Afternoon Market Recap for June 22, 2021

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Mild weather pushes corn, soybeans lower

Spring wheat prices surge higher, with winter wheat contracts in the red today

Grain prices were mixed once again on Tuesday. Corn and soybean futures tilted lower on the heels of relatively mild summer weather across much of the Midwest and Plains to start the week. Traders largely shrugged off deteriorating crop conditions, with one big exception – spring wheat contracts moved more than 2% higher today after quality ratings took a ten-point drop this past week.

Plenty of wet weather is on the way for parts of the Midwest between Wednesday and Saturday. Portions of northern Missouri, Iowa, Illinois and Wisconsin could gather another 2” or more during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook, which covers June 29 through July 5, calls for seasonally hot, dry weather across the upper Midwest and Northern Plains.

On Wall St., the Dow moved another 70 points higher in afternoon trading to 33,947, with stocks tied to economic recovery continuing to turn in strong performances. Energy futures were mixed, with crude oil spilling 0.75% lower to land just above $73 per barrel. Gasoline and diesel each rose more than 1%, in contrast. The U.S. Dollar softened slightly.

On Monday, commodity funds were net buyers of soybeans (+6,500), soyoil (+9,000) and CBOT wheat (+500) contracts but were net sellers of corn (-4,000) and soymeal (-1,000).

Corn prices were mixed amid some uneven technical maneuvering today. Nearby contracts saw a small boost after USDA showed declining crop conditions, but better forecasts ahead pushed September contracts lower. July futures picked up 1.25 cents to $6.6050, while September futures slumped 18 cents lower to $5.5325.

Corn basis bids were mostly steady but did show some variability Tuesday after falling 5 to 10 cents lower at two Midwestern elevators while tilting 2 cents higher at an Illinois river terminal today.

Through June 20, USDA rated 65% of this year’s corn crop in good-to-excellent condition, down from 68% a week ago. Analysts were expecting to see a two-point drop this past week. Another 29% of the crop is rated fair (up two points from last week), with the remaining 6% rated poor or very poor (up a point from a week ago).

A recent Reuters poll of ten analysts suggest Brazil’s total corn harvest for the 2020/21 season could trend 8.5% below prior forecasts to around 3.7 billion bushels, due to ongoing drought concerns.

China’s Sinograin is planning another auction on June 25 to sell nearly 717,000 bushels of corn that was initially imported from Ukraine. This is the latest in a series of moves by China to curb rising domestic grain prices.

Fertilizer prices are on the rise, without a doubt. Grain market analyst Bryce Knorr notes that corn’s cost for NPK has risen about $50 per acre since last fall. “And there’s no indication anything will get any cheaper this summer when suppliers post offer sheets for summer and fall deliveries,” he adds. Catch more of Knorr’s analysis in the latest Ag Marketing IQ blog – click here to read.

Keep an eye on emerging ethanol production trends. For the past five weeks, production has averaged more than 1 million barrels per day, a pace not seen since before the pandemic. Production did see a moderate decline for the week ending June 11, dropping to a daily average of 1.025 million barrels. The next round of data from the U.S. Energy Information Administration comes out Wednesday morning.

Preliminary volume estimates were for 353,356 contracts, moving slightly ahead of Monday’s final count of 328,791.

Soybean prices stumbled on improved weather forecasts, as traders largely shrugged off declining crop conditions reported by USDA yesterday afternoon. Prices ultimately settled more than 1.25% lower by the close. July futures dropped 20 cents to $13.95, with August futures down 18 cents to $13.5225.

Soybean basis bids held steady across most Midwestern locations but did boost 10 cents higher at an Iowa processor today.

Soybean quality ratings fell two points lower this past week, which was in line with analyst expectations. Through Sunday, 60% of the crop was rated in good-to-excellent condition. Another 31% is rated fair (up a point from last week), with the remaining 9% rated poor or very poor (also up a point from a week ago). Planting progress has reached 97%, with crop emergence at 91%.

Brazil’s Anec lowered its forecasts for June soybean exports but still expects to see sales totaling around 404 million bushels this month. Brazilian corn exports are expected to come in just below 5 million bushels in June, meantime.

Egypt purchased 63,000 metric tons of soyoil and another 10,500 MT of sunflower oil in an international tender that recently closed. The vegetable oils are for arrival in September.

What is the best way to approach volatility in the grain markets right now? Kent Stutzman with Advance Trading, Inc., shares some thoughts on predicting prices versus protecting profit margins in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 184,707 contracts, dipping slightly below Monday’s final count of 194,113.

Wheat prices were mixed today. Winter wheat contracts took a moderate spill on a round of technical selling after USDA reported slightly higher quality ratings yesterday afternoon. But spring wheat conditions saw steep cuts this past week, which triggered a round of technical buying that pushed prices more than 2% higher today. September Chicago SRW futures fell 9 cents to $6.56, September Kansas City HRW futures dropped 2 cents to $6.0725, and September MGEX spring wheat futures rose 16 cents to $7.8350.

USDA marked winter wheat conditions a point higher, with 49% rated in good-to-excellent condition. Another 31% of the crop is rated fair (down a point from last week), with the remaining 20% rated poor or very poor (unchanged from a week ago). Physiologically, nearly all (96%) of the crop is headed, up from 92% a week ago and identical to the prior five-year average. Harvest is at 17%.

Spring wheat quality ratings got hammered this past week, losing ten points to 27% rated in good-to-excellent condition, dropping even further behind year-over-year ratings of 75%. Another 36% is rated fair (unchanged from last week), with the remaining 37% rated poor or very poor (up ten points from a week ago). The crop nears full maturity, meantime, with 27% now headed.

Japan issued a regular tender to purchase 5.9 million bushels of food-quality wheat from the United States and Canada, which closes later this week. Of the total, 54% is expected to be sourced from the U.S.

Preliminary volume estimates were for 119,228 CBOT contracts, slipping slightly below Monday’s final count of 121,511.
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