Katie Murphy

Aug 26, 2020

Highlights

  • Hurricane Laura was seen rapidly intensifying overnight and is expected to continue to strengthen into a category 4 hurricane. Forecasts are expecting the storm to produce flash flooding and extreme winds over Eastern Texas and Louisiana later today. The Hurricane however is not expected to impact the corn belt, with most of the heaviest rains only reaching as far north as southeastern Missouri.
  • Coronavirus cases are continuing to fall in the US, however testing rates across the country are also seen falling. The CDC had revised its testing guidance earlier this week, stating that people without symptoms who came into contact with someone who tested positive “do not necessarily need a test”.
  • US stock futures are seen close to unchanged this morning, with the S&P 500 hovering right below its recent closing high seen yesterday.
  • As of 7:00 AM: Crude oil down 0.24 at 43.11, Dow futures down 66 ticks at 28,127, S&P 500 futures down 0.25 at 3442.75, and the U.S$ index up 185 ticks at 93.204.                          

 Corn

  • The corn market is trading lower this morning after managing to hit a six week high during yesterday’s session. Yesterday the US saw the largest single day US corn purchase in almost a month, totaling to 408,000 tonnes.
  • The EU has lowered its maize import tariff to 0.26 Euros a tonnes from 5.48 euros a tonne effective today. The prior tariff rate was due to low US corn prices which had fallen below a regulatory price floor.  
  • China’s Agriculture Ministry stated that corn prices are expected to stabilize later in the year as supplies become more stable.
  • Brazilian corn exports are seen at 6.79 million tonnes in August vs the forecast of 7.25 million from the week prior, according to ANEC.
  • Corn open interest was seen down by 42,800 contracts, with the September contract down a total of 37,600 contracts.
  • Spreads: U/Z 14 cent carry; U/H 26 cent carry; Z/N 23 carry .

Outlook: Trading steady today as the market waits for additional signs of demand.

 Oilseeds

  • The soybean market is trading higher this morning sitting at a seven month high due to expectations that China will continue their buying spree of US soybeans.
  • According to a report from Bloomberg, China is expected to buy 40 million tonnes of US soybeans in 2020.
  • China’s Agriculture Ministry stated that there is no shortage of food or oil and supplies are stable. Ministry of agriculture and rural affairs official Tang Ke also stated that soybean imports in the second half of 2020 will continue to rise.
  • Brazilian soy exports are seen at 6.02 million tonnes in August vs the forecast of 6.58 million from the week prior, according to ANEC.
  • Brazil’s Conab has revised soybean crop estimates for the past seven cycles due to a review that showed about 14.4 million more tonnes of soybeans being grown than previously thought.
  • Malaysian palm oil futures trading higher during today’s session, finding support from strength in rival oils. Gains however were capped due to poor export data, August 1-25 exports were down by 16.4% compared to the same period in July.
  • Spreads: U/X 5 ¼ cent carry, X/F 6 ¾ cent carry, X/H 8 ½ cent carry

Outlook: Trading higher today as the market is supported by Chinese purchases.

 Wheat

  • Wheat markets are trading higher this morning due to a recent uptick in export demand as several countries across the globe have recently issued tenders.
  • French consultancy firm Agritel has reported that they see the 2020 French soft wheat harvest at 29.2 million tonnes, down from 39.5 million in 2019.
  • Consultancy Agritel also expects that French soft wheat exports will fall by almost 40% in 20/21 due to the smaller crop.
  • Three companies are offering in Jordan’s tender for 120,000 tonnes of wheat, no purchase has been made yet.
  • Egypt’s GASC has purchased 530,000 tonnes of Russian wheat via their tender. The prices paid ranged from $227.50 to $228.73 c&f.
  • Turkey provisionally purchased about 390,000 tonnes of wheat in its tender, the lowest price for wheat was reported at $209 a tonne c&f.
  • Spreads: Chicago U/Z 8 ¼ cent carry; Kansas City U/Z 11 ¼ cent carry; Minneapolis U/Z 14 ¾ cent carry.

Outlook: Trading slightly lower today as the market seen mostly flat trade today.