Tag Archives: soybeans

Arlan Suderman, Chief Economist for Stone X, joins the Fontanelle Final Bell on Wednesday. Being the last full trading day of the week with no markets on Thursday and a half day Friday traders looked to take profit in the grain markets. As Suderman explains traders are likely stepping away from the office for the next few days and don’t want too many positions exposed to headlines while they are away.

The supply side of the story continues to be in control for the grains though with South America still in the grip of La Nina. However Suderman warns that previous La Nina’s have shifted enough moisture into Northern Brazil to help offset Southern production losses.

The broader market is also very active currently with traders working between increasing lockdowns and vaccine hopes.

Catch the full conversation with Suderman here:

Summary

The market coming back from Thanksgiving is mixed, but near record highs for the equities. Traders right now are trying to decide between the looming economic impact of lockdowns across the globe and hopes of a vaccine that could roll out in 2 weeks in the US.

Economic data on Wednesday was positive with the second reading of third quarter gross domestic product revealed that GDP grew at a robust 33.1% pace on an annualized basis, unchanged from the first reading last month and matching analyst expectations. Personal consumption expenditures grew at an annualized rate of 40.6%, down slightly from 40.7% initially reported and from analyst expectations of 40.8%. There is no question that we saw a robust recovery in the third quarter following this spring’s shutdown in the economy to slow the spread of coronavirus.

The grain complex comes into the end of the week in pullback mode with the bullish fundamentals still sitting strong. Most analyst are viewing the current selling as something that was coming sooner rather than later. The net long fund position going into this shortened trading week was the largest it had been since July 2013. With many traders and fund managers stepping away from the office for Thanksgiving protecting profit was a top priority. With the current dip this could give an opportunity for speculative funds to come back into the market once again.

Overall the main driver of the rally  continues to be dry South American weather. Area’s in Southern Brazil have seen less than 50% of their typical rainfall to this point in the growing season. With most of the soybeans emerged and growing analysts liken the current time frame the 4th of July in the US. rain is needed sooner rather than later to help the crop really develop. Which could happen for Northern Brazil which is typically favored my more rains in a La Nina weather pattern. How much rain the North gets though could determine if the Northern production can help offset the losses in Southern production.

With the South American crop still being a big unknown the supply side of the market dominates the story the trade is looking at. However the demand side of the story is starting to dry up it appears. USDA has announced very few flash sales this week and it’s been several weeks since China was the headlining buyer. There is even rumor Wednesday that China has washed out or cancelled several option origin soybean contracts.  The major thing to understand with this rumor is that it is likely small Chinese crushers that did not have hedges in to protect against this sharp run up in prices. Crusher margin in China is flat to near negative so small crushers may cancel imports to wait for more favorable prices possibly from South America in a few months.

As for corn it continues to play between corn and wheat, but finally got some positive news this week with a rally in energy prices. Crude oil ran up 4+% on Tuesday into Wednesday with WTI prices back near $45/barrel. With energy prices finally getting off the ground ethanol may finally have a chance in 2020. According to EIA data on Wednesday US ethanol production rose to an 8 month high of 990,000 barrels per day for the week ending November 20. That was still below the 1,059,000 barrels per day being produced last year at this time. US ethanol stocks also climbed 700,000 barrels to 20.9 million. Estimated corn used in ethanol production rose to 102 million bushels weekly. With 1.119 billion bushels consumed so far in 2020. That is 5.4% or 64 million bushels lower than last year.

  • In the wheat trade Tuesday was a good day as buyers finally got the break in winter wheat condition ratings that they had been waiting for several weeks. The US winter wheat crop dropped 3% to 43% good to excellent. Then Wednesday rain looked more favorable in the Black Sea forecast and sellers returned to the market.

The livestock complex has broken away from the grains has made positive gains up to the trade on Friday. Live cattle have lead the way building off support from the recent cattle on feed report. The boxed beef cutout has also supported cattle bulls continuing to appreciate through Thanksgiving. Traders are curious to see where protein demand falls this year with Thanksgiving looking different for many families across the country. Smaller gatherings could indicate more willingness to purchase higher priced cuts of beef and pork. Instead of the traditional turkey.

Friday will also host the USDA export sales and shipments report. Beef exports were strong last week, but pork was starting to dwindle as China pushes the story of it’s hog herd rebuilding. There also hasn’t been any recent data to suggest that food inflation is still rampant in China so state held reserves maybe finally started to fill up.

It’s also key to note in the livestock that Arlan Suderman with Stone X pointed out in the Fontanelle Final Bell on Wednesday that Tianjin officials in China are blaming the source of its latest COVID-19 outbreak on pork products originating from the United States. This has not been confirmed by any of China’s major news outlets or publications, but could be the early signal that China looks to shift policy on US pork imports.

Cash trade in the country was slowly developing Wednesday afternoon with cattle in Eastern Nebraska trading at $111 live. There was also reported trade in Iowa at $110 live and $172 dressed. While not enough to establish a full market trend that would be steady to $1 higher if it continues. There were also bids of $111 live $172 dressed in Kansas, Texas and Western Nebraska. Feeders were passing on the offers though digging in for better cash on Friday with support from the futures trade.

For the week ending November 14, 2020, Imported Beef Passed for Entry in the U.S. totaled 39,950, 101.08% of the previous week and 93.00% of the 4-week average.

Expected Slaughter numbers Wednesday

Cattle

121,000 hd today 121,000 hd wk ago 118,520 hd yr ago

Hogs

495,000 hd today 493,000 hd wk ago 479,094 hd yr ago

Midday Carcass Value Wednesday

Beef

Choice up 0.62 244.92

Select up 1.40 221.11

C/S Spread  23.81

Loads  79

Pork

Carcass up 0.56 78.14

Bellies dn 0.20 93.25

Loads 178

Grain Settlements

  • Corn dn 2 1/4 – 5 3/4
  • Soybeans dn 7 1/4 – 8
  • Chicago Wht dn 15 – 23
  • Kansas City Wht  dn 17 1/4 – 20 1/4
  • Livestock Settlements
  • Live Cattle up 0.20 – 0.45
  • Feeder Cattle up 0.60 – 1.15
  • Lean Hogs up 0.52 – 0.92
  • Class III Milk dn 0.25  – 0.33

Pre-Opening Market Broker Commentary

Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today.  Soybeans hit $12 overnight, but rain in Argentina could pull the bulls back. No Mark Gold commentary 11/24-11/25 due to technical difficulties in recording.


Jerry Stowell, Country Futures,  looks at what may impact the livestock futures today. Cattle are looking for a firmer open after a friendly cattle on feed report. No Jerry Stowell commentary 11/24-11/25 due to technical difficulties in recording.


Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Grains are moving lower, but livestock are trading higher on solid fundamentals.


John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Payne see’s the selling as traders going into first notice day and wanting to square up positions. This could be a dip that encourages more commercials and funds into the market.


Jack Fenske, York Commodities, looks at the closing market numbers. Grains pull back with profit taking.

Tuesday saw mostly higher grain prices. Soybean bulls had to fight back the bears to make limited gains on the day. Darin Fessler, Lakefront Futures and Options, highlights that soybeans continue to have the strong weather story and Chinese demand that keep bulls in charge. However Fessler encourages producers to have plans and targets in place in case the commodity market quickly shift. Fessler reminds listeners of what happened 4 plus year ago when commodity prices were near similar levels.

Fessler also looks into the current cash market which continues to encourage selling the physical commodity. The market offers little carry between contract months and Fessler believes there might be better options to sell the grain and own paper to take advantage of higher moves in the market.

The broader market on Tuesday was feeling fairly risk on with the DOW Jones hitting 30,000 and crude oil up over 4%. Yet Fessler doesn’t see the current rally in commodities as inflation rather the result of production concerns combined with strong demand. For Fessler this means there is still room for commodity inflation in 2021.

You can catch the full conversation with Fessler here:

Grains and livestock start a holiday shortened week well within the green. South American weather is still dry and demand looks strong. These fundamentals continue to feed the soybean bulls. With continued strength in the soybeans the broader grain complex is moving higher with positive sentiment. Mike Zuzolo joins the Fontanelle Final Bell on Monday and outlines what can continue to support these bullish fundamentals. Zuzolo also highlights what data could swing the market to sell into current overbought signals.

Zuzolo also breaks down what farmers and ranchers should be watching in the energy market. 2021 already holds a lot of unknowns that could impact energy production and demand. Therefore ag producers need to be aware of their fuel needs and how they can address that risk.

The Fontanelle Final Bell ends on a livestock note with discussion on how protein demand could be different this holiday season.

Catch the full program here:

USDA on Tuesday released its November Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports.

USDA lowered the average corn yield by 2.6 bushels per acre (bpa) in the report, down to 175.8 bpa. That dropped corn production by 215 million bushels (mb) to 14.5 billion bushels (bb). USDA lowered new-crop ending stocks to 1.7 bb, following a 325 mb increase to export forecasts.

Soybean ending stocks estimates for the 2020-21 marketing year came in at 190 mb — 100 mb lower than last month. Despite rising interest from China, the change didn’t come from exports. USDA lowered its production estimate for soybeans by 98 mb to 4.170 bb by lowering the average national yield to 50.7 bpa.

CORN

Several surprises came in the 2020-21 corn numbers as USDA lowered the average corn yield to 175.8 bpa, a 2.6-bushel decline from October, while USDA also increased export sales for corn to a potential record volume as well and dramatically cut the estimated ending stocks.

Keeping harvested acres at 82.5 million acres, that lowered 2020-21 corn production to 14.507 bb, a 215 mb decline from the October estimate. That put total supply at 16.527 bb.

On the demand side, USDA lowered total domestic use by 75 mb by lowering the feed and residual use for corn by that amount, bringing feed and residual use down to 5.7 bb, based on a smaller crop and higher expected prices. Ethanol demand remained steady at 5.05 bb.

Exports were the 2020-21 corn crop were pumped up to 2.65 bb, up 325 mb from the October estimated. If realized, that would be a record high for U.S. corn exports, USDA stated.

Total use was forecast at 14.825 bb, up 250 mb from October. That brought down ending stocks to an estimated 1.702 bb, a decline 465 mb from October.

The stocks-to-use ratio for corn came it at 11.48%, compared to 14.8% in the October report.

The average farm price for the 2020-21 corn crop was posted at $4.00 a bushel, a robust 40-cent bump from the October report.

Globally, USDA also raised the import estimates for Chinese corn imports to 13 million metric tons (mmt), up from 7 mmt estimated in the October report.

SOYBEANS

U.S. soybean growers are expected to harvested 4.17 bb this fall, 98 mb lower than what USDA estimated last month. The agency cut its yield estimate by 1.2 bpa to 50.7 bpa, below the range of pre-report expectations. The agency said lower yields were reported in major soybean growing states, including Illinois, Iowa, Indiana, Ohio and Nebraska.

The production change resulted in most of the 100-million-bushel decline in new-crop soybean ending stocks. USDA put ending stocks at 190 mb. It also made small tweaks to seed use, up 3 mb, and residual use, down 1 mb.

The national average farm gate price increased by 60 cents to $10.40 per bushel.

Globally, USDA lowered 2020-21 ending stocks to 86.52 million metric tons (mmt), which is toward the low end of pre-report expectations. USDA left Brazilian production unchanged at 133 mmt but lowered Argentine production by 1.5 mmt to 51 mmt. Chinese import demand was left unchanged at 100 mmt.

WHEAT

USDA pegged 2020-21 U.S. wheat production at 1.826 bb, unchanged from last month. Average yield was also left at 49.7 bpa, with acreage still forecast for 44.3 million acres planted. Old-crop (2019-20) wheat production was also left unchanged 1.08 bb.

The agency trimmed ending stocks to 877 mb, in line with pre-report analyst estimates. That drop came from USDA upping food use of wheat stocks by 5 mb and seed by 1 mb.

Globally, USDA pegged total wheat production for 2020-21 at 772.38 mmt, a 0.7 mmt decrease from the October report. That drop came mostly from production losses in Argentina, where drought and a local freeze dropped its forecast production down 1 mmt to the lowest in eight years, at 18 mmt.

World ending stocks were projected at 320.45 mmt, in line with pre-report analyst estimates, and down 1 mmt from October, due to increased world consumption, mainly from higher feed and residual use for China and the EU. China’s wheat imports hit 8 million tons, on track to be the largest since 1995-96.

U.S. PRODUCTION (Million Bushels) 2020-21
Nov Avg High Low Oct 2019-20
Corn 14,507 14,645 14,820 14,250 14,722 13,620
Soybeans 4,170 4,253 4,320 4,189 4,268 3,552
U.S. AVERAGE YIELD (Bushels Per Acre) 2020-21 (WASDE)
Nov Avg High Low Oct 2019-20
Corn 175.8 177.5 179.2 175.0 178.4 167.5
Soybeans 50.7 51.7 52.5 50.9 51.9 47.4
U.S. HARVESTED ACRES (Million Acres) 2020-21
Nov Avg High Low Oct 2019-20
Corn 82.5 82.5 82.7 82.3 82.5 81.3
Soybeans 82.3 82.3 82.3 82.3 82.3 74.9
U.S. ENDING STOCKS (Million Bushels) 2020-21
Nov Average High Low Oct
Corn 1,702 2,048 2,215 1,950 2,167
Soybeans 190 239 308 195 290
Wheat 877 874 902 818 883
WORLD ENDING STOCKS (million metric tons) 2020-21
Nov Avg. High Low Oct
Corn 291.4 297.8 302.2 292.0 300.5
Soybeans 86.5 87.6 89.0 86.3 88.7
Wheat 320.5 320.0 322.6 318.9 321.5

 

See the full report here:

https://www.usda.gov/oce/commodity/wasde/wasde1120.pdf

Sales of U.S. soy to China have slowed down from a previously rapid pace. Reuters says the slowdown is raising questions of whether China is just pausing its purchases, or if most of the intended volume has been purchased and Chinese buyers are waiting for Brazil’s new supply to become available.

Surging soybean sales to China is helping the overall level of farm trade to the Asian nation set new records for this time of year, while at the same time bringing China closer to meeting the purchase requirements in the Phase One trade deal with the U.S. Net export sales of U.S. soybeans to China during the week ending on October 29 totaled 810,710 tons, which is the lowest total in the last 11 weeks of the current marketing year. That volume included 578,600 tons switched from unknown destinations.

There hasn’t been a daily U.S. soybean sale explicitly to China since October 15, the longest streak since April of this year. U.S soybean prices have risen significantly over the last two months, which may be a limiting factor in further sales at the end of 2020.

The Purdue University/CME Group Ag Economy Barometer rose 27 points to a reading of 183 in October, setting an all-time high for the index. Farmers were more optimistic about both the future and current financial situations on their farms.

The Current Conditions Index rose 36 points to a reading of 178, and the Future Expectations Index climbed 23 points to a reading of 186. Since bottoming out this summer, the ag economy has rebounded sharply, and the dramatic improvement in sentiment mirrors the turnaround in the farm income picture. Organizers say the early fall rally in commodity prices combined with government program payments boosted farm income.

Corn and soybean prices continued to rally even though U.S. corn yields are expected to set a record high, and USDA projects soybean yields to be the fourth highest on record. Comparing their farm’s financial condition today to one year ago, 25 percent of survey respondents said their farm was better off financially now than at the same time last year.

The pace of harvest slowed again nationwide last week, but progress for both the corn and soybean harvest remained ahead of normal, according to the USDA NASS weekly Crop Progress report released on November 2nd.

Starting with Corn harvest the needle moved ahead 10% week to week at 82% complete. That is still 13% ahead of the five-year average of 69%. In the state break down big I states like Illinois (89%) and Iowa (87%) were nearly double or almost triple the harvest progress of a year ago. Nebraska corn harvest is 86% complete and Kansas corn harvest is 90% complete.

Meanwhile, soybean harvest slowed to a crawl last week, gaining just 4% to reach 87% complete as of Sunday. That puts this year’s current harvest progress 4% percentage points ahead of the five-year average of 83%. Nebraska and North Dakota are the first states to hit 100% soybean harvest according to NASS. Iowa soybean harvest is almost there at 97%. Kansas soybean harvest has a little more ground to go at 83%. All of these states though are well ahead of the year ago levels.

Winter wheat planting like harvest slowed last week, moving ahead  4% to 89% as of Sunday. That is 3% ahead of the five-year average of 86%. An estimated 71% of winter wheat had emerged, 1 percentage point ahead of the five-year average of 70%. In the state break down South Dakota and Nebraska are the first states to finish winter wheat planting. Kansas winter wheat planting is 95% complete.

The condition of the winter wheat crop was estimated at 43% good to excellent, up 2% from the previous week but down from 57% a year ago. Nebraska winter wheat dropped 2% to 41% good to excellent. Kansas winter wheat dropped 1% to 28% good to excellent. California hosts the best winter wheat in the country with a rating of 95% good to excellent.

See the full report here: https://downloads.usda.library.cornell.edu/usda-esmis/files/8336h188j/js9576006/zg64vb153/prog4520.pdf

Listen to a recap of the report here:

ST. LOUIS (October 30, 2020)— Commodity Classic has announced it will transition its annual conference and trade show, originally scheduled for March 4-6, 2021, in San Antonio, Texas, to an alternative digital format. The change was necessary due to restrictions related to the COVID-19 pandemic.  The new format is expected to be offered the first week in March 2021.

“This is about doing the right thing for our farmers, exhibitors, stakeholders, and the broader community in terms of health and safety—which is our top priority,” said Anthony Bush, an Ohio corn farmer and co-chair of the 2021 Commodity Classic representing the National Corn Growers Association.  “After careful deliberation among our farmer-leaders and industry partners, the COVID-19 restrictions would prevent us from delivering the type of high-quality experience Commodity Classic attendees and exhibitors have come to expect and enjoy for the past 25 years.”

According to Brad Doyle, an Arkansas soybean farmer and co-chair of the 2021 Commodity Classic representing the American Soybean Association, directed health measures due to the evolving COVID-19 pandemic such as social distancing guidelines would prevent Commodity Classic from conducting the trade show, educational sessions, and farmer networking—each of which are hallmarks of Commodity Classic.  “Farmers and agribusiness companies rate Commodity Classic highly because of its unique energy, excitement and one-on-one engagement with agribusiness companies and fellow farmers,” he said. “The health and safety restrictions required will simply not allow us to provide a productive in-person event that is in keeping with our 25 years of being the nation’s best farmer-led, farmer-focused ag experience.”

The transition of the 2021 Commodity Classic offers an attractive opportunity for farmers who have never attended Commodity Classic, Doyle added.  “Now farmers from across the nation and even around the world can get a taste of the Commodity Classic experience without ever leaving their farms,” he said.

Jerry Johnson, Ag Sector Chair of the Association of Equipment Manufacturers said, “Agribusiness companies put Commodity Classic at the top of the list when it comes to opportunities to engage with farmers from across the nation,” he said.  “However, our concern for the health and safety of our customers and our employees takes precedence, so all of us in agribusiness will work with the farmer-leaders at Commodity Classic to find innovative ways to connect in 2021.”

Commodity Classic is now redirecting its efforts to developing alternative methods of connecting farmers and agricultural stakeholders.  “We realize the total Commodity Classic experience cannot be completely replicated online. Yet a key benefit of Commodity Classic is the educational sessions and presentations from agricultural thought leaders, which are even more important in today’s challenging environment,” said Bush. “We are already exploring ways in which we can deliver high-quality content in unique ways that allow farmers to get the information they seek from the experts they trust.”

The transition to an alternative experience is already underway.  More information on the transition will be available in the coming weeks.  To keep up to date, sign up for email updates at CommodityClassic.com.  More information on the 2021 Commodity Classic will also be available on the website.

The 2022 Commodity Classic will be held in New Orleans on March 10-12, 2022.  “Like everyone else in agriculture, we are really looking forward to reconnecting with everyone face-to-face,” Doyle added.  “We urge everyone to get these dates on their calendar and plan to join us in-person in New Orleans in 2022.”

ST. LOUIS, Mo. — Secretary of Agriculture Sonny Perdue appointed eight new U.S. soybean farmers to the United Soybean Board (USB) and reappointed 11 directors for an additional term. These farmer-leaders will be officially sworn in for service at the annual USB meeting in December and will serve a three-year term.

“Every board member plays an integral role by lending their expertise and industry insights to determine checkoff investments that benefit all U.S. soybean farmers,” said USB Chair Jim Carroll III from Arkansas. “The soy checkoff is led by a dedicated and diverse group of farmers, and I look forward to working with each of the newly appointed leaders to move our industry forward and further innovation.”

The soy checkoff provides significant value to farmers by leveraging checkoff funds in investments and programs to build preference for U.S. soy across the country and around the world. Authorized by the Soybean Promotion, Research, and Consumer Information Act, the United Soybean Board is composed of 78 members representing 29 states, in addition to the Eastern and Western regions. The number of seats on the board is determined based on bushels produced in that region. Members must be soybean farmers nominated by a Qualified State Soybean Board.

“Board members have farms of almost every size and type, from those just starting out with a handful of acres to those with larger operations. Many of our farmer-leaders have a deep knowledge of demand opportunities and production research who are on the cutting edge with their minds on the future,” said USB Vice Chair Dan Farney from Illinois. “But every single one of them shares the goal to advance markets and profitability for U.S. soybean farmers.”

The newly appointed farmer-leaders include:
• Alabama — Sam Butler, New Hope
• Arkansas — AJ Hood, Star City
• Iowa — Timothy Bardole, Rippey
• Kentucky — Ryan Dale Bivens, Hodgenville
• Michigan — Laurie Isley, Palmyra
• Nebraska — Greg Greving, Chapman
• South Carolina, Fitzhugh L. Bethea III, Dillon
• South Dakota — Todd J. Hanten, Goodwin

The reappointed farmer-leaders include:
• Illinois — Gary Berg, Saint Elmo
• Indiana — Tom Griffiths, Kendallville
• Iowa — Thomas E. Oswald, Cleghorn
• Kansas — Dennis Gruenbacher, Andale
• Maryland — Belinda Burrier, Union Bridge
• Minnesota — Lawrence E. Sukalski, Fairmont
• Mississippi — Philip Good, Macon
• Missouri — Lewis Rone, Portageville
• Ohio — David A. Dotterer, Rittman
• Tennessee — David E. Nichols, Ridgely
• Texas — Andrew W. Scott, Jr., Weslaco

The newly appointed alternate is:
• Texas — Harold Roberts, Honey Grove

Visit unitedsoybean.org to learn more about the work of the soy checkoff.