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Afternoon Market Recap for May 12, 2021

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Soybeans soar while corn, wheat weaken.

Prices mixed after traders digest a big supply and demand report from USDA

USDA’s latest World Agricultural Supply and Demand Estimates (WASDE) report, out late this morning, held a lot of grain data for both the current marketing year and for 2021/22 that ultimately had a mixed effect on grain prices today. Soybeans were the session’s big winner, climbing another 1.75% and capturing double-digit gains. But corn slid around 1% lower after some technical selling today, and some wheat prices tumbled more than 2.5% lower.

Another round of rains is expected to land on the western Corn Belt between Thursday and Saturday, per the latest 72-hour cumulative precipitation map from NOAA. Some areas could see up to 1” additional moisture during this time. NOAA’s latest 8-to-14-day outlook, covering May 19 through May 25, calls for a return to seasonally wet weather for much of the central U.S., with widespread warmer-than-normal temperatures also likely.

On Wall St., inflation concerns pushed the Dow down another 568 points to 33,700. The latest data suggests inflation has climbed 4.2% over the past year, versus analyst estimates of 3.6%. Energy prices moved higher amid some supply concerns unfolding in some parts of the U.S. Crude oil firmed nearly 1% to move closer to $66 per barrel. Diesel and gasoline rose by similar percentages. The U.S. Dollar firmed moderately.

On Tuesday, commodity funds were net buyers of all major grain contracts, including corn (+11,000), soybeans (+15,000), soymeal (+7,500), soyoil (+4,000) and CBOT wheat (+5,500).

Corn

Corn prices stumbled after USDA’s ending stocks came in higher than analyst estimates, which triggered some technical selling. May futures eased 2 cents to $7.5750, while July futures dropped 8 cents to $7.1425.

Corn basis bids fell 3 to 7 cents at two interior river terminals while moving as much as 8 cents higher at a Nebraska processor today.

Private exporters announced to USDA the sale of 3.9 million bushels of corn to Mexico. Thirty percent of the total is for delivery during the current marketing year, with the remaining 70% for delivery in 2021/22.

USDA’s WASDE report this morning makes the assumption that farmers will achieve trendline yields this season, for an average of 179.5 bushels per acre and total production of 15.0 billion bushels. Exports are expected to decline 325 million bushels during the 2021/22 marketing year. Ending stocks should rise 250 million bushels year-over-year to 1.507 billion bushels, which was notably higher than the average trade guess of 1.344 billion bushels.

South American production saw some revisions from April. In Brazil, production potential fell 275 million bushels to 4.016 billion bushels. In Argentina, USDA held estimates steady from a month ago, with 1.850 billion bushels.

World ending stocks for 2021/22 were higher than trade guesses, coming in at 11.508 million bushels. Analysts had offered up an average estimate of 11.144 prior to today’s report.

Ethanol production showed moderate signs of improvement for the week ending May 7, with a daily average of 979,000 barrels, according to the latest data from the U.S. Energy Information Administration, released this morning. That’s up from 945,000 barrels per day during the prior week and reaching the highest levels since late November.

China’s agriculture ministry is projecting the country’s 2021/22 corn production will increase by 4.3%, based on more acres and improved yields. Total production is expected to reach 10.701 billion bushels.

Brazil’s Conab expects a drop in its second corn crop this season, meantime, offering a latest estimate of 3.142 billion bushels. However, the country’s total corn crop for the 2020/21 season is expected to climb 3.7% above last year’s total, with 4.190 billion bushels. Exports are forecasted at 1.378 billion bushels.

Preliminary volume estimates were for 425,156 contracts, moving well above Tuesday’s final count of 330,494.

Soybeans

Soybean prices firmed Wednesday on a round of technical buying inspired by strong supply and demand fundamentals. A slowdown in Argentine sales applied additional tailwinds today. May futures rose 23 cents to $16.6050, with July futures added 28.25 cents to $16.43.

Soybean basis bids were steady to weak across the central U.S. Wednesday after falling 3 to 6 cents lower at two interior river terminals and dropping 5 cents at an Iowa processor today.

USDA’s 2021/22 soybean outlook calls for lower supplies and exports, an improving crush volume and higher ending stocks compared to the current marketing year. USDA estimates this year’s soybean production will reach 4.4 million bushels, based on more acres and trendline yields. Favorable crush margins should push the 2021/22 crush 35 million bushels higher year-over-year to reach 2.2 billion bushels.

Soybean exports this upcoming marketing year are expected to slide 205 million bushels below 2020/21 volume, to 2.1 billion bushels. That leaves ending stocks at 140 million bushels, which was slightly above the average trade guess of 138 million bushels. The U.S. share of total global exports is also expected to drop from 36% this year down to 33%. Prices could average $13.85 per bushel, which is an improvement of $2.60 compared to 2020/21.

Globally, USDA estimates 2021/22 soybean stocks at 3.347 billion bushels. That’s a bit above the average trade guess of 3.238 billion bushels.

Brazil’s Conab is estimating the country’s 2020/21 soybean production will reach 4.975 billion bushels, representing a slight reduction from its prior projection in April. Exports are expected to reach 3.145 billion bushels this marketing year.

Argentina’s agriculture ministry reports that farmers have sold 635.7 million bushels of soybeans during the 2020/21 marketing year. But sales have been relatively sluggish this year as farmers are holding grain as a hedge against the weak peso. Sales are down 19% year-over-year so far.

Preliminary volume estimates were for 274,091 contracts, jumping above Tuesday’s final count of 195,278.

Wheat

Wheat prices stumbled in Wednesday’s session on a round of technical selling that eroded prices throughout the session. July Chicago SRW futures dropped 12 cents to $7.2975, July Kansas City HRW futures lost 19.25 cents to $6.9125, and July MGEX spring wheat futures fell 7.75 cents to $7.6275.

For wheat, USDA’s first glimpse into the 2021/22 marketing year predicts smaller supplies, higher domestic use, lower exports and reduced stocks. All-wheat yield estimates rose 0.3 bushels higher year-over-year to 50.0 bushels per acre. Domestic use is expected to rise 6%, primarily due to higher feed, residual and food use. Food use could rise another 3 million bushels to 963 million bushels, and annual feed and residual use is projected at 170 million bushels – the highest level in eight years.

Exports are expected to decline 65 million bushels to a total of 900 million bushels, however. Still, ending stocks are expected to decline 11% to 774 million bushels, falling to a seven-year low. Analysts were expecting a sharper decline, with an average trade guess of 730 million bushels. USDA estimates prices will average $6.50 per bushel, which is a year-over-year increase of $1.45, if realized.

Russian wheat exports between January and March reached 321 million bushels, which was a 19% increase versus the first three months of 2020, according to official customs data. Russia is the world’s No. 1 wheat exporter.

French farm office FranceAgriMer slightly lowered its monthly forecast for 2020/21 soft wheat ending stocks to 95.5 million bushels, falling to the lowest levels since 2013/14.

Japan is looking to purchase 2.9 million bushels of feed wheat and 4.6 million bushels of feed barley in a simultaneous buy-and-sell auction that will be held May 19. The grain would be for arrival by October 28.

Preliminary volume estimates were for 93,937 CBOT contracts, sliding slightly below Tuesday’s final count of 112,780.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-May 769.25 750 757.5 -2
21-Jul 731.25 703.5 714.75 -8
Soybeans        
21-May 1677.25 1660.25 1660.5 23
21-Jul 1667.5 1615.25 1642.5 28.25
Soymeal                $/ton        
21-Jul 457.2 445.4 448.8 3.2
Soyoil                    cents/lb        
21-Jul 67.44 64.58 66.4 1.51
Wheat                    $/bushel        
21-May 763 746.5 754.75 -5
21-Jul 751.5 724.25 729.75 -12
KC Wheat        
21-May 672.5   682.75  
21-Jul 720.75 687.5 690.75 -19.25
MPLS Wheat        
21-May     748  
21-Jul 782.25 758.25 765.5 -7.75
Live Cattle             cents/lb        
21-Jun 119.425 118.425 118.55 -0.075
Feeder Cattle         cents/lb        
21-Aug 150.95 148.05 150.95 2.1
Lean Hogs             cents/lb        
21-Jun 112.85 111.6 112.025 0.85
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Jun 66.63 64.97 65.95 0.67
Diesel        
21-Jun 2.081 2.0311 2.0656 0.0239
Unleaded Gasoline   $/gallon        
21-Jun 2.1827 2.1223 2.1598 0.0199
Natural Gas        
21-Jul 3.033 2.971 3.032 0.033
Ethanol Futures        
21-Jul     2.34  
U.S. Dollar Index        
21-Jun 90.785 90.13 90.69 0.566
Gold                      $/ounce        
21-Jun 1844.7 1818.6 1821.7 -14.2
Copper        
21-May 4.835 4.74 4.755 -0.0235
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

 

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