Corn Rises as Production Outlook Dips
August 13 2020 - 4:09PM
Dow Jones News
By Kirk Maltais
-- Corn for December delivery rose 3.5% to $3.38 3/4 a bushel on
the Chicago Board of Trade Thursday as new "prevented planting"
data and uncertainty about recent wind storm damage have traders
reconsidering their expectations for the 2020 harvest.
-- Soybeans for November delivery rose 1.9% to $8.99 1/2 a
bushel.
-- Wheat for September delivery rose 1.1% to $4.96 3/4 a
bushel.
HIGHLIGHTS
New Data: Confirmation by the USDA as to how many acres U.S.
farmers declared as unplanted under the prevent plant program
lifted corn futures Thursday. According to the FSA, 8.99 million
acres were enrolled in the prevent plant option with 5.37 million
acres being corn and 1.22 million acres being soybeans.
For traders, this confirms the USDA's June WASDE that showed a 5
million-acre decrease in planting expectations, giving hope that
the 2020 crop won't be as burdensome as previously expected.
"Both [corn and soybeans] were lower than expected but keep in
mind that due to Covid it is likely not all the data was
collected," said Craig Turner of Daniels Trading.
Busy Buyers: China again purchased more U.S. soybean exports
Thursday, making it the sixth day in a row that the USDA has
reported a sale of 100,000 metric tons or more to the country. The
USDA said 197,000 tons of soybeans were sold to China for delivery
in the 2020-21 marketing year, making it over 1.75 million tons
sold to China in six days.
On top of that, soybean export sales topping 3.4 million metric
tons for both 2019-20 and 2020-21 marketing years included 2.13
million tons of sales to China, the USDA said in its weekly export
sales report, giving grains traders optimism that strong Chinese
business is here to stay.
INSIGHTS
Thinking It Over: Wednesday's WASDE report may have shown a
record-size yield for the U.S. corn crop, but grains traders are
reconsidering their assumptions about how large the 2020 corn
harvest will actually be.
"Our production thoughts are going backwards at this point,"
said Ted Seifried of Zaner, highlighting changes to weather
forecasts for the next few weeks as well as a wind storm that hit
the Midwest as reasons that projections for a record-size corn crop
may shrink going forward. After corn futures shed 6% in July,
traders may see an opportunity to get futures cheap, although the
fundamental supply-demand story for corn is unlikely to radically
change, Mr. Seifried said.
Money Moves: Managed money investors holding short positions in
corn futures appear to be cutting their exposure, said Marex
Spectron. The firm estimates that traders have reduced the net
short on corn to 123,000 contracts as of Aug. 11, down from 150,000
contracts on Aug. 4. The CFTC is scheduled to release its next
Commitments of Traders report on Friday, but in its last report it
showed the net short position in corn among large fund traders at
roughly 194,000 contracts as of Aug. 4.
Storm Pattern: Weather patterns developing in the Atlantic Ocean
will have a strong effect on the weather for crops in the U.S. Corn
Belt, said Terry Reilly of Futures International.
"Weather in North America over the next few weeks will be
largely determined by the tropics and the interaction of frequent
tropical cyclones and the North America high pressure ridge," said
Mr. Reilly. "An active tropical pattern will be firing up in
another week to no more than 10 days ... the subtropical jet stream
will bring frequent storms toward the southeastern United States
and there will often be a trough of low pressure over the
southeastern U.S. that will limit moisture from flowing into the
Midwest helping to reduce rainfall."
AHEAD:
-- The CFTC is scheduled to release its weekly commitments of
traders report at 3:30 p.m. EDT Friday.
-- The USDA is due to release its weekly grain export
inspections data at 11 a.m. EDT Monday.
-- The USDA is scheduled to release its weekly crop progress
report for the 2020-21 crop at 4 p.m. EDT Monday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
August 13, 2020 15:54 ET (19:54 GMT)
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