Plus – a deep dive into the latest export data released by the Census Bureau and USDA
Corn down 2-3 cents
Soybeans down 6-9 cents, soyoil down $0.50/lb, soymeal down $3.7/ton
Wheat down 1-6 cents
*Prices as of 6:50am CST.
Editor’s Note: Our January 2021 survey is live! Click here to share harvest results and answer a few questions about the top-trending issues in agriculture right now. Our results will be released January 5, 2021 to allow farmers enough time to recalibrate their marketing plans ahead of the January 12 WASDE and Crop Production reports, which will feature final crop estimates for 2020 corn and soybean harvests.
Corn: Traders began settling their positions overnight in anticipation for large global ending stocks in Thursday’s WASDE reports. Widespread rainfall in South America increased those odds. Losses were limited by La Niña weather patterns expected to persist in South America in the coming months. March corn futures dropped $0.0225/bushel lower to $4.2175 on the sentiments while May futures also fell $0.0225/bushel to $4.245.
Large price swings tend to shine light on cracks in marketing plans, Advance Trading’s Dave Lechtenberg writes. The latest rapid price swing brings farmers face-to-face with several marketing habits that even good prices can’t ignore.
Lechtenberg breaks down these flaws, including inaction, overselling, and using revenue insurance to offset any potential marketing moves, as three of the biggest grain marketing sins during a bull market. Check out Lechtenberg’s four other tips in the latest Ag Marketing IQ column.
Export loading paces for corn slowed significantly in yesterday’s grains inspections for export report from USDA. For the week ending December 3, corn volumes weighed for inspection dropped by 29% to 28.9 million bushels.
Seasonal decreases in corn exports are not uncommon this time of year, especially in the wake of harvest sales. Peak U.S. corn export season will not begin until mid- to late March. But international buyers may regain interest if futures prices continue their decline, especially in the midst of a falling dollar.
For the 2020 calendar year to date as of October, the U.S. has exported $114.4 billion in agricultural goods to international buyers, according to the most recent ag trade data released by the U.S. Census Bureau in conjunction with USDA’s Foreign Agricultural Service.
U.S. corn sales contribute to $7.5 billion, or 6.6%, of that total. At $190.6 million, the value of U.S. corn exports to China in October 2020 was the highest valued since May 2012.
Sales to China between January 2020 – October 2020 total a mere $680.3 million. Export volumes of U.S. corn to China shattered records between August – October 2020, notching the top three monthly volumes of corn exports to the country in that period. In October 2020, 43.4 million bushels of U.S. corn were sent to China, just shy of August 2020’s record high of 46.4 million bushels.
But it is worth bearing in mind that current corn sales to China pale in comparison to historical top buyers, even though export loading paces to the world’s second largest economy have been hot as of late. Calendar year to date, Mexico and Japan remain the top buyers of U.S. corn, purchasing $2.2 billion and $1.6 billion, respectively.
Soybeans: Easing export loading paces and no news of additional Chinese export sales weighed heavy on the U.S. soybean complex this morning. Steady rains in South America encouraged planting conditions in Argentina. January soybean futures tumbled $0.095/bushel lower to $11.49 as a result, with March futures following $0.085/bushel lower to $11.54. January soyoil futures fell $0.50/lb to $37.53 while January soymeal futures shed $3.7/ton to $378.60.
Weekly soybean export loading paces saw a slight drop in weekly volumes. Yesterday’s grains inspection for export report from USDA saw a 5.2% decline in weekly soybean exports, down to 84.4 million bushels for the week ending December 3. High futures prices in recent weeks have soured some smaller Chinese soybean processors who did not have pricing locked at the time of the sale.
Calendar year to date soybean export sales are on track for their best performance since 2016, according to trade data released by the U.S. Census Bureau. As of October 2020, $7.8 billion worth of U.S. soybeans had been bought by global customers with October 2020 sales topping $3.5 billion – or 45% of calendar year to date soybean sales.
Total calendar year to date U.S. soybean shipments are valued at $16.2 billion as of October 2020. Sales to China have overwhelmingly supported the national trade balance, with $7.8 billion earned on U.S. soybean shipments abroad during the January 2020 – October 2020 reporting period.
Only monthly U.S. soybean shipments in November 2012 were higher than October 2020 totals, at $3.51 billion for the month. U.S. soybean shipments are historically highest in November, so next month’s data could see a new record high, especially amid high futures prices and export loading paces.
Wheat:
Wheat futures edged lower in overnight trading as investors banked on large global supplies in Thursday’s WASDE report to hold back rallies. Bumper crops in Canada and Australia contributed largely to that weakness as well as slowing export demand from Asian countries. A stronger dollar also underpinned losses, even though the currency is trading at 20-month lows. The ICE Dollar Index traded 0.15% higher to $90.925 this morning.
The world’s top wheat importer, Egypt, expects to produce 367.4 million bushels of wheat from 3.63 million acres in the 2020/21 marketing year, up 55.1 million bushels from last year. USDA expects Egypt will produce 327.0 million bushels of wheat this year, up 4.8 million bushels from last year. The larger production forecast could limit export demand from the North African country, primarily in the Black Sea and European regions.
French acreage planted for wheat will see a slight uptick in 2021/22, but the rebound will likely fall short of market expectations. Soft wheat acreage is expected to total 11.7 million acres, a 12.4% increase from last year, but still 1.9% lower than the five-year average. France is largest wheat producing country in the European Union. The EU bloc is the largest wheat-producing body on earth.
Wheat volumes inspected for export last week held steady, supported by dollar values falling to nearly a 20-month low. For the week ending December 3, wheat volumes weighed for export inspection edged 0.7% lower to 19.5 million bushels. Export volumes remain about 3% higher than the same time a year ago and are very likely to hit USDA’s 2020/21 target export estimate of 975 million bushels for the marketing year.
U.S. wheat exports for the 2020 calendar year to date through October edged about 1% lower than the same period a year ago, according to data released yesterday from the U.S. Census Bureau and USDA-Foreign Ag Service. Between January 2020 – October 2020, U.S. wheat exports were valued at nearly $5.3 billion.
The Philippines and Mexico battled for the top buyer position of U.S. wheat for the calendar year to date reporting period, purchasing $665.3 million and $639.0 million, respectively. Sales to China in that time frame only totaled $402.0 million but reached their highest levels since 2013.
In October 2020 alone, U.S. wheat shipments to China were valued at $81.7 million. U.S. wheat exports to China in August – October 2020 have hit their highest values since January 2014, when shipments were priced at $102.9 million.
Weather: Clear skies and mild temperatures will prevail across the Midwest today, according to NOAA’s short-range forecasts. The weather trend is expected to continue in the Heartland through the remainder of the week.
Financials: Coronavirus cases in the U.S. rose by 193,448 from yesterday morning to 14,955,024 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 1,423 lives overnight to 283,746 deaths as of press time.
U.S. exports of agricultural goods to China totaled a mere $16.9 billion for the January – October 2020 reporting period. China’s Phase One trade agreement targets of $36.5 billion – $40 billion for the 2020 calendar year will likely fall short, due in large part to competitive South American soybean crops and the global pandemic.
Strong U.S. wheat export volumes could help move the needle a little closer to the target, but strong soybean export loading paces are likely to fade amid high prices and the looming record-setting Brazilian soybean crop. With soybean exports to China supporting a significant amount of the Phase One trade goal, the looming export slowdown further limits China’s likelihood of advancing 2020 export targets.
Speculation continues to swirl around potential Secretary of Agriculture nominees for the upcoming Biden Administration. While Ohio Representative Marcia Fudge and North Dakota Senator Heidi Heitkamp are among potential nominees. But President Barack Obama’s former Secretary of Agriculture, Tom Vilsack, may be throwing his hat in the ring as well.
Vilsack, an Iowa governor from 199 to 2007, is currently serving as the president and CEO of the U.S. Dairy Export Council. Vilsack has been an outspoken advocate for the biofuels industry.
The mad scramble to pass government funding legislation will continue this week. The current spending bill to fund the government expires this Friday, December 11. House Speaker Nancy Pelosi announced last Thursday that Congress could pass the government spending bill and a potential COVID-19 pandemic stimulus bill when it breaks for the week on Thursday.
While Speaker Pelosi and Senate Leader Mitch McConnell purportedly are cooperating to pass the legislation, the country will hold its breath until both bills are passed.
U.S. stock futures are trading slightly lower this morning despite the first vaccines rolling out in the United Kingdom. Stalled Congressional talks on a potential stimulus and government spending bill caused a new round of investor jitters in the overnight markets. Rising coronavirus cases and worries about Brexit negotiations with the European Union also weighed heavy on traders’ minds this morning. S&P 500 futures dropped 0.53% to $3,671.25 on the sentiments.
