Wheat complex soars on trimmed global 2021 production forecasts
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Frost damage to Argentina’s corn crop, which is 81% harvested, and positive export prospects in this morning’s weekly Export Sales report from USDA helped power corn prices to close the trading session $0.04-$0.08/bushel higher today.
Cash bids were mixed for corn across the Midwest today, with gains reported at processors and ethanol plants. An Eastern Corn Belt elevator lowered its cash offering for spot corn bids.
In its weekly Export Sales report released this morning, USDA reported only 4.1 million bushels of 2020/21 corn export sales were ordered during the July 16-22 reporting week. It was a 3.6-million-bushel decline from the previous week as buyer interest wanes in the last several weeks of the 2020/21 marketing year.
This trend is not unusual for late in the marketing year. And it was largely overshadowed by accompanying data released by USDA in this morning’s report. 2021/22 corn export sales booked for the week topped 20.8 million bushels – nearly five times higher than the corn export orders booked last week.
Mexico (6.8M bu.), unknown buyers (5.9M bu.), and Colombia (5.1M bu.) booked the largest new crop corn export orders through the week ending July 22. The week’s sales were the largest since China’s new crop buying spree ending in mid-May.
Export shipments for the week ending July 22 were also among the highest volumes seen by exporters since mid-June. USDA reported 53.6 million bushels of corn left U.S. export terminals over the past week, up over a third from a week prior.
While China has refrained from openly booking corn sales over the past couple months, it was the top destination for U.S. corn last week. Exporters shipped 27.6 million bushels of corn to the world’s second largest economy as tight soy crush margins send Chinese livestock producers abroad in search of cheaper feedstuffs. Japan (12.1M bu.) and Mexico (10.1M bu.) rounded out the top three.
Markets rewarded the uptick in weekly shipping volumes and new crop corn export sales. Weekly corn export shipments have lagged behind record-setting paces set earlier this year. But this morning’s report reaffirms that export demand for corn remains strong and if current trends continue, U.S. exporters are very likely to hit USDA’s export target of 2.85 billion bushels for the 2020/21 marketing year.
Export optimism sent soybean futures $0.13-$0.18/bushel higher in today’s trading session.
Fresh on the heels of an uptick in weekly soybean export shipments, USDA announced a large new crop soybean export sale this morning, buoying investor strength in the soybean market. An unknown buyer booked an order of 4.8 million bushels of U.S. soybeans to be delivered in the 2021/22 marketing year.
Similar to corn, old crop soybean export sales in this morning’s Export Sales report from USDA were nothing to write home about. And while 5.8 million bushels in current year export cancellations from Japan and unknown buyers were not welcomed by market watchers, it paled in comparison to renewed enthusiasm for new crop export sales.
Mexico booked 5.9 million bushels of 2021/22 soybeans through the week ending July 22 and China followed closely behind with 4.4 million bushels. Notably, unknown buyers cancelled 2.4 million bushels of new crop soybean orders.
While it was a shot of optimism for new crop soybean prices, price opportunity was limited as China continues to lag behind last year’s new crop buying paces. A year ago, China had booked 47% more bushels of new crop soybeans.
Despite being a player in export sales, China was not among the top destinations for U.S. soybeans last week. Weekly shipments rose nearly 3 million bushels on the week to 9 million bushels. Mexico (3.9M bu.), Bangladesh (2.2M bu.), and Canada (1.2M bu.) paved the way for the largest week of soybean exports since early June.
The U.S. has shipped 2.20 billion bushels of soybeans to international buyers so far in 2020/21. With only a handful of weeks remaining in the marketing year, it seems highly likely exporters will reach USDA’s 2.27-billion-bushel target with ease in the coming weeks.
Cash prices for soybeans were largely unchanged today. An elevator near Cincinnati, Ohio lowered its cash soybean bids. An Indiana merchandiser reported increasing countryside grain movement in the Eastern Corn Belt, particularly as farmers begin to clean out bins ahead of harvest.
Global forecasts for a smaller 2021 wheat crop, steady export demand from China and Mexico, and a weakening dollar supported gains in the wheat complex today. Prices rose $0.08-$0.16/bushel on the prospects.
The Wheat Quality Council’s (WQC) spring wheat tour just came to a close, with crop scouts confirming below average 2021 spring wheat yields due to drought in the Northern Plains. While conditions varied across fields, the WQC ultimately landed on an estimate of 29.1 bushel per acre – the lowest measured yield observed on the tour since 1993.
Recent frosts in South America threatened Brazilian wheat crops in the flowering stages, but a report issued by Argentina’s Buenos Aires Grains Exchange today points out that Argentine wheat acres could have been impacted as well.
Argentina’s wheat crop was just recently planted, and the frost did not cause any immediate or lasting damage to the young crop, leaving the Buenos Aires Grains Exchange to leave its 2021/22 wheat forecast unchanged at 698 million bushels.
But early frosts and lingering dryness could limit the country’s exportable wheat supplies down the road if such weather patterns continue. A La Niña weather pattern is expected to plague the Western Hemisphere again this fall, which partially explains the unseasonably early cold snap recently experienced by Argentina and Brazil.
USDA’s current national yield estimate for 2021 spring wheat stands at 28.0 bushels per acre. North Dakota is the country’s largest spring wheat producer.
Easing export demand, as seen in today’s weekly Export Sales report from USDA, was confirmed by the cash market today. A rail shipping facility that feeds into export terminals in the U.S. Gulf trimmed its cash bid by $0.01/bushel to $1.79 over September Kansas City futures.
Basis was largely unchanged elsewhere in the Southern Plains. An Oklahoma merchandiser estimates half of the 2021 hard red winter wheat crop has already been sold to processors, feeders, and exporters as harvest activity comes to a close in the Southern Plains.
The International Grains Council (IGC) released slimmed down estimates for 2021/22 global wheat production this morning. Persistent drought in the Canadian prairies and U.S. Northern Plains was the key driver behind the monthly forecast’s reduction. A crop report from Saskatchewan’s government website noted that any rainfall at this point will have no effect on yields but will go a long way to replenishing soil moisture levels for next year.
IGC does expect better than anticipated yields from the European Union despite untimely rains during peak winter wheat harvest activities. The IGC now forecasts 2021/22 global wheat production at 28.95 billion bushels, down nearly 37 million bushels from its previous month’s estimate. The ICG also increased its 2021/22 global corn forecast by 39 million bushels to 47.3 billion bushels.
As freshly harvested winter wheat makes its way to export terminals, international buyers continue to eagerly snap up U.S. supplies. For the week ending July 22, 20.5 million bushels of 2021/22 wheat exports were ordered by international buyers.
China (4.8M bu.), Mexico (3.1M bu.), and the Philippines (2.1M bu.) were the most active buyers during the reporting week. But it’s worth noting that sales to Southeast Asian countries totaled a massive 12.9 million bushels – nearly two thirds of the weekly total.
Wheat export shipments fell by over a quarter on the week as barge bids competed with higher corn and soybean demand. For the week ending July 22, only 12.7 million bushels of wheat were shipped out of U.S. ports, the lowest weekly volume recorded in the past month.
The lion’s share of wheat exports for the week were shipped to Mexico (3.1M bu.) and China (2.4M bu.), both countries recording slightly higher tallies on the week. Smaller shipments to Southeast Asian and other Central and South American countries accounted for a smaller weekly shipping volume during peak wheat exporting season.
Cooler temperatures are moving into the Upper Midwest as showers from earlier this week move out, according to NOAA’s short-range forecasts. Temperatures will likely fall into the 80’s in the Upper Midwest by this afternoon, though blistering temperatures will likely remain in place in the Southern Plains. The cooldown bodes well for crops – especially corn crops that are entering into peak pollination activity this week.
The showers will shift into the Eastern Corn Belt today, where up to an inch of accumulation is possible over the next 24 hours. Showers will also move into the Northern Plains later this evening, which could provide some relief to drought-stressed crops in the region.
Updated Drought Monitor data released this morning saw nation-wide drought conditions ease slightly, falling over half a percent to show 53.54% of the country in some sort of abnormally dry to drought condition.
Scattered shower across the Midwest through the week ending July 27 helped to alleviate dry conditions, as the drought ratings for the region slipped half a percent to 34.3% of acreage reporting dry to drought conditions.
Nearly 72% of acreage in the High Plains are reporting dry to drought conditions, down fractionally from the previous week. Around a third of cattle, corn, and soybean producing areas across the country are experiencing drought.
Coronavirus cases in the U.S. rose to 34,675,359 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 611,805 deaths as of press time.
According to the CDC, 69% of U.S. adults have received at least one COVID-19 vaccine. Over 163 million Americans (49%) are fully vaccinated. Nearly 4 billion vaccine doses have been administered worldwide.
U.S. stocks rose today, with both the S&P 500 and Dow setting new record highs despite lower GDP estimates and rising weekly unemployment claims released earlier today. Earnings season is likely somewhat responsible for the marketing shrugging off these concerning metrics.
“Consumer spending surged, while the negatives in the report were from inventory drawdown, presumably from supply shortages,” said Matt Peron, director of research at Janus Henderson Investors told the Wall Street Journal this afternoon. “This implies that the economy, and hence earnings which have also been very strong so far for 2Q, will continue for some time.”
|Afternoon Ag Commodity Prices - 7/29/2021|
|Contract||Units||High||Low||Last||Net Change||% Change|
|SEP '21 CORN||$ / BSH||5.59||5.465||5.5725||0.08||1.46%|
|DEC '21 CORN||$ / BSH||5.5775||5.4625||5.5575||0.0675||1.23%|
|MAR '22 CORN||$ / BSH||5.6525||5.5425||5.6375||0.07||1.26%|
|MAY '22 CORN||$ / BSH||5.6925||5.5825||5.68||0.0725||1.29%|
|JUL '22 CORN||$ / BSH||5.6925||5.59||5.6775||0.065||1.16%|
|SEP '22 CORN||$ / BSH||5.18||5.0975||5.1675||0.045||0.88%|
|DEC '22 CORN||$ / BSH||5.0175||4.945||5.005||0.04||0.81%|
|AUG '21 SOYBEANS||$ / BSH||14.4975||14.2775||14.355||0.035||0.24%|
|SEP '21 SOYBEANS||$ / BSH||13.885||13.66||13.855||0.1525||1.11%|
|NOV '21 SOYBEANS||$ / BSH||13.795||13.57||13.785||0.175||1.29%|
|JAN '22 SOYBEANS||$ / BSH||13.835||13.6175||13.82||0.165||1.21%|
|MAR '22 SOYBEANS||$ / BSH||13.7425||13.5425||13.72||0.1525||1.12%|
|MAY '22 SOYBEANS||$ / BSH||13.7075||13.4975||13.6675||0.135||1.00%|
|JUL '22 SOYBEANS||$ / BSH||13.6875||13.48||13.645||0.1325||0.98%|
|AUG '22 SOYBEANS||$ / BSH||13.47||#N/A||13.45||0.1425||0.00%|
|SEP '22 SOYBEANS||$ / BSH||12.995||#N/A||12.975||0.135||0.00%|
|AUG '21 SOYBEAN OIL||$ / LB||68.17||66.35||66.76||0.21||0.32%|
|SEP '21 SOYBEAN OIL||$ / LB||66.55||64.68||66.19||1.26||1.94%|
|AUG '21 SOY MEAL||$ / TON||359.9||355||357.7||1.6||0.45%|
|SEP '21 SOY MEAL||$ / TON||359.1||355.3||356.6||1.1||0.31%|
|OCT '21 SOY MEAL||$ / TON||357.8||354.1||355.5||0.9||0.25%|
|DEC '21 SOY MEAL||$ / TON||361.3||357.4||359.4||1.3||0.36%|
|JAN '22 SOY MEAL||$ / TON||361.5||357.8||360.3||1.7||0.47%|
|SEP '21 Chicago SRW||$ / BSH||7.0675||6.89||7.0525||0.165||2.40%|
|DEC '21 Chicago SRW||$ / BSH||7.1525||6.9775||7.135||0.1575||2.26%|
|MAR '22 Chicago SRW||$ / BSH||7.22||7.0475||7.205||0.1575||2.23%|
|MAY '22 Chicago SRW||$ / BSH||7.2||7.095||7.19||0.1375||1.95%|
|JUL '22 Chicago SRW||$ / BSH||7.0125||6.87||6.995||0.12||1.75%|
|SEP '21 Kansas City HRW||$ / BSH||6.7775||6.58||6.74||0.145||2.20%|
|DEC '21 Kansas City HRW||$ / BSH||6.88||6.695||6.84||0.1325||1.98%|
|MAR '22 Kansas City HRW||$ / BSH||6.9525||6.77||6.9125||0.13||1.92%|
|MAY '22 Kansas City HRW||$ / BSH||6.955||6.86||6.93||0.1225||1.80%|
|JUL '22 Kansas City HRW||$ / BSH||6.83||6.6875||6.79||0.1||1.49%|
|SEP '21 MLPS Spring Wheat||$ / BSH||9.28||9.0675||9.1675||0.13||1.44%|
|DEC '21 MLPS Spring Wheat||$ / BSH||9.11||8.93||9.0025||0.095||1.07%|
|MAR '22 MLPS Spring Wheat||$ / BSH||8.925||8.79||8.85||0.0825||0.94%|
|MAY '22 MLPS Spring Wheat||$ / BSH||8.745||8.6675||8.7075||0.075||0.87%|
|JUL '22 MLPS Spring Wheat||$ / BSH||8.555||8.535||8.5425||0.06||0.71%|
|SEP '21 ICE Dollar Index||$||92.29||91.865||91.89||-0.427||-0.46%|
|SE '21 Light Crude||$ / BBL||73.67||72.26||73.57||1.18||1.63%|
|OC '21 Light Crude||$ / BBL||73.02||71.66||72.92||1.13||1.57%|
|AUG '21 ULS Diesel||$ /U GAL||2.1909||2.1535||2.1902||0.0342||1.59%|
|SEP '21 ULS Diesel||$ /U GAL||2.1938||2.1537||2.1923||0.0346||1.60%|
|AUG '21 Gasoline||$ /U GAL||2.3526||2.3062||2.3487||0.0405||1.75%|
|SEP '21 Gasoline||$ /U GAL||2.3262||2.278||2.3239||0.0419||1.84%|
|AUG '21 Feeder Cattle||$ / CWT||160.275||158.3||158.525||-1.65||-1.03%|
|SEP '21 Feeder Cattle||$ / CWT||163.55||161.575||161.95||-1.5||-0.92%|
|AU '21 Live Cattle||$ / CWT||123.525||122.425||122.55||-0.525||-0.43%|
|OC '21 Live Cattle||$ / CWT||128.9||127.75||128.125||-0.4||-0.31%|
|AUG '21 Live Hogs||$ / CWT||107.3||105.425||106.275||0.575||0.54%|
|OCT '21 Live Hogs||$ / CWT||90.875||88.5||88.95||-0.575||-0.64%|
|JUL '21 Class III Milk||$ / CWT||16.49||16.48||16.48||-0.04||-0.24%|
|AUG '21 Class III Milk||$ / CWT||16.41||16.17||16.2||-0.15||-0.92%|
|SEP '21 Class III Milk||$ / CWT||16.5||16.2||16.28||-0.22||-1.33%|