Corn, soy end the month lower as weather conditions improve
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The nearby September 2021 corn contract ended the month 7.4% lower than it started. Rains and moderate temperatures across the Midwest as pollination season comes to a close benefited crop development and eased concerns about potential yield shortfalls ahead of harvest.
It was a quiet day at the Chicago Board of Trade with contract volumes down over a quarter from yesterday. A stronger dollar dampened export prospects, limiting gains in the corn complex today, with futures prices shedding $0.08-$0.12/bushel to end the trading session.
Rains and cooler temperatures in the drought-stressed Upper Midwest sent soybean prices lower today. Weather forecasts are calling for rain following peak reproductive development for soybeans, which would help reverse some of the weather damage incurred on the crop so far this year.
The August 2021 soybean futures contract is expected to close the month 2.5% lower, marking a third straight month of losses for the soybean market. Easing crush rates as domestic soybean supplies run dry also factored in to the day’s losses.
Rising global edible oil prices were met with some resistance in today’s trade, leading soybean oil futures lower in today’s trading session. Soymeal prices also followed the overall soy complex lower today, though rising cash prices were reported at the Gulf of Mexico this morning, suggesting strong export demand.
Another year, another acreage increase for Brazil’s upcoming soybean crop. According to Brazilian agribusiness consultancy Datagro, Brazilian soy growers will likely plant 100.2 million acres of soybeans in 2021/22, a 4% increase from the prior marketing year. It will mark the 15th consecutive year Brazil has increased its soybean acreage.
Datagro forecasts 2021/22 Brazilian soy production at 5.3 billion bushels by the time harvest begins next January, marginally higher than USDA’s current projection for the crop. Barring any weather issues, Datagro expects Brazil will also harvest a larger corn crop next year as higher acreage and a hopeful return to more regular weather patterns encourage higher production.
Even though the wheat complex is likely to post a monthly gain for July, advancing harvest paces in the European Union triggered lower prices in today’s trading session. Some profit-taking was also at play in the wheat complex today after results from this week’s spring wheat crop tour estimated the lowest spring wheat yields since the catastrophic drought of the late ‘80s.
Quickening soft wheat harvest paces in France made up some of the lost ground from rain delays earlier this summer, but harvest still remains behind historical benchmarks for Europe’s top wheat producer. France has harvested 47% of its soft wheat crop as of Monday. Fellow EU wheat powerhouse Ukraine has harvested over a third of its grain crop so far.
Meanwhile, Russian consultancy IKAR expects lower yields from the drought-stressed Central and Volga regions for the 2021/22 crop year, dropping estimates 3.7% to 2.88 billion bushels. USDA’s current estimate for 2021 Russian wheat production stands at 3.12 billion bushels.
Despite some weather hiccups in this season’s growing cycle, the European Union will likely produce 4.67 billion bushels of wheat in the 2021/22 crop year, according to the European Commission’s latest forecasts released early this morning.
The forecast is nearly 2% higher than previous projections from the European Commission and about 386 million more bushels than 2020/21 production rates. Wheat exports were left largely unchanged in the commission’s monthly report, though the production uptick adds more liquidity to the global grains trade if realized.
A quick look at input costs
China’s top fertilizer producers are temporarily suspending phosphate and urea exports, which could send key buyers India and Pakistan in search of alternative sources the U.S. has come to rely on in the wake of its countervailing tariff dispute with Russia and Morocco.
China is the world’s largest producer of phosphate. Leading up to this announcement, there was some optimism that Chinese supplies could help offset phosphate shortages in the U.S. as phosphate imports from key producers Russia and Morocco all but vanished following the tariff enforcement.
Fertilizer costs have hit record levels this year in China as a government-sponsored acreage expansion increased the demand for inputs. Recent flooding in central China’s Henan province has also stalled fertilizer production. Rising production costs and increased export demand due to a global acreage increase this year have also played a significant role in dwindling Chinese phosphate supplies.
The USDA’s Illinois Department of Ag Market News Service released it’s bi-weekly report on farm-level input costs yesterday and its latest update had little good news for farmers. Potash prices skyrocketed from the previous report, up nearly a quarter over the past two weeks to $600/ton.
The latest potash price surge is largely attributed to recent economic sanctions enforced on key producer Belarus by the European Union, United Kingdom, U.S., and Canada after the Belarus government imprisoned high-profile political protestors.
Potash suppliers were already tight leading up to the sanctions, which will further restrict international flows of the potassium fertilizer. It remains unclear if U.S. producers Nutrien and Mosaic will have the capacity to rachet up production in time for fall application season.
Countervailing tariff disputes continued to lead phosphate prices higher. New UAN dumping disputes levied against Russia and Trinidad and Tobago by the U.S. sent prices climbing over the past two weeks and could spur UAN prices higher as well.
Global nitrogen supplies continue to tighten as global acreage expansion climbs during this era of high commodity prices. Growers awaiting spring pricing in the coming weeks will need to pencil out 2022 profit and cost expectations pretty rapidly in the next couple weeks to decide if availability is worth the current high costs of inputs or if they can afford to take a gamble and wait for prices to moderate in the increasingly volatile post-pandemic era.
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 Missouri River Valley today. South Dakota, Eastern Nebraska, Iowa, and Northern Missouri could see up to two inches of rain over the next 24 hours.
Coronavirus cases in the U.S. rose to 34,754,668 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 612,129 deaths as of this morning.
According to the CDC, 69% of U.S. adults have received at least one COVID-19 vaccine. Nearly 164 million Americans (49%) are fully vaccinated. Over 4 billion vaccine doses have been administered worldwide.
U.S. stock markets edged lower in today’s trading session as renewed fears of the Chinese government’s crackdown on its tech companies triggered another selloff in Asian markets. S&P 500 futures slid 0.47% to $4,398.39 on the sentiment.
|Afternoon Ag Commodity Prices - 7/30/2021|
|Contract||Units||High||Low||Last||Net Change||% Change|
|SEP '21 CORN||$ / BSH||5.5775||5.465||5.4675||-0.1125||-2.02%|
|DEC '21 CORN||$ / BSH||5.56||5.435||5.445||-0.12||-2.16%|
|MAR '22 CORN||$ / BSH||5.635||5.515||5.525||-0.1175||-2.08%|
|MAY '22 CORN||$ / BSH||5.6775||5.56||5.5725||-0.115||-2.02%|
|JUL '22 CORN||$ / BSH||5.6775||5.56||5.5725||-0.1125||-1.98%|
|SEP '22 CORN||$ / BSH||5.1675||5.075||5.09||-0.0775||-1.50%|
|DEC '22 CORN||$ / BSH||5.005||4.935||4.955||-0.0575||-1.15%|
|AUG '21 SOYBEANS||$ / BSH||14.41||14.0575||14.1025||-0.24||-1.67%|
|SEP '21 SOYBEANS||$ / BSH||13.8725||13.505||13.545||-0.3075||-2.22%|
|NOV '21 SOYBEANS||$ / BSH||13.8075||13.43||13.48||-0.2975||-2.16%|
|JAN '22 SOYBEANS||$ / BSH||13.8475||13.4825||13.5375||-0.2825||-2.04%|
|MAR '22 SOYBEANS||$ / BSH||13.7375||13.4075||13.45||-0.2675||-1.95%|
|MAY '22 SOYBEANS||$ / BSH||13.67||13.3825||13.4375||-0.2375||-1.74%|
|JUL '22 SOYBEANS||$ / BSH||13.64||13.365||13.42||-0.2275||-1.67%|
|AUG '22 SOYBEANS||$ / BSH||13.24||13.2025||13.265||-0.185||-1.78%|
|SEP '22 SOYBEANS||$ / BSH||12.82||12.79||12.8125||-0.1625||-1.19%|
|AUG '21 SOYBEAN OIL||$ / LB||66.75||65.03||65.6||-1.33||-1.99%|
|SEP '21 SOYBEAN OIL||$ / LB||66.4||64||64.54||-1.68||-2.54%|
|AUG '21 SOY MEAL||$ / TON||359.3||352||352.6||-3.9||-1.09%|
|SEP '21 SOY MEAL||$ / TON||359||350.8||350.9||-5.6||-1.57%|
|OCT '21 SOY MEAL||$ / TON||357.8||349.6||349.8||-5.9||-1.66%|
|DEC '21 SOY MEAL||$ / TON||361.5||353.1||353.2||-6.2||-1.73%|
|JAN '22 SOY MEAL||$ / TON||361.8||354.2||354.3||-5.6||-1.56%|
|SEP '21 Chicago SRW||$ / BSH||7.115||6.95||7.035||-0.0175||-0.25%|
|DEC '21 Chicago SRW||$ / BSH||7.2||7.035||7.1275||-0.01||-0.14%|
|MAR '22 Chicago SRW||$ / BSH||7.2675||7.1075||7.2025||-0.005||-0.07%|
|MAY '22 Chicago SRW||$ / BSH||7.2425||7.095||7.1925||-0.005||-0.07%|
|JUL '22 Chicago SRW||$ / BSH||7.0475||6.91||7.0075||0||0.00%|
|SEP '21 Kansas City HRW||$ / BSH||6.795||6.64||6.7275||-0.0175||-0.26%|
|DEC '21 Kansas City HRW||$ / BSH||6.9025||6.75||6.835||-0.0175||-0.26%|
|MAR '22 Kansas City HRW||$ / BSH||6.975||6.825||6.9125||-0.01||-0.14%|
|MAY '22 Kansas City HRW||$ / BSH||6.9875||6.855||6.9375||-0.005||-0.07%|
|JUL '22 Kansas City HRW||$ / BSH||6.835||6.7075||6.8025||0.005||0.07%|
|SEP '21 MLPS Spring Wheat||$ / BSH||9.175||8.995||9.015||-0.17||-1.85%|
|DEC '21 MLPS Spring Wheat||$ / BSH||9.025||8.8525||8.8725||-0.16||-1.77%|
|MAR '22 MLPS Spring Wheat||$ / BSH||8.85||8.71||8.73||-0.1425||-1.61%|
|MAY '22 MLPS Spring Wheat||$ / BSH||8.7||8.55||8.5725||-0.145||-1.66%|
|JUL '22 MLPS Spring Wheat||$ / BSH||8.485||8.3975||8.4825||-0.055||-0.64%|
|SEP '21 ICE Dollar Index||$||92.215||91.78||92.18||0.309||0.34%|
|SE '21 Light Crude||$ / BBL||74.23||72.93||73.74||0.12||0.16%|
|OC '21 Light Crude||$ / BBL||73.52||72.3||73.01||0.03||0.04%|
|AUG '21 ULS Diesel||$ /U GAL||2.2028||2.174||2.1994||0.0011||0.05%|
|SEP '21 ULS Diesel||$ /U GAL||2.2045||2.1759||2.1896||-0.0025||-0.11%|
|AUG '21 Gasoline||$ /U GAL||2.3695||2.3395||2.3659||0.0073||0.31%|
|SEP '21 Gasoline||$ /U GAL||2.3448||2.3071||2.3264||0.0013||0.06%|
|AUG '21 Feeder Cattle||$ / CWT||159.175||157.6||158.075||-0.425||-0.27%|
|SEP '21 Feeder Cattle||$ / CWT||162.7||160.825||161.725||-0.225||-0.14%|
|AU '21 Live Cattle||$ / CWT||122.75||122||122.125||-0.375||-0.31%|
|OC '21 Live Cattle||$ / CWT||128.225||127.075||127.375||-0.775||-0.60%|
|AUG '21 Live Hogs||$ / CWT||106.75||105.825||106||-0.3||-0.28%|
|OCT '21 Live Hogs||$ / CWT||89.375||87.275||88||-0.975||-1.10%|
|JUL '21 Class III Milk||$ / CWT||16.49||16.47||16.48||0||0.00%|
|AUG '21 Class III Milk||$ / CWT||16.3||16.16||16.29||0.07||0.43%|
|SEP '21 Class III Milk||$ / CWT||16.36||16.13||16.34||0.08||0.49%|