Afternoon Market Recap for August 2, 2021

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Wheat jumps higher.

Corn and soybeans also stand firm in Monday’s session

Good afternoon! Grain prices moved back into the green on Monday, anchored by big gains in wheat, with worries over production in the U.S. and abroad triggering a round of technical buying today. Expectations for lower quality ratings also pushed corn and soybeans higher. Corn caught bigger gains, moving around 2% to 2.5% higher, with soybeans trending slightly higher by the close.

The likelihood of rain is slim across the Midwest and Plains between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. No areas should receive much more than 0.1” during this time. The agency’s 8-to-14-day outlook predicts seasonally warm temperatures across the central U.S. between August 9 and August 15, with wetter-than-normal conditions returning to the eastern Corn Belt and Great Lakes region.

On Wall St., the Dow inched 30 points higher to 34,966 in afternoon trading as investors attempt to balance bullish earnings reports against worries over a rise in the coronavirus delta variant. Energy futures saw substantial cuts, in contrast, with crude oil down nearly 4% to fall back below $72 per barrel over weakening demand fundamentals. Diesel and gasoline each spilled around 2.75% lower. The U.S. Dollar softened slightly.

On Friday, commodity funds were net sellers of all major grain contracts, including corn (-10,000), soybeans (-11,000), soymeal (-2,000), soyoil (-7,500) and CBOT wheat (-1,000).

Corn Prices

Corn prices grabbed double-digit gains Monday, thanks in large part to spillover strength from wheat and expectations that USDA will report declining crop quality later this afternoon. September futures rose 11 cents to $5.58, with December futures up 13.75 cents to $5.59.

Corn basis bids tanked 8 to 29 cents lower at three interior river terminals while firming 5 cents at an Iowa ethanol plant on Monday. Other locations across the central U.S. held steady today.

Corn export inspections found another 54.5 million bushels last week. That was above the entire range of trade estimates, which came in between 35.4 million and 47.2 million bushels. China was by far the No. 1 destination, with 33.1 million bushels. Cumulative totals for the 2020/21 marketing year widened its already impressive lead over last year’s pace, moving to 2.473 billion bushels.

Ahead of the next USDA crop progress report, out later this afternoon and covering the week through August 1, analysts expect the agency to show corn quality ratings sliding a point lower from a week ago, with 63% of the crop rated in good-to-excellent condition. Individual estimates ranged between 62% and 65%.

USDA is currently collecting data for its first survey-based corn yield estimates for the 2021 season, which will be released on August 12. Historically, how do these August estimates compare versus the agency’s final yield estimates? Brian Basting, commodity research analyst with Advance Trading, Inc., takes a closer look in the latest Ag Marketing IQ blog – click here to learn more.

Brazil’s second corn crop production has tumbled to a decade-long low of 2.031 billion bushels, according to the country’s AgRural consultancy. That will be a year-over-year decline of nearly 27%, if realized. Brazil has struggled through drought conditions and a late-planted Safrinha crop this season. There were also some frost events in late June that caused additional problems.

China’s state grain stockpiler, Sinograin, sold another 1.2 million bushels of its state corn reserves on auction Friday. The grain had been imported prior to the sale. Only around 13% of the total available for purchase was sold. Sinograin has held more than half a dozen similar auctions throughout June and July as it attempts to boost local supplies and tamp down high prices.

Preliminary volume estimates were for 236,083 contracts, trending moderately higher than Friday’s final count of 184,862.

Soybean Prices

Soybean prices overcame moderate overnight losses to move back into the green by the close, primarily due to spillover strength from corn and wheat. However, generally yield-friendly forecasts over the next two weeks kept gains mostly in check today. August futures added 4 cents to $14.1875, while September futures picked up a penny to $13.5650.

Soybean basis bids were mostly steady to soft after dropping 6 to 25 cents lower at three interior river terminals on Monday. An Ohio elevator bucked the overall trend, firming 2 cents today.

Soybean export inspections tracked moderately lower from a week ago, sliding to 6.7 million bushels. That was a bit on the lower side of analyst estimates, which ranged between 3.7 million and 11.0 million bushels. Mexico was the No. 1 destination, with 1.6 million bushels. Cumulative totals for the 2020/21 marketing year are still far ahead of last year’s pace, with 2.139 billion bushels.

Ahead of the next USDA crop progress report, out later this afternoon, analysts expect the agency to show soybean quality ratings down a point from last week, with 57% of the crop rated in good-to-excellent condition through Sunday.

Brazilian soybean exports in July reached 318.6 million bushels, a year-over-year drop of 13%, per the latest governmental data. Brazilian corn exports last month fell substantially year-over-year, with 78.1 million bushels.

Preliminary volume estimates were for 108,879 contracts, shifting slightly below Friday’s final count of 120,788.

Wheat Prices

Wheat prices jumped significantly higher, with some contracts rising as much as 4.5% on reports of lower production potential among some key overseas competitors and overall strong supply and fundamentals in the U.S. September Chicago SRW futures rose 27.25 cents to $7.31, September Kansas City HRW futures climbed 30.75 cents to $7.04, and September MGEX spring wheat futures gained 19 cents to $9.2375.

Wheat export inspections fell moderately from a week ago, dropping to 14.2 million bushels. That tally was on the lower end of trade estimates, which ranged between 11.9 million and 18.9 million bushels. Mexico was the No. 1 destination, with 3.9 million bushels. Cumulative totals for the 2021/22 marketing year have failed to match last year’s pace so far, reaching 138.6 million bushels.

Ahead of the next USDA crop progress report, out later this afternoon, analysts expect to see winter wheat harvest at 91% through Sunday, up from 84% a week ago. Spring wheat harvest progress is likely to move from 3% complete last week up to 11% complete. And spring wheat crop quality could fall another point, with just 8% of the embattled crop rated in good-to-excellent condition.

Late last week, Russian consultancy IKAR trimmed its forecast for the country’s 2021 wheat crop by 110 million bushels, falling to 2.884 billion bushels, due to lower yields in Russia’s central production regions, which has been plagued by dry weather in recent weeks. SovEcon offered an even lower production estimate, at 2.793 billion bushels. Russia is the world’s No. 1 wheat exporter.

Jordan issued a new international tender to purchase 4.4 million bushels of milling wheat from optional origins that closes on Wednesday. The grain is for shipment between February and March.

Egypt purchased 2.2 million bushels of wheat from Romania in an international tender that recently closed. The grain is for shipment between late September and early October.

Preliminary volume estimates were for 111,837 CBOT contracts, moving a bit above Friday’s final count of 100,386.

Settlement Prices for Key Commodities   
  High Low Last Change  
Corn                     $/bushel  cents/bu      
21-Sep 559.25 540.25 558.75 11  
21-Dec 559.75 540.75 559.25 13.75  
21-Sep 1362 1342 1356.25 1  
21-Dec 1359 1336.5 1353.5 3.25  
Soymeal                $/ton          
21-Sep 358 349.2 356.4 5.1  
Soyoil                    cents/lb          
21-Sep 64.66 63.1 63.71 -0.68  
Wheat                    $/bushel          
21-Sep 731.75 704 729.5 27.25  
21-Dec 741.5 713 739.25 27.75  
KC Wheat          
21-Sep 705.75 672.25 703.5 30.75  
21-Dec 716.75 683.75 714.75 31.25  
MPLS Wheat          
21-Sep 926 901.5 922.75 19  
21-Dec 914 888.5 911.25 21.25  
Live Cattle             cents/lb          
21-Aug 122.65 121.95 122.1 0.025  
Feeder Cattle         cents/lb          
21-Sep 163.425 161.725 162.025 0.225  
Lean Hogs             cents/lb          
21-Oct 89.825 88.2 89.375 1.35  
Crude Oil  $/barrel *Energy prices may not represent final settlements        
21-Sep 73.95 70.55 71.26 -2.69  
21-Sep 2.1947 2.1183 2.1366 -0.059  
Unleaded Gasoline   $/gallon          
21-Sep 2.3349 2.2535 2.2776 -0.0571  
Natural Gas          
21-Oct 4.042 3.93 3.969 0.049  
Ethanol Futures          
21-Sep     2.22    
U.S. Dollar Index          
21-Sep 92.18 91.92 92.05 -0.138  
Gold                      $/ounce          
21-Sep 1819.6 1804.9 1815.2 2.6  
21-Aug 4.5005 4.41 4.4135 -0.067  
Fertilizer Swaps     (as of 07/23)    
DAP Tampa-index              655.0 0  
DAP-New Orleans              672.4 -3  
Urea-New Orleans              469.0 -11  
Urea-Middle East              475.0 0  
Urea-Black Sea              452.5 0  
UAN (32%) New Orleans              314.2 0  


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