Category: Soybeans

16 Oct 2020

AG MARKET UPDATE: OCTOBER 10 – 16

Corn has continued its momentum up following Friday’s USDA report despite a hit to prices to start the week. Corn closed above the $4.00 mark for the first time since January on the Dec’ 20 contract (see chart below). This year has been different for many reasons but having the highest prices of the year come during harvest definitely adds to it. The “harvest lows” look to have been in August with the run up of 80 cents/bu, giving farmers hope after depressed prices all spring and summer. The USDA report from Friday came in with a yield estimate of 178.4 BPA and lowered the 2020 harvested acres to 82.5 million acres when estimates had it at 83.321 million acres. US corn harvest came in at 41% complete this week with favorable weather over the next two weeks to keep it going. Chinese purchases continue to roll in as they continue buying after their holiday break. Brazil’s weather outlook has improved in the short run to get some moisture but after this rain the long term picture remains unclear as Argentina looks dry as well.


Via Barchart

 

Soybeans rallied this week after gains last week and after the USDA report. Markets came down Monday on funds taking profit but have slowly come back over the last 3 days. The factors moving the market have been the same for the past several weeks. The USDA report from Friday estimated yields to be 51.9 bu/acre and 290 million-bushel stocks, almost 80 million below estimates. Harvest is 61% complete and looks to be full steam ahead with the promising weather across the US. As more uncertainty has come up this week with as China’s Premier Xi criticized the US in a speech regarding the US’s relationship with Taiwan. As the election nears US and China’s relationship will be stressed. What this will do to the Phase 1 agreement is an unknown, but China continues to need our beans which is helpful in the long run.


Via Barchart

 

Cotton prices rallied this week as flooding in India caused damage across large growing areas and possibly damaged up to 1/3 of the country’s cotton crop. With India’s cotton crop damage and Pakistan’s ongoing crop issues look for mills to look to the US for their cotton needs. Looking to ’21, if soybean and corn prices stay strong into the spring there will be a sizeable amount of cotton acres that shift to corn or beans tightening the supplies. Many experts think that the prices will be allowing for future demand to help prices as well.

Via Barchart

Dow Jones
The Dow continues to bounce around as there have been 3 down days after 4 up days. Europe is struggling with a possible second outbreak and the US continues to struggle with Covid-19. Election news and Covid-19 news will be the main market movers as vaccine trials are starting to have issues.

World Weather
The International Research Institute put out a forecast for the next 3-months for South America with expectations of normal rain and temperatures for Brazil with drier conditions for the for southern Brazil and Argentina’s main growing areas.  US weather looks great into November for a quick sprint to the finish for harvest.  Russian forecasts remain dry into month end which is driving wheat prices.



Via Barchart.com

08 Oct 2020

AG MARKET UPDATE: OCTOBER 3 – 9

Corn followed beans higher this week as exports continued and Brazil’s weather is still questionable as their season starts. Corn harvest in the US is 26% complete as favorable weather looks to allow for harvest to continue across the country. As Chinese buying continued following holiday, markets are keeping an eye on their purchases as the Chinese government changed laws in what can be fed to hog herds as they continue to recover from ASF. By not allowing for swill (food waste and garbage) to be fed to hogs anymore the demand for corn and meal for feed looks to increase, but it is hard to tell how much swill feed will need to be replaced. Ethanol demand has remained lower than normal as the pandemic continues, but with lower demand has also lowered production. The lower production has lead to tightening in stocks to their lowest level in 8 years. If/when ethanol demand rebounds, look for a boost in corn purchases for ethanol use to replenish stocks and meet demand. Keep an eye on the USDA yield estimates on Friday.


Via Barchart

 


Soybeans kept the rally going this week on weather concerns in South America and exports continued in large amounts. South America remains in a dry pattern that could turn into a drought if they do not get the much needed and forecasted rain in the next couple of weeks to get the beans in the field in some major growing areas. Harvest continued across the US this week as harvest is seen 36% complete as favorable weather across much of the US has allowed farmers to get off to a great start. As China came back from holiday the buying continued as feed demand in China has started to pick up despite herd sizes only being about 65% of what they were before ASF. Fund buying has also continued this week as funds now are long 1.4 billion bushels (about 10% of the expected world production in 20/21) of beans. Prices will once again be paying attention to the USDA report on Friday but do not expect anything like the last report. As you go through harvest we suggest not storing any beans as the market is currently inverted (Nov prices being better than anything in ’21) showing the market wants your beans now. Not seeing a carry in the market makes it hard to hold the beans when selling the physical and getting long futures if you believe the markets are going higher is an option.

 

Via Barchart

 


Funds continued to get long wheat this week, with some profit taking on Thursday, helping fuel the rally that other grains have seen. Weather problems in other areas of the world are helping markets move as parts of Russia remain dry and the Black Sea area has been dry but is forecasted to get much needed rain this week. Argentina like Brazil has been dry but looks to continue their dry pattern unlike Brazil. Stocks are expected to be lower in the report on Friday from the September report.


Via Barchart

 


Cotton prices rallied this week as Hurricane Delta heads toward the Mississippi Delta. The fact that there is still plenty of time for another storm before harvest after Delta worries farmers that one storm may be fine but another would present major issues. Cotton has seen a steady rise in prices since the lows back in April. Exports were good this week as there were little cancellations and strong sales to Vietnam.


Via Barchart

 

Crude Oil
Crude saw a boost this week as Hurricane Delta has shut down production in many parts of the Gulf of Mexico. This is typical of prices whenever a hurricane is in the gulf as reactions to what may happen is usually worse than the outcome.

Dow Jones
The Dow continues its bounce back despite back and forth tweets from Trump and Pelosi regarding a new relief bill and what it should look like. Big tech stays in the news as Amazon and Facebook are continuously being looked at for anti-trust violations by a bipartisan group, not much is expected to come from this but worth noting.

World Weather
Brazil has been dry causing some delays in planting but some rain this week and cooler temperatures are in the forecast so markets will keep an eye on any changes there. Hurricane Delta barrels toward the US as farmers in the south look to try and get their crops out ahead of any rain that could cause damage, especially to cotton in the Delta.

 

Via Barchart.com

02 Oct 2020

AG MARKET UPDATE: SEPTEMBER 26 – OCTOBER 2

Corn saw a big boost as a result of the surprises in the USDA stocks report this week. Corn came in 255 million bushels below estimates at 1.995 MBU, which comes back to what everyone thought that the USDA overestimated the 2019 crop. This adjustment lowers the 2019 yield by about 3 BPA, which sounds much more accurate from what we heard from talking to farmers. Ultimately, this means world stocks are tightening as Chinese demand of US grains has picked up with Phase 1 trucking on. Post-report funds continued to get long, which helped the drive up as well. Exports continue at a great pace as harvest begins in many parts of the US. Continue to keep an eye on exports and weather as any major delays to harvest/crop moisture could prevent problems although the forecast is favorable into mid-October. The chart below shows the sharp bounce back up after a couple weeks of slow losses.

Via Barchart

Soybeans had the biggest surprise of the report as ending stocks were down 42% from the September 2019 report. Beans came in at 523 million bushels, over 50 million below the average estimates. This low number on top of continued large buying from China saw a 25-cent rally after the report. Like corn, funds continued to get long post-report and are now long 1.07 billion bushels. As export numbers continue to be large and the USDA updated the stocks down, both were very bullish. Brazil’s growing season has gotten off to a good start as some areas are starting to look for rain. A good rain in Brazil would put a damper on the bulls, but with funds so long they will look to exports and harvest.


Via Barchart

 

Dow Jones

The Dow bounced back this week despite a Presidential debate that left more questions than answers. Tech continued its bounce back after it took a tumble a few weeks ago as airlines and travel industry saw a boost as more potential aid could be heading there way along with a second stimulus package is in discussion. The unemployment report on Friday will be the main market mover. But with President Trump testing positive for Covid-19 more uncertainty and volatility will be added to the markets. Any updates on his condition with it will be watched closely as we will not see any campaigning from him over the next couple of weeks.

 

World Weather
Brazil and Argentina are off to a pretty normal start as planting went well. Central Brazil will see higher than normal temperatures accompanied by average to below average precipitation. Dry and warm outlook for central Brazil to start October and Argentina has a slightly dry outlook with normal temperatures.

25 Sep 2020

Ag Market Update: September 19 – 25

Corn was hit hard on the week as grains pulled back from their great run over the last month. As equity markets fell this week with a rise in Covid-19 in European countries, grains followed. Pullbacks this year are normal as harvest gets going. Harvest should get off to a fast start as weather in most areas looks good with no widespread rain, although it does not appear to be enough to delay harvest too much – even as cooler temperatures roll in. The lack of export news on Thursday did not help as this week’s drawback continued, and fell back to levels we saw last week. New sales heading into the weekend will give the bulls some good news, but everyone will be looking to the weekend to see how much progress is made on harvest and the yields we see. The Dec ’20 chart is below.

via Barchart.com

 

Just like corn, soybeans fell this week as a pullback on the grains hit them hard. Like mentioned above for corn, beans face pressure as harvest begins and the great weather outlook for it. The lack of any sales Thursday put more pressure on the markets, and beans felt the full weight of it as they will need continuous bullish news to keep them high after such an impressive run in the last month. Friday will be important as the bulls need purchases to continue and the bears are looking for large numbers to come out of harvest over the weekend and lower sales. China also believes they will be able to have another crop in some areas not flooded, so they may look to continue restocking their reserves with a mix of Chinese grains and imports. The Nov ’20 chart is below.

via Barchart.com

 

Wheat followed the lead of corn and beans this week as it sunk lower after solid gains the past month. It is still in the same area as it was trading last week so it has not seen near the pulldown that other grains have. Keep an eye on the Black Sea area for any surprises that could give them a boost or further reason to fall as export news seem tired on the market.

 

Dow Jones
The Dow fell on the week as a market-wide pullback/correction hit hard along with Europe beginning to face Covid-19 struggles again. The tech pullback continues after its incredibly strong run since the market collapse this spring. As we know with any election year, and maybe this one the most, expect volatility in the market along with the 2020 volatility we have seen. The chart below shows the daily volatility/ranges we have seen along with the drawbacks.

via Barchart.com

18 Sep 2020

Ag Market Update: September 12 – 18

Corn gained on the week following soybeans lead. Corn exports, like soybeans, have been strong with China being a large buyer recently. As some analysts have pointed out, this pace of Chinese purchases may be a signal that their supplies are much lower than they have reported. As most numbers that come out of China, one should be skeptical, so this may be showing us where they actually stand. With weather looking good heading into harvest, the next few weeks should allow for steady progress. As you can see from the chart below, prices are at the highest they have been since March heading into harvest following the upward trend in beans; you may want to begin looking at putting a floor in. If corn exports continue (136% ahead of where they were this time last year), we may still see an  upward trend, but keep an eye on demand as harvest begins.

 

Soybeans saw huge gains this week to get and stay over $10.00 for the first time in the last 2 years. The continued buying from China, 6+ MBU seemingly every day, has led this charge up as we continue to see large export numbers. Funds have also been buyers along the run and are nearing 1 BBU in net long positions, the largest long position since 2012 when we had a devastating drought. If China keeps up with the purchases it is definitely supportive for prices. Soybean exports are 189% ahead of where they were this time last year. If soybean sales keep up this pace there does not seem much to get in the way of prices as South America is running low on last year’s crop as they begin planting for this year. The chart below shows the recent surge reaching contract highs as we head into harvest.

 

Dow Jones
The Dow gained on the week after several up and down trading days as tech stocks continue to struggle after the large selloff last week. It seems to have weathered the storm and may continue its slow recovery as many major areas of the US stay in some form of lockdown.

World Weather
Dry and warm weather remains heading forward as harvest beings in the US. South America is unusually dry as planting season starts and Russian wheat areas need rain. A large spread soaking rain in SA may dip prices a bit, but if SA drought continues after planting that would be bullish for beans.

11 Sep 2020

Ag Market Update: September 5 – 11

Corn gains on the week have been driven from continued strong export numbers as well as trade expectations of a 178 yield estimate heading into the USDA report on Friday. The report came out with a 178.5 bu/acre estimate which is pretty in line with what the trade was expecting. The drop from the 181.8 bu/acre yield estimate from the previous USDA report comes from a combination of the storm damage in Iowa as well as the extended stretch of dryness across many states to end last month. This impressive run up by corn from the lows seen in early August has been welcome heading into harvest. With a 2.5 billion bushel carryover still estimated we may see a tightening of prices as corn leaves the fields and we get a better idea on final yield as well as demand. The bump up in expected corn exports is good to see as the USDA expects countries (China) to continue their buying. Below you can see the Supply and Demand chart for corn from the report.

Via USDA

 

Soybeans have seen strong gains like corn in the last month. The report came through with numbers close to expectations with little surprises. Exports continue at a good pace and China announced that they intend to rebuild government stocks. A month ago $10 soybeans did not seem to be in play but now it is within a few cents. As we get closer to harvest the weather’s effect on the crop will be diminished outside of an early freeze that could cause damage. Keep an eye on exports to keep their pace and any bullish weather news as that magic $10 number looks to be met. See the Soybean Supply and Demand chart from Friday’s report below.

Via USDA

 

Dow Jones
The Dow has continued to bounce up and down finishing down on the week as tech continues its loses. As the pandemic drags on and business come back or close for good the attention will begin to shift towards the election.

Korea Bans German Pork Imports
South Korea banned German pork imports this week after an African swine Fever case was confirmed in Germany. This move falls in line with guidelines for animal food and safety and is an expected move as South Korea themselves have had trouble with ASF in parts of the country and has been banned from exporting its pork products. Look for some of South Korea’s demand to come to the US market.

USDA: The USDA released their World Agricultural Supply and Demand Estimates today, read the entire report here.

04 Sep 2020

AG Market Update: August 29 – September 4

Corn saw slight loses on the week after trading in the low $3.60s despite strong export numbers and falling crop conditions. The crop conditions at this point usually fall as corn starts to get ready for harvest and lose its color as ratings come from looking at the fields rather than any testing. As China has continued to be a large buyer it looks like the market has factored in their purchases and will expect similar levels or purchases moving forward. The forecasts have some rain in much needed areas as we get closer to harvest to help hold on to what many expected to be a great crop a month ago but has seen stress as of late. Rain over the weekend is expected for much of the corn belt especially in areas of the WCB that have been the driest. Although the rain may be late to help out corn much it should give the beans in those areas help. Look for the trade to hold its breath and trade in the $3.50-$3.60 range as everyone holds their breath in anticipation of the USDA Report next Friday.

Soybeans continue its climb higher as exports continue to be huge. Despite a bearish change in the weather with widespread rain coming this weekend the demand continues to pull beans higher. The rain could be coming at just the right time in certain areas as yields can still be effected. One private yield estimate from StoneX pegged the US bean yield at 52.9 bushels. This would be a larger trend line yield but with the increased demand from China it would not crush prices moving forward. Keep an eye on other private estimates as we head into the USDA Report next Friday to hopefully get an idea what the USDA might come out with. Look for exports to continue their strong run as any pullback would hurt prices that have been drawing their strength from recently.

DOW Jones

After trading over 29,000 the Dow saw large losses on Thursday after a week of gains. After the large run-up the last few months the losses could be from profit taking or the start of a market correction but there is no way to tell after one day.

Vaccine News

The US Center for Disease Control announced that states should prepare for a potential vaccine on November 1st. This would be great news heading into the end of 2020 and also right before the election.

28 Aug 2020

AG MARKETS UPDATE: AUGUST 22 – 28

Corn saw solid gains on the week as large exports and continued weather problems were the market movers. The western corn belt looks to continue its dry run in the coming week with no widespread rain expected in areas that have been suffering from drought. This will put more strain on the crop as we head into harvest. The crop, especially in Iowa on top of the storm damage, has been fighting drought conditions most of the summer in the western corn belt so an already strained crop doesn’t look like it will get much help coming down the stretch. Large exports this week also helped give a boost as China is stepping up their purchases over the past month. Along with the rally in Dec ’20 prices the ’21 crop has gotten a boost as well to much more attractive levels than a few weeks ago. The chart below shows the rebound back to levels we last saw around the 4th of July. It is possible we have already put in a low heading into harvest as weather outlooks, crop conditions and exports have been favorable for prices as of late. Unfortunately favorable for prices does not usually mean favorable for the crop so hope exports continue because any good weather news to help the crops would be bearish for prices.

Via Barchart

 


Soybeans saw a major bounce this week as weather concerns and Chinese buying drove the market. As soybean yields are still at a higher risk than corn at this point in the year the dry weather outlook could cause some damage to the crop. Like corn, the areas already in drought conditions will continue to hurt along with areas that have just started struggling look to continue into September. The continued exports to China are promising as consistent buying in bulk would be promising of long term Chinese demand. As everyone likes to see prices going higher for this year after a long year of Covid-19 and weather, do not forget to be thinking about the ’21 prices if the rally continues where you could sell forward some of your production for ‘21 or gain some premium for storing until next summer. If China continues making purchases and the weather remains grim look for this rally to continue or hold until there is news to stop it.


Via Barchart

 

Hurricane Laura
Hurricane Laura slammed the gulf coast in eastern Texas and western Louisiana as a category 4 storm. The hurricane will bring 5-10 inches of rain and heavy winds to the western Mississippi Valley. As the storm is expected to turn northeast and dump rains on the southern Ohio Valley this weekend it will miss the areas that need the rain the most in the western corn belt. Seeing the destruction brought by the storm along the coast our thoughts and prayers are with everyone affected. (Check out some more thoughts on a hurricanes effect on futures markets from our sister company here)   

21 Aug 2020

Ag Markets Update: August 15 – 21

Corn stayed level on the week after last week’s rally from the storm damage. Pro Farmer Tour is on the road this week looking at several areas across the midwest. The markets will be keeping an eye on them as they try and assess the damage of the storm and how many bushels were lost as well as the potential yields in areas not affected by the storm. So far the PFT has shown better than expected yield potential for Ohio, Indiana, Nebraska and the Dakotas. The parts of Iowa and Illinois to miss the storm look strong as well but storm damage is ultimately what people are holding their breathe for. Parts of western Iowa that were not affected by the storm have had another problem of their own, a severe drought that is going to cost the area bushels as well. All eyes and ears will be on the PFT as they try and estimate how many acres/bushels were lost to the derecho; more than expected expect another small rally, less than expected we could see another retreat as we head into harvest season.

 

Soybeans saw a small boost this week as China continues to be a major buyer. PFT is also looking at beans and making estimates based off pod counts so that has been a market mover this week as well. Bean pod count numbers are running well ahead of last year and historical averages, which indicates the bean crop still has above trend line potential which is bearish at these levels after the recent 54-cent rally. Several areas are in need of rain as well in the next 10-14 day window that look relatively dry for most areas continuing the trend of the past couple of weeks. At this stage beans still have plenty of ways to go to get to harvest ready so keeping an eye on them as August comes to a close will be important as well as always keeping an eye on export numbers.

 

Cotton prices gained on the week as strong exports and the concern of the possibility of a tropical storm in the gulf grew. West Texas has already had many weather issues, but the south has had a good year so far for growing but a storm with strong winds could change that. China was the biggest buyer of cotton on this weeks export report with 13 total buyers. This is promising as it would appear that other countries demand is beginning to come back after a summer of shutdowns has kept exports low. The US dollar continues to struggle providing some support for US commodities on the world stage. Continue keeping an eye on China as more rains continue to affect the Yangtze River as it reached new record water levels this week. The US and PRC look to continue trade talks in the coming days so expect any news, positive or negative, to affect the market.

 

Via Barchart.com

18 Aug 2020

AG Markets Update: August 8 -13

CORN

Corn, along with other crops, got a big boost on Thursday this week. After a derecho ripped through Iowa and parts of Illinois damaging millions of acres and lots of grain storage bins the market seems to be trying to price in the damage. Despite a pretty bearish USDA report this week corn has bounced on the storm and the news from the FSA of an estimated 9 million prevent plant acres, 5.37 MA of corn. This week tested both contract lows and highs for the month as traders are trying to figure out how the derecho and PP numbers are going to effect final yields and supply. Along with assessing the damage there was wide ranging damage done to the crop and some people thought some areas could rebound and still be able to harvest which is holding a big question mark over the market right now. You can see the chart below shows the rebound this week after a few weeks of losses. The USDA report yesterday estimated a 181.8 BPA yield for this year which would have been bearish if not for the weather events this week. It is important to note this number did not include the damage from the storm which some are estimating could cut over 3 bushels per acre from final yield. As we continue to learn the exact damage from the storm to the top corn producing area of the country prices will move on news.

 

SOYBEANS

Soybeans, like corn, were affected by the derecho storm that ripped through the Midwest. Even though it is not grown as much as corn in those areas it still takes up a significant portion of their acres. In the USDA report this week they came out with an estimated 53.3 BPA yield and large ending stock numbers. Despite bearish report numbers beans have seen a solid gain this week as rumors of South America running out of beans to sell seems to be coming to fruition. Another indicator that SA has oversold their crop is that US soybeans are now competitive in the world cash market. China continues to buy large amounts of US soybeans as they head into the meeting this weekend to discuss progress on the Phase 1 Agreement. 1.22 million acres of soybeans were in the 9 million total acres of prevent plant helping this week as well. In the chart below you can see the $0.20+ bounce back to the $9.00 range from the end of last week and start of this week.

 

OTHER NEWS

Phase 1 Trade Agreement Meeting

The US and China are set to have their first check-in meeting to assess how Phase 1 is going (spoiler alert: not great). This is on top of recent tensions over the closing of embassies and spying allegations. Not sure that anything good can come out of these talks but they will be worth keeping an eye on August 15th. Hopefully, we see a commitment to ramp up and get a boost to start that week following.

Derecho

The storm that ripped through Iowa and parts of Illinois this week caused damage to an estimated 10 million acres and lots of grain storage bins at the farm level and elevator level. The satellite image below shows the extent of how many crops were knocked down/blown over. How much, if any, of these crops can stand back up remains to be seen, as lots of areas think it will be a total loss that will become silage or another use.