Afternoon Market Recap for March 1, 2021

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Profit-taking slashes grain prices.

Corn, soybeans and wheat all spill into the red to start the week

The latest grain rally took a pause again on Monday on a round of technical selling and profit-taking that pushed corn 1.5% lower, while soybeans fell around 0.8%. Expectations for record-breaking harvests in South America and record-breaking plantings in the U.S. applied ample downward pressure. Wheat prices followed suit, with some contracts down more than 1.5% as worries persist over stiff overseas competition, particularly in Russia and the Black Sea region.

Sunny days ahead? There will be almost no measurable rain or snow anywhere in the Midwest and Plains between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. Meantime, the agency’s 8-to-14-day outlook calls for a return to seasonally wet weather for much of the central U.S. between March 8 and March 14, with bountiful warmer-than-normal conditions for the eastern two-thirds of the country next week.

On Wall St., the Dow raced 717 points higher in afternoon trading to 31,649 as investors continue to bet on economic recovery as the vaccine is rolled out to more and more people. The 10-year U.S. Treasury note yield also dipped slightly today, quelling some fears about possible rising interest rates and inflation. Energy futures sagged, in contrast, with crude oil down nearly 1.5% to fall back below $61 per barrel. Diesel dropped 1.25%, with gasoline down around 0.5% this afternoon. The U.S. Dollar firmed moderately.

On Friday, commodity funds were net sellers of most major grain contracts, including corn (-4,500), soybeans (-3,750), soymeal (-1,000) and CBOT wheat (-7,000). However, speculators continue to hold a significant net long position on corn contracts, which were at 361,151 through February 23. Soybean contracts are also sitting on a sizable net long position of 172,364 contracts through the same period.

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Corn

Corn prices tilted about 1.5% lower Monday on a round of technical selling prompted by expectations of a potential record-breaking harvest and record U.S. corn acres planted later this spring. March futures fell 8.5 cents to $5.47, with May futures down 9.5 cents to $5.38.

Corn basis bids were steady to mixed to start the week, moving 1 to 3 cents higher across multiple Midwestern locations but sliding 2 cents lower at two ethanol plants and an Iowa river terminal today.

Corn export inspections improved to 64.4 million bushels, versus the prior week’s tally of 48.5 million bushels. That was also on the high end of trade guesses, which ranged between 45.3 million and 68.9 million bushels. Japan and China were the top two destinations, with 13.8 million and 13.6 million bushels, respectively. Cumulative totals for the 2020/21 marketing year remain substantially above last year’s pace, crossing the 1-billion-bushel mark to reach 1.012 billion bushels.

European Union corn imports are trending 28.5% below last year’s pace, with 417.3 million bushels through February 28, per the latest data from the European Commission.

USDA has set crop insurance price guarantees at $4.58 per bushel for corn and $11.87 per bushel for soybeans, climbing to the highest level since 2013. Corn price guarantees are 18% higher than a hear ago, with soybeans up 29% versus 2020 levels.

Preliminary volume estimates were for 254,817 contracts, falling moderately short of Friday’s final count of 295,927.

Soybeans

Soybean prices suffered double-digit losses despite coming into Monday’s session with solid overnight gains after traders engaged in a round of technical selling and profit-taking today. Brazil’s soybean harvest is off to a slow start but could still rewrite the record books, and a historically large amount of U.S. acres are expected this year. March futures dropped 11.25 cents to $13.94, with May futures down 12 cents to $13.9225.

Soybean basis bids jumped 9 cents higher at an Illinois river terminal and firmed 3 cents at an Illinois processor while holding steady elsewhere across the central U.S. today.

Soybean export inspections saw week-over-week gains of around 9.5%, climbing to 32.3 million bushels and surpassing all trade estimates, which ranged between 14.7 million and 29.4 million bushels. China accounted for nearly 40% of the total, with 21.3 million bushels. Cumulative totals for the 2020/21 marketing year are still significantly above last year’s pace, with 1.906 billion bushels.

Brazilian consultancy AgRural raised its 2020/21 soybean production estimates by nearly 1% compared to its January estimates to 4.887 billion bushels – a record-breaking haul, if realized. AgRural’s latest survey concludes 25% of the crop has been harvested through February 25. That’s up from 15% the prior week but well behind last year’s pace of 40%.

European Union soybean imports for the 2020/21 marketing year reached 352 million bushels through February 28, which is 2.1% above last year’s pace so far. EU canola imports are slightly down year-over-year, in contrast, as are EU soymeal imports.

Iran issued international tenders to purchase up to 30,000 metric tons each of soyoil, palm oil and sunflower oil, which close tomorrow and are for shipment in April.

Preliminary volume estimates were for 191,295 contracts, inching slightly ahead of Friday’s final count of 188,268.

Wheat

Wheat prices followed corn and soybeans moderately lower on a round of technical selling today, with an uptick in Russian exports also weighing heavily on prices today. March Chicago SRW futures lost 11.25 cents to $6.4375, March Kansas City HRW futures fell 5.75 cents to $6.19, and March MGEX spring wheat futures dropped 3 cents to $6.28.

Wheat export inspections fell again, moving to a lackluster 10.0 million bushels. That was also below the entire range of trade guesses, which were between 11.0 million and 18.4 million bushels. Indonesia was the No. 1 destination, with 2.7 million bushels. Cumulative totals for the 2020/21 marketing year moved further below last year’s pace after reaching 662.8 million bushels.

European soft wheat exports for the 2020/21 marketing year are at 645.2 million bushels through February 28, which is 28% below last year’s pace so far. EU barley exports are also trending below last year’s pace.

Australia’s wheat production could fall 25% next season as La Niñ a conditions are expected to retreat along with the yield-friendly rains it brings, according to the country’s chief commodity forecaster. Australia’s wheat production this season could land at a record 1.227 billion bushels.

Russian consultancy SovEcon estimates that the country’s wheat exports in February reached 114 million bushels. That’s a 12% improvement from January’s tally, if realized, but still well below the monthly averages captured throughout the fall and winter. The consultancy expects total wheat exports in 2020/21 to reach 1.437 billion bushels.

China sold another 61.8 million bushels of its state reserves at wheat on auction earlier today, which was 41.7% of the grain available for sale. The country has offered nine similar wheat sales since the beginning of December as the domestic feed market looks for lower-cost alternatives to corn.

Algeria issued an international tender to purchase 1.8 million bushels of durum wheat, although the country often purchases more than the nominal amount listed. The tender closes on Wednesday, and the grain is for shipment in April.

Preliminary volume estimates were for 82,965 CBOT contracts, sliding below Friday’s final count of 92,973.

Closing Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-Mar 562.5 547 547.5 -8.5
21-May 554.25 537 538.25 -9.5
Soybeans        
21-Mar 1422 1392 1392.5 -11.25
21-May 1422.5 1389.5 1391.25 -12
Soymeal                $/ton        
21-May 427.2 417.8 418.3 -3.2
Soyoil                    cents/lb        
21-May 50.62 49.05 49.23 -0.82
Wheat                    $/bushel        
21-Mar 661 643 643.75 -11.25
21-May 666.75 647.75 650.25 -10
KC Wheat        
21-Mar 629 618.5 614.25 -5.75
21-May 639.75 621.25 623.25 -10.75
MPLS Wheat        
21-Mar 634.75 628 628.25 -3
21-May 644.5 630.75 633.5 -5.75
Live Cattle             cents/lb        
21-Apr 120.475 118.775 119.325 -0.675
Feeder Cattle         cents/lb        
21-Apr 142.3 140.6 141.25 -1.325
Lean Hogs             cents/lb        
21-May 90.5 88.55 89.5 0.625
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Apr 62.92 59.96 60.54 -0.96
Diesel        
21-Apr 1.8779 1.8007 1.8183 -0.0248
Unleaded Gasoline   $/gallon        
21-Mar 1.989 1.9178 1.9401 -0.0104
Natural Gas        
21-May 2.841 2.766 2.816 0.007
Ethanol Futures        
21-Apr     1.729  
U.S. Dollar Index        
21-Mar 91.15 90.685 91.025 0.143
Gold                      $/ounce        
21-Apr 1757.4 1718.3 1723.3 -4.8
Copper        
21-Mar 4.1735 4.0995 4.114 0.0195
Fertilizer Swaps     (as of 03/01)  
DAP Tampa-index              580.0 50
DAP-New Orleans              576.0 -4
Urea-New Orleans              388.6 13
Urea-Middle East              392.5 8
Urea-Black Sea              267.5 8
UAN (32%) New Orleans              250.8 14.88

 

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