midwest. For the week, December corn fell 4.25 cents to $3.86.75, July was 5.5 cents lower at $4.09.75, and December 2020 declined 2.5 cents to $4.07.75 per bushel. If we could get corn, ethanol, DDGs included in a Chinese deal, maybe volumes and volatility would improve. The next World Agricultural Supply and Demand Estimates report will be released on Nov. 8.
SOYBEANS — Soybeans moved sideways this week, but traded a fairly wide $9.26.25 to $9.45.25 per bushel weekly range. The daily closes were tightly grouped from $9.33.25 to $9.34 per bushel in the first four trading days this week. Most of the week’s action came on Oct. 25 as options expired and traders awaited any news on a Chinese trading agreement. China indicated early in the week they would allow 10 million metric tons of tariff-free U.S. soybean imports. Chatter also suggested China would buy $20 billion of U.S. products in the year following the signing of the Phase 1 trade deal. If true, that would bring us back up to pre-trade war levels. They would then purchase another $40-$50 billion worth of agricultural products annually after that. However, they are asking for concessions from the United States for that to happen. They would like to see the Dec. 15 proposed increase in tariffs by the United States taken off the table and the 15 percent tariffs from September eliminated. Phase 1 of the trade agreement will hopefully be signed in mid-November when the presidents of both countries meet in Chile at the Asia-Pacific Economic Cooperation summit. Currently, U.S. soybeans are competitive without tariffs with South America; but are not competitive beyond February. In the first nine months of the calendar year, China imported 10.15 mmt of U.S. soybeans, 45.19 mmt from Brazil, and 5.11 mmt from Argentina.
Weekly export sales were terrible at just 17.5 million bushels. Total commitments are running 12 percent behind last year at 678.4 million bushels. We need to average 24.7 million bushels of sales per week to achieve the 1.775 billion-bushel USDA projection. There were no new crop sales reported this week. In daily USDA export sales announcements this week, unknown bought 128,000 metric tons of U.S. soybeans and China bought 264,000 metric tons. China has imported 1.33 mmt of pork this year, up 44 percent from last year as they continue to find new cases of African swine fever.
Both Brazil and Argentina have received welcomed rain in the last couple of weeks. While not totally out of the woods, conditions have improved mainly in Brazil and their dry area has shrunk to less than 25 percent. As of Oct. 18, Brazil’s soybean planting was 20 percent complete, finally edging above the 18 percent average.
U.S. soybean harvest was 46 percent complete as of Oct. 20 vs. 64 percent on average. Dropping leaves was 94 percent and conditions were unchanged at 54 percent good/excellent. Early yield reports have been slightly better than expected. Growers have been slow sellers and basis numbers have firmed in response.
Argentina will hold their presidential election on Oct. 27. The incumbent Macri is not expected to win. Alberto Fernandez was the leader in the polls going into the election. If he wins, there are suggestions he may raise export taxes. This would be friendly for U.S. commodities.
The Chicago Mercantile Exchange will implement new daily trading limits for soybeans effective Nov. 1, going from 65 cents per bushel to 60 cents per bushel.
Outlook: For the week, November soybeans were down 13.75 cents at $9.20.25, with 13 cents of the loss coming on Oct. 25 when November options expired. July soybeans were down 9 cents for the week at $9.67 and November 2020 soybeans were only off a nickel at $9.67.75 per bushel. Soybean harvest is winding down in some eastern areas, but has barely begun in some western spots. Chinese developments, weather and grower selling will be forces behind direction. Basis levels have been firm to attract bushels into the pipeline. It’s impossible to guess what political events may transpire next week, but next support in the November contract is near $9.10 per bushel, then down near $8.95 per bushel. If you have bushels to move, look at rewarding the basis improvement.
Nystrom’s Notes: Contract changes for the week ended Oct. 25: Chicago December wheat dropped 14.5 cents to $5.17.75, Kansas City was down 11 cents at $4.22.75, and Minneapolis was 7.75 cents lower at $5.36.75 per bushel. Crude oil rallied $2.79 to $56.66, ULSD gained 3.25 cents, RBOB was a nickel higher, and natural gas fell 2 cents.