China sets 2021 grain TRQsChina set its 2021 low tariff rate quotas (TRQs) at 7.2 million metric tons (MMT) for corn, 9.6 MMT for wheat, and 5.3 MMT for rice, unchanged from 2020 levels. China also set the cotton quota at the same volume as in previous years at 894,000 metric tons. China sets the official TRQs per its World Trade Organization commitments, but it can issue “special” permits for extra imports. Plus the TRQs are on a calendar-year basis, while official import figures are based on marketing years, so there’s overlap. This year, China will fulfill its corn TRQs for the first time and is on pace to great-ly exceed corn import forecasts for 2020-21 (see News page 4).

Corn, bean battle... for export spaceAs of Sept. 10, unshipped U.S. export sales for 2020-21 totaled 30.1 MMT for soybeans and 19.3 MMT for corn. China accounted for roughly half of the outstanding sales for both at 15.9 MMT of soybeans and 9.0 MMT of corn. Just a couple weeks into the new-crop marketing year, soybean and corn export sales on the books already represent 60% of combined 2019-20 shipments. Export loading capacity could be an issue at the Gulf and PNW, especially if one of ADM’s Gulf loading facilities remains offline until March, as some indicate.

Trying to appease biofuels and Big Oil The Environmental Protection Agency (EPA) officially denied 54 of the 68 pending retroactive biofuel blending waivers for compliance years dating back to 2011. President Donald Trump also promised to allow E15 gasoline to be distributed using existing E10 pumps, pending individual state approv-al. But to also appease the oil industry, EPA officials are working on a plan to steer financial aid to refineries. There is controversy on where the money will come from.

CCC funding key for ag in coming CR Lawmakers are preparing a stop-gap government funding measure that will keep the government funded through Dec. 18. House Speaker Nancy Pelosi (D-Calif.) is holding up requested Commodity Credit Corporation (CCC) funding.

Soybeans surge on Chinese demand — Soybean futures surged to their highest level on the weekly continuation chart since June 1, 2018, on aggressive Chinese demand. As of Friday, USDA had announced daily soybean sales to China for 11 consecutive market ses-sions, totaling more than 2.4 million metric tons. “Unknown destinations” have also been a big buyer of U.S. soybeans during that span. The corn and wheat markets followed soy-beans higher last week. Funds’ net long position in the soybean market is huge — and building. Funds have been active buyers of corn and wheat too, though less aggressive than in soybeans. Cattle futures firmed last week on strength in the cash market. Lean hog futures pulled back after failing to find fresh buyer interest above the previous week’s high.

CFAP 2 funding of up to $14 billionSignup for the second Coronavirus Food Assistance Program (CFAP 2) runs Sept. 21 through Dec. 11. Details:

• Payments for 2020 crops with a 5% or more price decline (based on comparing the average price for Jan. 13-17 with the average for July 27-31) will be the greater of 1) eligible acres multiplied by $15 per acre; or 2) eligible acres multiplied by a nationwide crop marketing percent-age, multiplied by a crop-specific payment rate (see table) and then by the producer’s weighted 2020 APH-approved yield. If the APH is not available, then 85% of the 2019 ARC-CO benchmark yield will be used.

Row crops Unit Marketing % Payment rate

Corn bushel 40% $0.58

Soybeans bushel 54% $0.58

Wheat bushel 73% $0.54

Sorghum bushel 55% $0.56

Upland cotton pound 46% $0.08

Barley bushel 63% $0.54

Sunflowers pound 44% $0.02

• Beef cattle, hogs/pigs and lambs/sheep: the highest owned inventory of livestock, excluding breeding stock, on a date selected by the producer from April 16 through Aug. 31, multiplied by $55 per head for beef cattle, $23 per head for hogs/pigs and $27 per head for sheep/lambs.

• Cow milk: total milk production from April 1 to Aug. 31 multiplied by $1.20 per cwt.; and estimated milk produc-tion from Sept. 1 to Dec. 31 (based on the daily average production from April 1 through Aug. 31) multiplied by 122, multiplied by $1.20 per hundredweight.

• Broilers: 75% of 2019 production times $1.01 per bird.• Eggs: 75% of 2019 production multiplied by $0.05 per

dozen for shell eggs, $0.04 per lb. for liquid eggs, $0.14 per lb. for dried eggs and $0.05 per lb. for frozen eggs.

• Payment limitation is $250,000 per person/entity for all commodities combined. The Adjusted Gross Income limitation of $900,000 applies unless at least 75% or more of income is derived from farming, ranching or forestry-related activities.

News this week...2 — Corn, soybean acres likely to come down more.3 — Key Asian importers ban German pork shipments. 4 — China’s corn appetite much bigger than USDA forecasts.

September 19, 2020 Vol. 48, No. 38

Go to ProFarmer.com

NWS 30-day Temps

A: Above-normalB: Below-normalEC: Equal chances October

NWS 30-day Precip

A: Above-normalB: Below-normalEC: Equal chances October

September 19, 2020 / News page 2

Follow us on Twitter:@ProFarmer@BGrete

@ChipFlory@JWilson29

@DavisMichaelsen@MeghanVick

NOPA crush not as big as expectedMembers of the National Oilseed Processors Association (NOPA) crushed a nine-month low of 165.1 million bu. of soy-beans in August. The NOPA data projects total U.S. soybean crushings for August at 175 million bu. and the 2019-20 total at 2.165 billion bu., down 5 million bu. from USDA’s forecast.

Soyoil stocks at signaled lighter-than-expected use in August.

Drought impacting Ukraine’s cropsUkraine’s 2020 grain crop and the export forecast for 2020-21 were trimmed by APK-Inform due to impacts from drought. The consultancy expects Ukraine to harvest 71.3 million metric tons (MMT) of grain this year, including 25.5 MMT of wheat and 35.1 MMT of corn. APK-Inform expects the country to export 51.2 MMT of grains in 2020-21. Those forecasts are higher than those from Ukraine’s economic ministry, which calls for total grain production of 68 MMT and exports of 47.4 MMT.

Drought could also impact the country’s 2020-21 winter wheat crop. Soil conditions are the driest in the past decade, which has delayed winter wheat seeding. APK-Inform says dry soils are impacting roughly two-thirds to three-quarters of the country’s arable land.

Slow start for Brazil bean plantingsThe window for Brazilian farmers to start planting soy-beans opened Sept. 10 in Parana and Sept. 15 in Mato Grosso. Given dry conditions, most farmers will wait for rains before planting. South American Consultant Dr. Michael Cordonnier says if there’s a significant delay in Brazilian soybean plantings, the first vessels of new-crop soybeans wouldn’t likely leave ports until early February instead of more normal late-January shipments.

Data points to lower corn, bean acresUSDA’s Farm Service Agency (FSA) certified acreage data as of Sept. 1 showed some fairly substantial jumps from acreage levels reported in August. Farmers reported plant-ed acres (including failed acres) at the following levels:

• Corn: 87.560 million acres; 6.078 million acres of pre-vent-plant (PP)

• Soybeans: 81.455 million acres; 1.451 million acres of PPOur analysis of that data suggests USDA’s June planted

acreage estimate was 400,000 acres too high for corn and 350,000 acres too high for soybeans. Therefore, we expect USDA to lower harvested acres for both in October, when NASS incorporates the FSA certified acreage into its produc-tion estimates for corn and soybeans.

Corn, bean conditions keep decliningUSDA lowered the amount of the corn crop it rated “good” to “excellent” a percentage point to 60% as of Sept. 13. The portion of corn rated “poor” to “very poor” increased one point to 15%. USDA’s soybean crop ratings dropped two points in the top two categories to 63%, while the “poor” to “very poor” ratings increased a point to 11%.

When USDA’s weekly condition ratings were plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop slipped another 1.7 points to 354.1 points. The soy-bean crop dropped another 1.6 points to 355.9 points. The corn CCI rating is 14.5 points below its five-year average for this week. The soybean CCI is now 1.5 points below the five-year average — the first time that has been the case since the first condition ratings of the growing season.

The continued decline in crop ratings suggests USDA’s corn and soybean yield estimates will be trimmed again in October (see “From the Bullpen” on Analysis page 4).

Warm, dry weather expected during harvest The extended forecasts from the National Weather Service (NWS) suggest farmers should run into few weather disruptions during the corn and soybean harvests this fall. NWS forecasts elevated odds of above-normal temps across nearly the entire coun-try for October. It also calls for increased chances of below-normal precip over the central U.S., aside from “equal chances” for above-, below- and normal precip across the Upper Midwest and Northern Plains.

The warm, dry pattern is expected to continue, with the 90-day forecast showing increased chances for above-normal temps and below-normal precip across the Southern Plains through December. While those conditions are favorable for rapid planting of U.S. HRW wheat, emergence of the crop could be an issue, especially with dryness/drought

already covering most of Nebraska, all of Colorado, far western Kansas and the western halves of Texas and Oklahoma.

September 19, 2020 / News page 3

More ASF cases in GermanyAnother five cases of ASF in wild boars in eastern Germany were confirmed last week. While there haven’t been any cases of ASF in Germany’s domestic hog herd, China, South Korea, Japan and others banned pork shipments from the European Union’s second largest exporter. Germany doesn’t have a formal ASF plan with key import-ers, prompting the broad blanket bans on all pork exports.

Pork output cut, price forecast raised USDA lowered its 2020 pork production forecast by 120 mil-lion lbs. from August to reflect “the current pace of slaugh-ter and lighter carcass weights.” But pork production is still expected to rise 2.2% to a record 27.7 billion pounds. USDA left its pork export projection unchanged at a record 7.55 billion lbs., as “continued demand strength from China offsets weaker demand in other key markets.” The cut to production was enough to push USDA’s average 2020 cash hog price up 70¢ from last month to $39.40.

For 2021, USDA also trimmed its pork production forecast by 120 million lbs. as carcass weights are expected to con-tinue to decline, but output is still expected to rise another 0.7%. USDA projects pork exports will increase 1.4% next year. It left the average cash hog price projection at $44.00.

Beef output raised, price unchangedUSDA raised its 2020 beef production forecast by 23 million lbs. from last month on anticipated higher second-half slaughter. U.S. beef production is still expected to slip 0.4% from last year. USDA made no change to its beef export forecast, which is projected to fall 4.3%. The average cash steer price forecast was also unchanged at $107.30.

For next year, USDA now forecasts beef production will rise only 1.1% as slaughter rates and carcass weights aren’t expect-ed to be as high as previously thought. USDA’s export forecast is unchanged this month, but shipments are projected to rise 8.4% year-over-year. Given the cut to production, USDA raised its average cash steer price projection by $2 to $112.00.

China hog herd rebuilding underwayChina’s pig herd increased 31% versus year-ago in August, while the sow herd was up 37%, according to the country’s ag ministry. This marked the second straight month that hog numbers were up versus the prior year after more than two years of declining inventories as the country dealt with the massive African swine fever (ASF) outbreak. The minis-try says 2,030 new commercial pig farms began production in August, with more than 11,000 large farms completed since the start of the year. However, many of the small hog farms that accounted for a big portion of the country’s pork production have not rebuilt after the ASF outbreak.

Producer Crop Comments...Please send crop comments to editors@profarmer.com.

Livingston Co. (east-central) Illinois:“We had six weeks with no rain and now four inches in a week and the tiles still aren’t flowing a drip. Corn was done weeks ago and most beans aborted pods and beans already. Too late to get any new growth as they are turning yellow fast. Corn and bean yields will be all over, but I’d say down from normal.”

Central Illinois:“Farmers are pleasantly surprised hot, dry weather didn’t lower yields more than expected on early harvest-ed corn. Farmers that did not apply fungicide are report-ing yields in the 190 bu. to 210 bu. range. Corn with fun-gicide applied is running 225 bu. to 240 bu. per acre.”

Greene Co. (southwest) Illinois:“First two fields of corn tested 275 bu. per acre at 25.9% and 271 bu. per are at 25.2% moisture.”

Montgomery Co. (west-southwest) Illinois:“There’s some corn and soybeans harvested in our area, though too little to get a read on yields. But no one has been complaining, so that tells you yields are pretty good.”

Knox Co. (southwest) Indiana:“We started corn Sept. 14. Moisture was running 23% to 27%, with yields above our recent average.”

Humboldt/Kossuth Cos. (north-central) Iowa:“One guy started on beans, but most won’t begin har-vest until the last week of September. We want to get to corn early, because it looks like it might go down on us.”

Lancaster Co. (east-central) Nebraska:“Drove from Lincoln, Nebraska to Des Moines Sept. 13 and didn’t see anything harvested yet and nothing real-ly close. Most fields are dried up due to drought and some beans might be ready by month’s end.”

Gage Co. (southeast) Nebraska:“Tried corn today. What I thought would be 180 bu. corn is running 135 bu. to 140 bu. per acre. Way disap-pointed. Beans dried down way too fast. Several abort-ed beans and pods.”

Phelps/Harlan Cos. (south-central) Nebraska:“Early irrigated soybean yields are widely variable, run-ning 50 bu. to 100 bu. per acre.”

Hand Co. (central) South Dakota:“Corn is looking great, with big ears filled to the tip. Can’t wait to see what it yields.”

Codington Co. (northeast) South Dakota:“If you farm heavy ground, the crop is good. Not so much on the light ground. In the same field, yields will go from very poor to very good. Frost came through and may take bushels away on beans. Go south of here a few miles and it’s miles of light soil and poor crops.”

Casey Co. (central) Kentucky:“The flash flooding this past weekend wreaked havoc on crops. Water standing up to the ears in low-lying corn fields and some lodged soybeans.”

September 19, 2020 / News page 4

USDA in the Sept. 11 World Agricultural Supply & Demand Estimates (WASDE) Report stuck with its

prior forecast that China would import 7 million metric tons (MMT) of corn in 2020-21. At the time, U.S. new-crop corn sales on the books to China stood at 8.8 MMT. USDA’s World Ag Outlook Board said it was waiting to see if China announced any increase in its low-tariff rate quota (TRQ) for corn, which at this time is 7.2 MMT from all origins. Is USDA forecasting China will “cancel” some existing sales of U.S. corn?

USDA’s Office of the Chief Economist in a Feb. 6 white paper said the U.S. Trade Representative was not going to make public the specific purchase commitments for indi-vidual commodities under the Phase 1 U.S./China trade accord, and therefore those will have “no direct role in USDA’s market analysis and forecasts.” But USDA also noted, “As actual export sales accrue over time and mar-ket conditions evolve, USDA’s trade forecasts will be updated to reflect the timing and composition of China’s purchases of U.S. agricultural products throughout the relevant marketing (or fiscal) year.”

Well... China’s corn purchases have now gone well beyond its forecast level.

It’s not an apples-to-apples comparison, but... WASDE is on a marketing-year basis and China’s TRQs

are on a calendar-year basis, so some of the difference can be explained that way. But that does not address the fact that China’s corn purchase total is high and building.

As for China’s TRQ of 7.2 MMT for corn, the country can come up with ways around that. Consider cotton. China announced a TRQ for cotton of 894,000 metric tons (MT) this year. But the country just recently announced an additional 400,000 MT import quota for cotton for pro-cessing. USDA apparently is waiting for that policy signal before adjusting its corn import forecast. But again, that ignores the department’s own assertion that it would monitor export sales of commodities.

In the past, USDA has come out with an updated WASDE when something has happened on the policy side that would markedly change the outlook for a commodi-ty. With known Chinese purchases of U.S. corn for 2020-21 already well above USDA’s projection and more likely coming, it would suggest USDA’s own metric for adjust-ing its forecasts is not being met.

China deals under a cloud of secrecyChina’s ag ministry raised its corn import forecast for

2020-21 to 7 MMT, matching USDA’s “outlook.” But histo-ry shows China deals with secrecy until it has bought what it wants/needs. Absent another U.S./China trade war, China’s total corn imports in 2020-21 will easily exceed 7 MMT, though “official” forecasts won’t likely reflect it until after China has its corn needs shipped.

China could import up to 30 MMT of cornPro Farmer has consulted with and interviewed our best

China watchers and veteran industry analysts from Asia, Europe and the United States. Those sources now signal China’s total corn imports for 2020-21 will be between 20 MMT and 30 MMT, with most projections in the 20-MMT to 25-MMT range. China-based Shanghai JC Intelligence Co. projects China’s 2020-21 corn imports at 16 MMT, well above the “official” forecasts.

If China’s corn imports hit the bottom of the industry range of 20 MMT, it would equate to an additional 512 million bu. of corn demand beyond what USDA is fore-casting... another 906 million bu. if Chinese brings in 30 MMT of corn in 2020-21. The U.S. would get the biggest portion of China’s added corn business, but not all of it.

Potential impacts to the U.S. corn balance sheetDue to lower yield and acres than USDA is currently fore-

casting, the U.S. corn crop will likely drop enough to pull projected 2020-21 corn ending stocks down closer to 2.4 bil-lion bu. from the September forecast of 2.5 billion bushels.

Using the low end of our contacts’ Chinese corn import needs and conservatively assuming the U.S. gets half of that business, it would drop U.S. ending stocks to just over 2.2 billion bu. and stocks-to-use below 15%. That would likely keep the average cash price for 2020-21 at around $3.60 — about the same price seen each of the past two marketing years.

If China imports 30 MMT of corn in 2020-21, the U.S. would likely see a greater percentage of the additional 10 MMT, as competitors’ exportable supplies are depleted. If the U.S. gets 250 million bu. to 300 million bu. of the increase, ending stocks would drop below 2 billion bu. and stocks-to-use would be sub 13.5%. That would point to a 2020-21 cash price in the $3.80 to $3.90 range.

USDA is way too low on its China corn import forecastby Washington Policy Analyst Jim Wiesemeyer, Editor Brian Grete & Chief Economist Bill Nelson

News alert and analysis exclusively for Members of Professional Farmers of America® 402 1/2 Main St. Cedar Falls, Iowa 50613-9985General Manager Joel Jaeger • Editor Brian Grete • Editor Emeritus Chip Flory • Sr. Market Analyst Jeff Wilson • Chief Economist Bill Nelson

Washington Policy Analyst Jim Wiesemeyer • Digital Managing Editor Meghan Vick • Inputs Monitor Editor Davis MichaelsenSubscription Services: 1-800-772-0023 • Editorial: 1-888-698-0487

©2020 Professional Farmers of America, Inc. • E-mail address: editors@profarmer.comFarm Journal CEO, Andrew Weber

Feed MonitorFEED

Corn Game Plan: You should remain hand-to-mouth on corn-for-feed needs. We do not want to chase the rally. Be pre-pared to be a buyer on harvest weakness later this fall. Meal Game Plan: You should have all soybean meal needs covered in the cash market through the end of September. Our downside target to extend coverage is $315 to $310 basis December futures.

Corn III’20 0% IV’20 0% I’21 0% II’21 0%

Meal III’20 100% IV’20 0% I’21 0% II’21 0%

Analysis page 1

DAILY DECEMBER MEAL

$308.90

DAILY DECEMBER LEAN HOGS

Position Monitor

HOGS - Fundamental AnalysisTraders pushed hog futures too far in front of the cash market on hopes for even stronger exports to China amid Germany’s African swine fever cases, which triggered a sharp corrective pullback. Packers are raising cash bids as they push kill rates to meet the Chinese demand. Strong export demand limits the downside for both futures and cash prices near-term, but the hog market must still deal with record supplies through year-end. Given rising feed prices, you should be looking to lock into hog hedges whenever futures are above your breakeven prices, especially for fourth- and first-quarter production.

Game Plan: On Sept. 16, we ad-vised hedging 25% of fourth-quarter in December hogs and 25% of first-quarter in February hogs. Our fills were $61.625 and $67.65, respectively.

CASH CATTLE PRICES ($/CWT.)

CASH HOG PRICES ($/CWT.)

Position MonitorGame Plan:Fed cattle h e d g e r s should be patient as downside risk is limited. Be prepared to hedge a challenge of the August highs.

Feds Feeders III’20 0% 0% IV’20 0% 0% I’21 0% 0% II’21 0% 0%

The Sept. 14 high at $67.10 is initial resistance. Above that, there’s a heavy layer of resistance from $68.00 to $72.00 (not marked) from last fall and winter.

DAILY DECEMBER LIVE CATTLECATTLE - Fundamental AnalysisStrength in cattle futures led to a price recovery in the cash market last week. But given premiums futures hold to cash prices, the cash market must take on a leadership role to sustain a price uptrend into year-end. While packer margins are strong and showlist numbers are declining, reflecting light placements of calves into feedlots last spring, wholesale beef prices must find a bottom soon for packers to keep raising cash bids. Choice boxed beef prices continue to fall, but wholesale beef prices are nearing levels that have attracted strong retailer buying in the past, suggesting a short-term low in the product market is near.

The August high at $114.025 is solid resistance. Above that, resistance would be layered in the $115.00 to $119.00 range (not marked).

If support at $110.80 and the

40-day moving average (green line) falters, it would

suggest a test of the uptrend and possibly the

August low at $107.25.

$114.025

$110.80

$59.98

$67.10

The bottom of the Sept. 10 chart gap at $59.98 is key support. Filling the gap would force a test of the uptrend and likely an even deeper setback.

$107.25

September 19, 2020ANALYSIS

Lean Hogs III’20 0% IV’20 25% I’21 25% II’21 0%

The contract is challenging this year’s high at $336.30 on the continuation chart. Above that, continuation chart resistance would be at the July 2018 high of $342.60.

September 19, 2020 / Analysis page 2

$5.68 1/2

$5.25 1/4

$5.54 3/4

DAILY DECEMBER SRW WHEAT

WHEAT - Fundamental AnalysisSRW — The wheat market will go as high as corn and soybeans pull it. While there are dryness concerns in Argentina, Europe and the Black Sea region, the world will have record supplies in 2020-21. And U.S. wheat will struggle to compete on the global market unless prices fall.

Position Monitor

Game Plan: Use periods of price strength to get current with advised old- and new-crop sales. Given our sales levels, we can wait on addition-al cash sales. Maintain the hedge in December SRW futures as downside protection.

The big rally Sept. 17 pushed the contract back above $5.54 3/4 and negated the downtrend from the Sept. 1 high.

The contract bounced at the 40-day moving

average (green line), confirming it as solid near-term support.

CORN EXPORT BOOKINGS (MMT)AVERAGE CORN BASIS (DECEMBER)

CORN - Fundamental AnalysisChina needs corn and also needs to fulfill its Phase 1 trade commitments, which is fueling aggressive purchases of U.S. corn (see News page 4). That’s causing traditional buyers of U.S. corn to panic, inflating export sales tallies. With new-crop corn sales running much stronger than even the most bullish traders expected, the market is now trying to find a price that slows the buying pace. Funds covered short positions by the end of August and started building a net long position. Until funds get an indication prices are choking off demand, they will likely continue to buy. But there’s risk in getting more bullish as prices rise. Use the strong rally to make 2020- and initial 2021-crop sales.

The next level of resistance would be the psychological $4.00 level (not marked).

Previous resistance

at $3.73 3/4 is now solid

support.

DAILY MARCH CORN

$3.54 $3.59 3/4

$3.73 3/4

DAILY DECEMBER CORNPosition Monitor

Game Plan: Use this rally to make catch-up sales to get current with advised cash sales for the 2020-crop. Given potential for even more aggressive Chinese purchases of U.S. corn, we will hold off on additional sales for now. Be pre-pared to make additional sales on a runup to the $3.85 to $4.00 range in December futures. We would also likely make initial 2021-crop sales at the same time as the next 2020-crop sales.

Resistance is layered heavily from $3.88 1/2 to $4.02 1/2 on the weekly continuation chart. That matches up with daily chart resistance from late-2019/early 2020.

Old resistance at $3.63 and the

uptrend proved to be solid

support last week.

$3.43 3/4

$3.63

$3.48 1/2

’20 crop ’21 cropCash-only: 50% 0% Hedgers (cash sales): 50% 0% Futures/Options 20% 0%

’20 crop ’21 cropCash-only: 75% 30% Hedgers (cash sales): 75% 30% Futures/Options 20% 0%

September 19, 2020 / Analysis page 3

DAILY DECEMBER HRS WHEATDAILY DECEMBER HRW WHEAT

HRW — The extended forecast through December calls for above-normal temps and below-normal precip across the Southern and Central Plains. That could threaten the development of U.S. HRW wheat. With that said, it’s difficult to get the market excited about potential HRW crop concerns during fall and early winter.

DAILY MARCH SOYBEANS

HRS — Winter wheat futures will follow corn and soybeans. Spring wheat futures will follow the winter wheat markets. Given record global wheat supplies for 2020-21, any hopes for the spring wheat market taking a leadership role are tied to a surge in demand for high-protein supplies. Spreading action will likely dominate near-term price action.

Strong resistance is at $4.95, followed by the $5.00 mark.

The uptrend is initial support again.

$4.95

If bulls can reestablish the uptrend, it would point to a test of $5.54 1/2.

The 40-day moving average (greenline) is key support.

$9.09 3/4

$5.54 1/4

The surge to a new contract high cleared the $10.00 mark. A close above $10.25 would have bulls targeting the $10.50 level.

The 40-day moving average (green line will

act as key support if the uptrend is violated.

SOYBEAN EXPORT BOOKINGS (MMT)AVERAGE SOYBEAN BASIS (NOVEMBER)

WHEAT EXPORT BOOKINGS (MMT)

AVERAGE WHEAT BASIS (DECEMBER)

SOYBEANS - Fundamental AnalysisChina continues to aggressively buy U.S. soybeans, fueling a surge in overall export demand. Total commitments (exports + outstanding sales) are running 189% ahead of last year’s pace and 87% ahead of the five-year average. Total commitments are already 56% of USDA’s forecast. Chinese buyers are booked on needs into early 2021, but will continue to actively buy U.S. soybeans until they are confident in Brazil’s new-crop supply. Brazilian producers are expected to increase soybean plantings and harvest a record crop. But conditions are dry in central Brazil, which could push back plantings, and La Niña could deliver less-than-ideal weather conditions through the growing season.

The uptrend will be critical support

on an eventual price pullback. If the uptrend falters, there wouldn’t

be much support before $9.12 1/2.

$9.12 1/2

Position Monitor ’20 crop ’21 crop

Cash-only: 65% 0% Hedgers (cash sales): 65% 0% Futures/Options 0% 0%

Game Plan: Get current with advised sales. Giv-en China’s strong appetite for U.S. soybeans and declining ending stocks forecasts, there’s addi-tional upside potential. But there’s no carry in fu-tures, signaling the market isn’t going to pay you to store soybeans. Hedgers should be prepared to finish 2020-crop sales this fall and potentially re-own some bushels in futures/options. Cash-only marketers can’t be as aggressive with cash sales.

DAILY NOVEMBER SOYBEANS

The contract surged to a new high last week, meaning resistance now comes from the weekly continuation chart. The first layer is from $10.50 to $10.70, followed by the $10.80 level.

September 19, 2020 / Analysis page 4

’20 crop ’21 cropCash-only: 30% 0% Hedgers (cash sales): 30% 0% Futures/Options 0% 0%

Keep Pro Farmer in your pocketDownload the Pro Farmer app to your mobile device to easily keep up to date on the latest

market and policy news and analysis.

USDA Cattle on Feed ReportPlacements will be the key figure.

FRI 9/252:00 p.m. CT

5

USDA Hogs & Pigs ReportCovid-19 impacts on hog industry.

THUR 9/242:00 p.m. CT

4

USDA Export Sales ReportFocus is on sales to China.

THUR 9/247:30 a.m. CT

3

USDA Cold Storage ReportAug. beef, pork stocks usually build.

2

USDA Crop Progress ReportWill corn, bean ratings keep falling?

MON 9/213:00 p.m. CT

1

WATCH LIST

TUE 9/223:00 p.m. CT

its yield and ear counts in the 10 states indicates record ear weights. Ear counts are there to drive a record U.S. corn yield, but ear weights will likely come down from implied levels as USDA gets harvestable data from field samples given the rapid finish to this year’s crop.

For soybeans, USDA found the sec-ond most pods per 18 square feet in the 11 objective yield states. The implied pod weight from USDA’s yield and pod counts would be the fourth highest. That seems high, though September rains helped some later-maturing soybeans.

Bottom line: USDA’s corn and soy-bean yields are likely to come down some more, but the cuts in September likely caught most of the decline.

USDA cut its corn yield estimate 3.3 bu. per acre from August and trimmed the soybean yield by 1.4 bushels. The cut to the corn yield was the fifth largest since 1970. This was the third biggest nominal drop in the soybean yield in September.

USDA’s cuts to its corn and soybean yield estimates were historically big — yet fully expected given expanding drought and the Aug. 10 derecho that robbed yield potential. Traders expect corn and soy-bean yields to decline again in October.

What could drive the cuts? For corn, USDA’s objective yield sur-

vey found the fourth highest number of ears on record for the 10 sample states. USDA doesn’t measure ear weights in September, but the derived weight using

By Editor Brian GreteFROM THE BULLPEN

Monetary policy: As expected, the Federal Open Market Committee (FOMC) left interest rates unchanged and signaled they aren’t likely to rise for at least three years. The Fed plans to leave short-term rates near zero “until labor market condi-tions have reached levels consistent with the committee’s assessments of maxi-mum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

GENERAL OUTLOOKOther highlights of the policy meeting:• GDP is expected to decline less than previously forecast this year, but grow slower than thought in 2021 and 2022. • The Fed remains committed to using its full range of tools to aid the economy. • Purchases of Treasury-backed securi-ties will continue at least at the current pace to aid financial conditions.• Fed Chair Jerome Powell says more fiscal stimulus is likely needed.

DAILY DECEMBER COTTON

Game Plan: Make sure you are current with advised 2020-crop sales. We are targeting sales at 68.00¢ to 70.00¢ or on a close below 64.00¢ in December futures.

Position Monitor AVERAGE COTTON BASIS (OCTOBER)

COTTON - Fundamental AnalysisHurricane Sally skirted the largest cot-ton areas of the Southeast, but there are multiple other storms in the Atlantic. Crop-loss concerns are offset by demand worries tied to pandemic slowdowns in textile consumption, despite huge week-ly sales of 440,100 bales to China.

COTTON EXPORT BOOKINGS (’000 BALES)

WEEKLY YIELD ON A 10-YEAR U.S. NOTE

If initial support at 63.46¢ is violated, it would point

to a test of the 40-day moving average (green line)

and potentially a challenge of uptrending support.

The contract is struggling to find sustained buying above the August high. A sustained breakout above that level would have bulls targeting resistance in the 68.00¢ to 70.00¢ range (not marked).

63.46¢63.46¢

Yields are likely to remain Yields are likely to remain in a sideways pattern in a sideways pattern above the all-time low of above the all-time low of 0.318% posted in March. 0.318% posted in March. 0.3180.318