Unusual soybean rally continues Friday

The U.S. dollar is lower, supporting the soybean market’s strength.

On Friday, the CME Group’s soybean market ended higher.

At the close, the Sept. corn futures finished 1¾¢ higher at $3.46. Dec. corn futures ended ¾¢ higher at $3.59¾.
 
Nov. soybean futures settled 8 1/4¢ higher at $9.50 1/2. January soybean futures closed 8¾¢ higher at $9.56¾.

Dec. wheat futures ended 2¢ lower at $5.48¾. 

Dec. soymeal futures settled $6.60 per short ton higher at $309.70. Dec. soy oil futures settled 0.26¢ lower at 33.24¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.07 per barrel lower at $42.97. The U.S. dollar is lower, and the Dow Jones Industrials are 161 points higher.

On Friday, private exporters reported to the USDA export sales of 324,032 metric tons of corn received in the reporting period for delivery to unknown destinations during the 2020/2021 marketing year.

The marketing year for corn began Sept. 1.

Al Kluis, Kluis Advisors, says that the timing of this rally is unusual.

“The seasonal pattern the last few years is to post a low in late August or early September. However, there are valid concerns about production estimates for the U.S. crop. The lack of rain in August – plus extended heat – clipped the top end of soybean production for many areas. Corn has been firing as rainfall dwindled the past three weeks. We are not facing the same problems as last year, but there are many operations that watched a potential record crop turn to a hopeful average crop in the month of August,” Kluis told customers in a daily note.   

He added, “Momentum indicators for grains are very overbought after the rally this week. Use this opportunity to get sales made, or buy puts to protect a portion of the upcoming crop.”

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Thursday’s Grain Market Review

DES MOINES, Iowa -- At the close of CME Group trading Thursday soybeans settled sharply higher with wheat also putting in strong gains.

In late morning trading, the September corn futures finished 3¾¢ higher at $3.44¼. Dec. corn futures ended 4¼¢ higher at $3.58½.
 
Nov. soybean futures closed 17¾¢ higher at $9.42. January soybean futures finished 17¼¢ higher at $9.47½.

Dec. wheat futures ended 11¢ higher at $5.50¾. 

Dec. soymeal futures closed $3.80 per short ton higher at $303.10. Dec. soy oil futures ended .97¢ higher at 33.50¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.53 per barrel lower at $42.86. The U.S. dollar is higher, and the Dow Jones Industrials are 233 points higher.

“Grains received a much needed push here Thursday on trade, hot weather, and managed money adjusting their positions following the derecho that affected Iowa on August 10,” says Matt Tranel of the Commodity Risk Management Group. “The market believes that the USDA estimates will be tough to reach given the damage and crop tour results.”

“Export data was solid this morning,” he adds.  “Wheat exports were released at 764,000 tonnes for the marketing year 2020/2021 and outpaced the highest trade guess of 700,000 tonnes.  Corn exports totaled 270,000 tonnes for the 2019/2020 year which was also above the highest average guess of 200,000 tonnes.  2020/2021 exports were very respectable at 1.181 million tonnes.  Soybeans also had solid sales in 2020/2021.  On top of the USDA export sales data, flash sales were reported this morning for corn.  747,000 metric tons of corn heading to China for 2020/2021 marketing year and 140,000 metric tons heading to unknown destinations for that same time period.”

“Hot weather has been playing a big factor with many areas not receiving ample rain,” Tranel says.  “Crop conditions reported by USDA fell 5% from last week across the country and certain states had massive declines, including Iowa and Michigan.  This was verified by the U.S. Drought Monitor released on August 25th with essentially the entire state of Iowa being abnormally dry or worse, Northern Illinois/Indiana abnormally/moderately dry, southern Michigan, and Ohio popping up.  With this news, managed money has adjusted their short bets in corn and extended long positions in soybeans.”  

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DES MOINES, Iowa -- At midsession Thursday, grain futures continue higher.

In late-morning trading, the September corn futures are 3¼¢ higher at $3.43¾. Dec. corn futures are 4¼¢ higher at $3.58½.
 
Nov. soybean futures are 20½¢ higher at $9.44¾. January soybean futures are 19¾¢ higher at $9.50.

Dec. wheat futures are 8¾¢ higher at $5.48½. 

Dec. soymeal futures are $4.40 per short ton higher at $303.70. Dec. soy oil futures are 0.61¢ higher at 33.14¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.64 per barrel lower at $42.75. The U.S. dollar is higher, and the Dow Jones Industrials are 259 points higher.

“We’re up sharply in the beans and it must be weather as there was no demand news this morning,” says Jack Scoville of PRICE Futures Group. “The demand was in corn from China and unknown with China very big – but corn is just up a fraction of the beans today.  Beans are getting fund buying, not showing up as much in the corn. It’s a pretty wild day for the beans.”

Asked if possible effects from Hurricane Laura are a factor in today’s soybean trading, Scoville says, “It could be, plus the forecast for Iowa and Illinois has all of a sudden turned dry.”

Louisiana is a significant soybean state and Arkansas and Missouri, set to get hit with possible flooding, are often among the top 10 producers.

Don Roose of U.S. Commodities agrees with Scoville that the change in weather outlook is driving much of today’s soybean price movement.

Overnight, “the weather forecast changed from a wetter outlook to a drier outlook in the Western Corn Belt,” Roose says.

The European model outlook for the next ten days was released early Thursday morning with a drier outlook. U.S. and Canadian models aren’t the same.

“The trade’s kind of been going with the European model because it’s been more right” in the last month, Roose says.

Funds are increasing their long positions in soybeans and wheat and getting out of corn, Roose says.

Hurricane damage to soybeans in the South is expected to be minimal, he says. There is more concern about the rice crop. Many soybean farmers were trying to get beans harvested ahead of the storm, he says.

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DES MOINES, Iowa – In early trading Thursday, soybean futures are sharply higher following more positive export news and corn prices are also higher.

In early trading, the September corn futures are 2¾¢ higher at $3.43¼. Dec. corn futures are 3¢ higher at $3.57¼.
 
Nov. soybean futures are 13¢ higher at $9.37¼. January soybean futures are 12¾¢ higher at $9.43.

Dec. wheat futures are 5½¢ higher at $5.45¼. 

Dec. soymeal futures are $3.80 per short ton higher at $303.10. Dec. soy oil futures are 0.37¢ higher at 32.90¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.01 per barrel higher at $43.40. The U.S. dollar is lower, and the Dow Jones Industrials are 112 points higher.

“Corn futures have continued to climb higher on the heels of the gap higher on Tuesday, says Al Kluis of Kluis Commodity Advisors. Before today’s open, “the December contract is more than 35 cents off the August 12 low. Soybean futures have managed to rally back to the early February highs. Momentum indicators for both commodities are in overbought territory. The strong export sales this week have added fuel for the bulls to keep the momentum going,”

Kluis is also watching for further improvement in gasoline demand.

“RBOB gasoline has recovered 61.8% of the losses sustained from the February high to the March low,” he says. “Prices have been stuck in a 10-cent range on either side of $1.20 for the past three months. If futures are able to break higher, then it would be a good sign for ethanol demand.”

Separately, the USDA’s weekly Export Sales Report Thursday showed new crop corn and soybean sales that were within trade expectations.

  • Corn: 270,400 metric tons (mt) for 2019/2020 and 1,180,500 mt for 2020/2021.  Trade expectations for corn were up to 200,000 mt old crop and 700,000 to 1,300,000 mt new crop.
  • Soybeans: 50,400 mt for 2019/2020; 1,874,400 mt for 2020/2021.  For soybeans, trade guesses ranged from 1,200,000 to 2,200,000 mt for the new crop.
  •  Wheat: 764,100 mt
  • Soybean meal: 150,800 mt (old and new crop)

Also on Thursday, a USDA daily report showed additional corn sales to China.

Private exporters reported to the U.S. Department of Agriculture the following activity:

--Export sales of 747,000 metric tons of corn for delivery to China during the 2020/2021 marketing year; and

--Export sales of 140,000 metric tons of corn for delivery to unknown destinations during the 2020/2021 marketing year.

The marketing year for corn began Sept. 1.

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On Wednesday, the CME Group’s farm markets closed mostly higher.

At the close, the Sept. corn futures finished ¼¢ lower at $3.40¾. Dec. corn futures finished ¼¢ lower at $3.54¾.
 
Nov. soybean futures settled 4¢ higher at $9.24½. January soybean futures finished 3¢ higher at $9.30¾.

Dec. wheat futures closed 4¼¢ higher at $5.39¾. 

Dec. soymeal futures ended $0.70 per short ton lower at $299.30. Dec. soy oil futures settled 0.25¢ higher at 32.53¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.11 per barrel lower at $43.46. The U.S. dollar is higher, and the Dow Jones Industrials are 54 points higher.

On Wednesday, private exporters reported to the USDA export sales of 400,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.

The marketing year for soybeans began Sept. 1.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says that the farm markets continue to build and hold risk premium in expectation as record yields begin to wane.  

“The hot and dry weather pattern that has sat over most of the Midwest is believed to be taking the top end off of yield. China has been an active buyer of corn and soybeans this week. As corn approaches our hold high of $3.62, that should serve as fairly stiff resistance. Talking with grain buyers across the Midwest, farmers have started engaging in some sales, which will also pressure moves higher. Funds have added to their soybean position, pushing over 100k and corn funds are lightening the load and currently carrying less than 100k short. Maybe more back-and-forth trade now until yields start rolling in. Stocks are currently not projected to be tight in either crop. Bulls will need to be fed to maintain control,” O’Connell says. 

Al Kluis, Kluis Advisors, says that the worsening crop conditions are giving support to the markets.

“Crop ratings will move lower again next Monday. This sets up lower crop projections in the September USDA report. I think of the USDA reports as snapshots of where the crop is as of that week. It is important to watch the changes from the August to September projections. When they get larger, the final crop projections usually increase. When the projections move lower, then the final crop size also usually moves lower,” Kluis told customers in a daily note.   

He added, “Watch the soil moisture index in the Corn Belt. Moisture conditions in the Corn Belt declined for the third week in a row, with dry conditions for most of August. The soil moisture in Iowa is rated 76% short to very short, Nebraska is 64% short to very short, Michigan is 63% short to very short, and Ohio is 60% short to very short.”

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets jump up.

At the close, the Sept. corn futures finished 9¢ higher at $3.40¾. Dec. corn futures closed 9½¢ higher at $3.54¾.
 
Nov. soybean futures finished 14½¢ higher at $9.20½. January soybean futures closed 14¼¢ higher at $9.27¼.

Dec. wheat futures settled 7¾¢ higher at $5.35¾. 

Dec. soymeal futures closed $3.00 per short ton higher at $300.00. Dec. soy oil futures ended 0.33¢ higher at 32.28¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.69 per barrel higher at $43.35. The U.S. dollar is lower, and the Dow Jones Industrials are 79 points lower.

Private exporters reported to the U.S. Department of Agriculture the following activity:

  • Export sales of 408,000 metric tons of corn for delivery to China during the 2020/2021 marketing year.
  • Export sales of 100,000 metric tons of corn for delivery to Japan during the 2020/2021 marketing year.
  • Export sales of 204,000 metric tons of soybeans for delivery to China during the 2020/2021 marketing year.
  • Export sales of 142,500 metric tons of soybeans for delivery to unknown destinations during the 2020/2021 marketing year.

The marketing year for corn and soybeans began Sept. 1.

Al Kluis, Kluis Advisors, says that the worsening crop conditions are giving support to the markets.

“The USDA Crop Progress report showed corn ratings down 5% and soybean rating down 3%. This was more than expected and has corn and soybeans higher in the night trade. Yesterday, the U.S. stock market rallied to new all-time highs and in the overnight market stock prices are higher again,” Kluis told customers in a daily note.   

He added, “Watch the crop ratings in Iowa very closely. Last week, corn and soybeans fell by 10% and in the Monday report, conditions declined another 3% for corn and 6% for soybeans. The drop in Iowa’s yield potential in the last three weeks will likely show up in the USDA Crop Production report next week.”

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets begin the week mostly higher.

At the close, the Sept. corn futures ended 4¾¢ higher at $3.31¾. Dec. corn futures closed 4½¢ higher at $3.45.
 
Nov. soybean futures settled 1¢ higher at $9.05½. January soybean futures finished 1¾¢ higher at $9.13.

Dec. wheat futures finished 7¢ lower at $5.27½. 

Dec. soymeal futures ended $0.50 lower per short ton at $297.00. Dec. soy oil futures closed 0.28¢ higher at 31.95¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.25 per barrel higher at $42.59. The U.S. dollar is lower, and the Dow Jones Industrials are 261 points higher.

Jack Scoville, PRICE Futures Group, says that it is a weather market for the most part today. 

“Corn and bean prices are reacting to hot and dry forecasts for this week. Demand has been good as well, but no demand news today is hurting the upside. Neither corn nor beans have been able to push to new highs yet, and that could become significant. Traders seem to be bulled up on the weather, but we are getting closer to harvest. So, another downswing might be coming soon,” Scoville says.

Al Kluis, Kluis Advisors, says that investors are watching for this afternoon’s crop ratings and Iowa’s crop weather.

“The grain market was quiet on Friday with traders focusing on whether the two tropical depressions will result in more rain in the Corn Belt this week,” Kluis told customers in a daily note. “The USDA Crop Progress report today will show corn conditions 2% to 3% lower and soybeans 1% to 2% lower than last week. Iowa will again take a big hit in the reports out this afternoon.”  

He added, “Watch the extended weather forecasts and the track of the two tropical depressions. Will these storms bring rain into the dry areas of the western Corn Belt? If the dry conditions continue in Iowa for another two weeks, then the national yield of both corn and soybeans will move lower in future reports. Meanwhile, the USDA enumerators are out checking crop size across the Corn Belt over the next two weeks for the September 11, 2020 Crop Production report.”

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