Afternoon Market Recap for May 11, 2021

phongphan5922/Thinkstock markets charts - green with red line
Traders place their pre-WASDE bets.

Corn, soybeans and wheat all climb higher Tuesday

Tomorrow morning, USDA releases its May World Agricultural Supply and Demand Estimates (WASDE) report, which will reveal a highly anticipated set of fundamentals data. Expectations remain solid for now that the agency will lower its estimates of domestic stocks for corn, soybeans and wheat. That led to a round of technical buying Tuesday that significantly lifted grain prices. Corn rose nearly 1.75% today, with soybeans up around 1.5% and some wheat contracts trending more than 2% higher.

Not much additional moisture will be seen across the Plains and Midwest between Wednesday and Saturday, although some areas will see as much as 0.25” during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s latest 8-to-14-day outlook expects a return to seasonally wet weather for the central U.S. between May 18 and May 24, meantime, and widespread warmer-than-normal conditions are also likely.

On Wall St., the Dow tumbled 505 points lower in afternoon trading to 34,237 on lingering concerns over inflation and overvalued tech stocks. The CBOE Volatility Index (sometimes called the “fear index”) climbed to two-month highs. Energy futures were on the rise, with crude oil up around 0.5% this afternoon to move back above $65 per barrel. Diesel rose more than 1%, with gasoline up around 0.4%. The U.S. Dollar softened slightly.

On Monday, commodity funds were net sellers of most grain contracts, including corn (-35,000), soybeans (-7,000), soyoil (-6,500) and CBOT wheat (-20,000) but were net buyers of soymeal (+1,000).

Corn

Corn prices rose steadily higher Tuesday on anticipation that USDA will trim domestic stocks in its WASDE report tomorrow morning, which led to a round of technical buying today. Dry weather in Brazil has lent additional support in recent sessions. Today, May futures gained 13 cents to $7.61, with July futures rising 12.25 cents to $7.24.

Corn basis bids showed some variability at two Midwestern ethanol plants Tuesday while holding steady elsewhere across the central U.S. today.

Private exporters reported another large corn sale to China Tuesday. Today’s sale was for 26.8 million bushels and will be delivered during the 2021/22 marketing year, which begins September 1.

Corn plantings reached 67% completion through Sunday, up from 46% a week ago and in line with analyst expectations. This year’s pace is slightly faster than 2020’s pace of 65% and well above the prior five-year average of 52%. And 20% of the crop is now emerged, up from last week’s mark of 8% and slightly ahead of the prior five-year average of 19%.

Ahead of Wednesday morning’s WASDE report, analysts are expecting USDA to further trim 2020/21 corn ending stocks from 1.352 billion bushels in April down to 1.275 billion bushels in May.

“There is a lot of background noise that will underscore tomorrow’s report,” admits Farm Futures grain market analyst Jacquie Holland. “New information will be added to the monthly report and the first concrete 2021/22 demand estimates will be released for markets to digest new crop demand potential – or rationing.” Click here to read Holland’s exclusive analysis leading up to tomorrow’s WASDE report.

Preliminary volume estimates were for 330,494 contracts, drifting moderately below Monday’s final count of 411,032.

Soybeans

Soybean prices jumped about 1.5% higher Tuesday on a round of technical buying, as traders expect already historically tight domestic stocks to continue to tighten. Planting progress proved to be largely a nonfactor today, but be aware that the 2021 crop is going into the ground much faster than it has in recent years, which could create some downward pressure later this spring. Today, May futures gained 17.5 cents to $16.3750, with July futures up 28.5 cents to $16.16

Soybean basis bids moved 2 cents higher at two interior river terminals on Tuesday while holding steady elsewhere across the central U.S.

Soybean planting progress moved to 42% through Sunday, which was two points above the average trade guess and well above the prior week’s pace of 24%. Farmers are also planting much faster than 2020’s pace of 36% and the prior five-year average of 22%. Soybean emergence is at 10% among the top 18 production states, getting there faster than 2020’s pace of 6% and the prior five-year average of 4%.

Ahead of tomorrow morning’s WASDE report from USDA, analysts expect the agency to slightly trim 2020/21 soybean stocks from 120 million bushels in April down to 117 million bushels in May.

Worried about inflation? You’re not alone, according to grain market analyst Bryce Knorr. Even so, there are some silver linings, including better commodity prices and land values. “So, should you welcome, or fear inflation in the 2020s?” he asks. “The answer depends on the data you use and how you look at it.” Knorr offers up a healthy dose of analysis in the latest Ag Marketing IQ blog – click here to learn more.

Preliminary volume estimates were for 196,710 contracts, moving slightly ahead of Monday’s final count of 186,120.

Wheat

Wheat prices trended significantly higher, with most contracts closing with double-digit gains. Traders squared positions ahead of tomorrow’s WASDE report from USDA, kicking off a round of technical buying in the process. Spillover strength from corn and soybeans lent additional support. July Chicago SRW futures gained 13.5 cents to $7.44, July Kansas City HRW futures added 9.25 cents to $7.1275, and July MGEX spring wheat futures climbed 18.75 cents to $7.72.

Spring wheat plantings jumped from 49% a week ago up to 70% through Sunday. That’s much faster than both 2020’s pace of 40% and the prior five-year average of 51%. Twenty-nine percent of the crop is now emerged, up from the prior five-year average of 20%.

The 2020/21 winter wheat crop is shifting slowly closer to harvest, with 38% of the crop now at the heading stage. That’s moderately behind 2020’s pace of 42% and the prior five-year average of 46%. Quality ratings moved a point higher, with 49% of the crop in good-to-excellent condition. Analysts thought USDA would hold ratings steady this past week. Another 33% of the crop is rated fair (unchanged from last week), with the remaining 18% rated poor or very poor (down a point from last week).

Ahead of Wednesday morning’s WASDE report from USDA, analysts expect the agency to show 2020/21 wheat stocks on the decline, moving from 852 million bushels in April down to 846 million bushels in May.

Russia’s SovEcon consultancy estimates that the country’s wheat exports in April reached 40.4 million bushels. If realized, that would be a month-over-month improvement of 19% but otherwise far below the typical monthly volume seen earlier this marketing year. Russia is the world’s No. 1 wheat exporter.

Japan issued a regular tender to purchase 4.5 million bushels of food-quality wheat from the United States, Canada and Australia that closes later this week. Around half of the total is expected to be sourced from the U.S. The grain is for shipment in July.

Preliminary volume estimates were for 112,780 CBOT contracts, sliding slightly below Monday’s final count of 117,172.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-May 771.5 747.25 759.5 13
21-Jul 732.5 703.25 722.25 12.25
Soybeans        
21-May 1650.25 1608.25 1637.5 17.5
21-Jul 1625.5 1573.25 1614.75 28.5
Soymeal                $/ton        
21-Jul 452.2 438.2 447 4.8
Soyoil                    cents/lb        
21-Jul 65.29 63.11 64.8 1.01
Wheat                    $/bushel        
21-May 765 742.75 759.75 17.25
21-Jul 749 722.75 741.75 13.5
KC Wheat        
21-May 707 707 702.5 11.5
21-Jul 718.5 694.25 710.5 9.25
MPLS Wheat        
21-May     745.75  
21-Jul 773.75 745 770.5 18.75
Live Cattle             cents/lb        
21-Jun 118.9 117.85 118.7 0.475
Feeder Cattle         cents/lb        
21-Aug 149.625 147.55 149 0.3
Lean Hogs             cents/lb        
21-Jun 113.125 110.25 111.475 -0.625
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Jun 65.48 63.68 65.34 0.42
Diesel        
21-Jun 2.0447 1.9964 2.0439 0.0273
Unleaded Gasoline   $/gallon        
21-Jun 2.1452 2.0947 2.1421 0.0087
Natural Gas        
21-Jul 3.013 2.928 3.001 0.023
Ethanol Futures        
21-Jul     2.34  
U.S. Dollar Index        
21-Jun 90.335 89.955 90.12 -0.065
Gold                      $/ounce        
21-Jun 1842.5 1817.8 1833.4 -4.1
Copper        
21-May 4.82 4.709 4.8055 0.072
Fertilizer Swaps     (as of 05/07)  
DAP Tampa-index              589.5 0
DAP-New Orleans              617.3 25
Urea-New Orleans              399.6 -18
Urea-Middle East              350.0 2
Urea-Black Sea              314.5 -15
UAN (32%) New Orleans              322.4 5.51

 

Get our top content delivered right to you inbox every day. Click here to subscribe to our morning and afternoon market newsletters.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish