Big sales continue to drive markets

By Doug Tenney, Leist Mercantile

Mid-November, corn and soybean harvest activity was quickly winding down for many Ohio producers. The first 10 days of November provided great weather as 70 degree daily highs enabled that final push for many to complete the harvesting of soybeans. Corn moisture levels reached 18% to 20% as they finally were able to move away from the mid 20s and higher, which had plagued many producers well into the final days of October. Vomitoxin was an unwelcome reality for many in Ohio as it became just one more nuisance for the 2020 growing season. 

The monthly WASDE Report of Nov. 10 provided a welcome bullish surprise for grain producers across Ohio and the Midwest. Both corn and soybean production and yields had been expected to decline with the hope of seeing a report friendly for grain prices. Those numbers were reduced more than expected with December CBOT corn closing at $4.23, up 15.5 cents. January CBOT soybeans closed at $11.46, up 35.5 cents. Wheat also posted double-digit gains as the higher corn prices pulled wheat higher. December CBOT wheat that day closed at $6.085, up 11 cents.

The second week of November revealed a large amount of corn and soybeans moving to town as producers were able to capture prices of cash corn near the $4 mark. Soybean prices were at or above $11 much of that week. Corn basis levels in numerous Ohio locations had actually seen improvement for much of the harvest season, which is an anomaly. The corn pipeline was finally recharged once U.S. harvest progress reached 80%. Values for January delivery soybeans compared to October, November, or December delivery for much of the fall harvest failed to yield the multiple dimes of price gain seen in past harvest seasons.

Soybean prices on that same Nov. 10 report day received a huge boost higher with declining U.S. production and yields. U.S. soybean ending stocks were estimated at 190 million bushels, a decline of 100 million bushels. The decline for soybean production and its ending stocks were larger than expected. Many had expected U.S. soybean exports to increase. They did not. However, U.S. corn exports increased 325 million bushels to 2.650 billion bushels, a gain of 13.9%.

U.S. soybean sales continued to see huge weekly sales in the past two months. With the Nov. 13 U.S. weekly export sales report, sales that week were 53.9 million bushels. It is estimated that 83% of the expected U.S. soybean exports of 2.2 billion bushels have already been sold. The 5-year average for soybean sales mid-November is just 54%. It was a surprise last month when the U.S. soybean export sales number did not increase. Strong demand provides price support. 

Demand for U.S. corn and soybeans remain robust, in a much welcomed turn around for prices and demand compared to that seen in early summer. In June, the corn ending stocks for 2020-2021 were 3.323 billion bushels, with industry estimates they could eventually reach 4 billion bushels. Contrast that to today when with reduced U.S. corn acres and increasing U.S. demand, corn ending stocks are estimated at 1.702 billion bushels.

U.S. corn continues to be the cheapest source of corn in the world compared to all other exporters. Early November it was reported Brazil had purchased several cargoes of U.S. soybeans for delivery in December or January. 

Mid-November, Brazil continued to experience difficulties in planting soybeans. Mato Grosso, a major soybean producing region was still arid in many locations. Soybeans had been replanted once or even multiple times in efforts to produce normal or above average yields. 

Pull that seat belt even tighter for the months ahead!

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