3 Big Things Today, December 2, 2020

Soybeans Plunge in Overnight Trading; Australian Wheat Output Expected to Double.

1. Soybeans Plunge in Overnight Trading on Slack Demand

Soybean futures fell sharply in overnight trading on a lack of export demand for U.S. supplies.

Grains also declined.

No new sales of 100,000 metric tons of soybeans were reported by the U.S. Department of Agriculture yesterday, now marking more than three weeks since such an announcement was made.

The last time the USDA reported a sale of 100,000 tons or more was on Nov. 9. Several sales of corn have been reported since then, and smaller sales of soybeans have been made, but the lack of large purchases by importers including China is causing concern.

Prices also may be falling as speculative investors who were long the market, or had bet on higher prices, liquidate their positions and sell their contracts.

Soybean futures in November jumped about 13%, the biggest monthly gain in more than six years.

Wheat futures were little changed as prices were underpinned by an Australian government report that showed production will more than double year-over-year.

Soybean futures for November delivery dropped 16¼¢ to $11.45¾ a bushel overnight on the Chicago Board of Trade. Soymeal plunged $7 to $383.20 a short ton, and soy oil lost 0.29¢ to 36.72¢ a pound.

Corn futures fell 3¼¢ to $4.17½ a bushel.

Wheat futures for September delivery were up 1¢ to $5.78¼ a bushel, while Kansas City futures fell ¼¢ to $5.38¾ a bushel.

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2. Wheat Reports Show Strong Australian Crop and Stressed Russian Grain

Two key wheat reports released this week have shed some light on the global wheat market.

The Australian Bureau of Agricultural and Resource Economics and Sciences, or ABARES, now expects wheat production in the country at 31.2 million metric tons, a 10% increase from a prior forecast and more than double the previous year’s output.

That would also be the second-highest production on record, ABARES said in its report.

Growing conditions in the spring in most cropping regions in the states of New South Wales, Victoria, and South Australia were “very favourable” giving crops an early boost, the agency said.

“Crops in these states were generally in very good condition at the end of winter and favourable rainfall during September and October increased soil moisture levels during the critical grain development period,” the report said.

Prospects in Western Australia and Queensland states, meanwhile, weren’t as good due to less-favorable weather in the spring, ABARES said.

The second report was out of Russia, the world’s largest exporter of wheat, which showed poor crop development, Commerzbank said in a note to clients on Wednesday.

“At 22%, the proportion of wheat plants in poor condition there is at its highest level in seven years,” Commerzbank analyst Michaela Helbing-Kuhl said.

Andrey Sizov, the managing director of SovEcon, a firm that focuses on the Black Sea agricultural markets, said in a tweet that the share of winter crops – mainly wheat – is at the highest it’s been in recent years and that “there is a big risk of huge winterkill.”

The USDA has pegged Australian production at 28.5 million metric tons, up from 15.2 million a year earlier, and Russian output at 83.5 million tons, an increase from 73.6 million tons last year.

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3. Winter Storm Warnings and Advisories Issued in Southern Plains

Winter storm warnings and advisories have been issued for parts of the southern Plains, the National Weather Service said, where hard-red winter wheat is overwintering.

Heavy snow is forecast with accumulations of up to 8 inches expected, the NWS said in a report early this morning. A winter storm warning for counties in northern Oklahoma and the panhandle into southwestern Kansas will be in effect from noon today until 6 a.m. Thursday.

Wind gusts of up to 40 mph also are expected.

A winter weather advisory also has been issued in surrounding counties stretching into the Texas panhandle as 2 to 4 inches of snow are forecast along with wind gusts of up to 45 mph.

“A combination of strong winds and snowfall could result in visibility restrictions down to a mile or less,” the NWS said. “Plan on slippery road conditions and visibility restrictions.”

In eastern Kansas and western Missouri, meanwhile, rain is expected today and tonight. The precipitation will turn into a wintry mix overnight and result in some slick spots on hard surfaces.

“Only light snow accumulations are anticipated through late Thursday morning before precipitation chances back over to all rain,” the agency said.  

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