Grain and Feed Futures Post Impressive Gains in 2020

Another day, another rally in corn futures, which traded higher in 14 consecutive days to end the year. Concerns about South American growing conditions propelled nearby corn futures two percent higher (March contract +9 1/2 cents per bushel) on Thursday. For the year, corn futures rose nearly 25 percent and gained almost 57 percent from the April low. The end-of-year rally has lifted corn prices to the highest level since 2014 and left most contracts at life-of-contract highs. In addition to the concerns about South American weather conditions, strong export demand, especially from Chinese buyers, drove buying in December. If South American weather conditions do not improve, the benchmark contract will likely breach the psychologically critical $5 per bushel level in January.

Soybean futures also benefited from South American weather concerns, gaining more than 1/2 percent (March contract +10 1/2 cents) on the last day of 2020. For the year, soybean futures gained more than 37 percent and rose more than 60 percent from the April low. Thursday’s gains left the benchmark contract solidly above the psychologically important $13 level. Still, prices could retest that level in the short term, especially if weekend rainfall in South America is better than expected.

Soybean meal futures were mixed (March contract +$2.00 per ton) as bull spreading weighed on summer contracts (August contract -$1.30 per ton). For the year, soybean meal futures rose almost 41 percent and gained more than 53 percent from the June low. Strong demand from livestock producers offset record crushing volumes and drove prices higher. The coronavirus’s resurgence this winter has shifted consumer spending back toward food at home, likely supporting continued robust demand because consumers tend to prefer chicken and pork when eating at home. The wide distribution of a vaccine may reverse the trend in the summer of 2021, but in the short-term, soybean meal prices are likely to remain well supported by soybean prices and concerns about South American growing conditions.

Wheat futures were mixed on Thursday, with nearby Chicago contracts narrowly lower (March contract -1/4 cent per bushel). Most of the rest of the forward curve posted gains of less than 1/4 percent (July contract +1 cent), but the July 2021 contract settled nearly 1/2 percent lower. The Minneapolis and Kansas City contracts rose less than 1/2 percent (Kansas City March contract + 2 1/4 cents and Minneapolis March contract +3 cents). For the year, Chicago futures rose nearly 15 percent and gained 36 percent from the June low. Kansas City futures gained 24 percent in 2020 and increased more than 47 percent from the August low. Minneapolis futures rose less than seven percent for the year and gained more than 22 percent from the August low.

The United States Department of Agriculture (USDA) reported export sales of wheat during the week ending December 24 totaled 520,600 tonnes, near the upper end of expectations ranging from 200,000 to 600,000 tonnes. Sales of corn totaled 964,500 tonnes, near the upper end of expectations ranging from 500,000 to one million tonnes. USDA reported sales of soybeans totaled 695,400 tonnes, near the upper end of analysts’ expectations ranging from 200,000 to 700,000 tonnes. Sales of soybeans for 2020/21 delivery totaled a marketing-year high of 315,800 tonnes. Sales of soybean meal totaled 76,200 tonnes, a marketing-year low and below expectations ranging from 100,000 to 350,000 tonnes.

Weekly shipments of wheat totaled 434,800 tonnes, up 19 percent from the previous week and eight percent from the four-week average. Shipments of corn totaled 1.34 million tonnes, a marketing-year high and up 60 percent from the prior week and 49 percent from the four-week average. Soybean shipments totaled 2.44 million tonnes, down three percent from the preceding week and five percent from the four-week average. Soybean meal shipments totaled 285,600 tonnes, down nine percent from the previous week, but up 14 percent from the four-week average.