3 Big Things Today, October 28, 2020

Soybeans, Grains Plunge Overnight; Brazil Gets Rain But Southern States Still Dry.

1. Soybeans and Grains Plunge in Overnight Trading

Soybean and grain futures dropped in overnight trading as rain falls in parts of Brazil and on signs of slowing demand for U.S. agricultural products.

In Brazil, the biggest exporter of soybeans, 0.25 to 2.75 inches of rain fell in the past 24 hours in first-crop bean- and corn-growing regions, according to forecaster Commodity Weather Group.

As much as 2.75 inches fell in some isolated areas, CWG said.

Wheat-growing areas in the South American country saw up to 1.25 inches of precipitation.

The five-day forecast calls for about 1.5 inches of rain in bean and corn areas and up to 1 inch in wheat-producing states, the forecaster said in a report.

Demand has been robust for U.S. agricultural products, though the government didn’t report any sales to overseas buyers yesterday. On Monday, however, the agency said exporters sold 120,700 metric tons of soybeans to an unnamed buyer and 135,000 tons of soybean meal to the Philippines.

China has been conspicuously absent from export rolls since Oct. 15, though sales to what the USDA calls “unknown destinations” could be to the Asian country.

Precipitation this week in the U.S. southern Plains is also weighing on prices.

“Rain (and) snow the next two days aid wheat growth given warming next week,” CWG said in its report.

Futures also declined overnight as investors who were long the market, or bet on higher prices, sold their contracts and liquidated their positions after prices hit multiyear highs.

Soybeans earlier this week hit the highest price since July 2016 on Monday while corn reached its highest level in more than a year.

The run-up in agricultural commodity prices was due to strong demand from overseas buyers, dry weather in Brazil that threatened crops and, for wheat, long periods of dry and freezing weather in the U.S. southern Plains.

Soybean futures for January delivery dropped 10¾¢ to $10.65¾ a bushel overnight on the Chicago Board of Trade. Soymeal lost $5.70 to $378.30 a short ton, and soy oil fell 0.55¢ to 33.56¢ a pound.

Corn futures for December delivery fell 8½¢ to $4.07½ a bushel.

Wheat futures for December delivery plunged 12¼¢ to 6.03½ a bushel in Chicago while Kansas City futures fell 13¢ to $5.36¼ a bushel.

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2. Rain Falling in Parts of Brazil But ‘Exceptional Drought’ Persists in Southern States

Rain is falling in Brazil, giving a boost to soybeans, corn, and wheat in the South American country, with more on the way.

More precipitation than expected fell in north Rio Grande do Sul yesterday but the rain missed parts of central and southeastern Parana and Sao Paulo, Commodity Weather Group said.

Still, it’s not all rosy as long-term moisture deficits continue in up to 40% of crop areas, though stress in the short term is more limited to about a quarter of growing areas, CWG said.

USDA maps show that Rio Grande do Sul, which produces about 16% of the country’s soybean crop, was suffering from an “exceptional” drought as of Oct. 20.

Parts of Parana, which accounts for about 17% of Brazil’s bean crop, also is seeing dry weather.

Mato Grosso, the country’s largest producer of soybeans in the center of the country, looks more favorable for production, the agency’s maps show.

Little or no rain has fallen in the southern states in the past week, though the center of the country, including Mato Grosso, received as much as 50 millimeters (2 inches) of precipitation, the USDA said.

Commodity Weather Group said in its long-range outlook for South America that it expects a moderate to strong La Niña weather pattern that’s indicated by warmth in the southern Atlantic.

Soybean and corn yields in Argentina likely will be near to below normal, though any losses will be mitigated if the La Niña system is on the stronger side, CWG said.

Central Brazil is expected to be wetter in the country’s summer months, which likely will aid yield, the forecaster said.

“(The) greatest risks for broad crop heat (and) moisture stress focus early in summer for Argentina, but overall dryness (outlooks are) scaled back slightly,” CWG said in its report. Some bean and corn losses are likely.

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3. Winter Weather Threatens Southern Plains as Zeta Bears Down on Gulf Coast

A winter storm warning is in effect until tomorrow morning in parts of the Oklahoma and Texas panhandles where hard-red winter wheat is emerging, according to the National Weather Service.

“Additional snow accumulations of up to 7 inches across the southwestern two-thirds of the panhandles and ice accumulations of around 0.10 inch across the eastern panhandles” are expected, the NWS said in a report.

Winds are expected to gust as high as 30 mph.

Travel will be “very difficult,” the agency said.

Along the Gulf Coast, meanwhile, Tropical Storm Zeta is expected to make landfall this afternoon along southeastern Louisiana shores. The storm is expected to strengthen into a hurricane before turning north and making landfall, the NWS said.

“If the current forecast holds, moderate to potentially major impacts will be experienced across portions of southeastern Louisiana and southern Mississippi,” the agency said. “Heavy rainfall, storm surge, strong to potentially damaging winds, and a few tornadoes could be possible with Zeta.”

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