Afternoon Market Recap for May 6, 2021

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Grain rally rumbles onward.

Corn, soybeans and wheat continue to push higher Thursday

Fears of dwindling domestic and global grain supplies continue to be at the forefront of discussion on Thursday, which helped grain prices move even higher after another round of technical buying today. Corn prices firmed another 1.5% higher today, with soybeans finding similar gains. Wheat prices were more variable, but some contracts climbed as much as 1.75% by the close.

The latest U.S. Drought Monitor updates, out this morning, show a few problematic areas scattered across the Midwest and Plains. The Dakotas continue to struggle with overly dry conditions, as does much of Iowa and parts of Illinois and Indiana. Nationwide, 65.6% of the country is affected by some level of drought through May 4, down from 68.3% a week ago. NOAA’s 8-to-14-day outlook predicts widespread seasonally wet weather for much of the central U.S. between May 13 and May 19.

On Wall St., the Dow flirted with new record highs after climbing another 132 points in afternoon trading to reach 34,363. Jobless claims fell to their lowest level of the pandemic era, which boosted investor confidence today. A strong performance tomorrow will help the Dow break its current two-week losing streak. Energy futures tilted lower, with crude oil down 1.25% to fall back below $65 per barrel despite falling U.S. inventories, on worries that India’s surge in coronavirus cases will curb demand. Gasoline was also down around 1.25%, with diesel falling 0.5%. The U.S. Dollar softened moderately.

On Wednesday, commodity funds were net buyers of corn (+10,500), soybeans (+3,500), soymeal (+3,000) and CBOT wheat (+9,500) contracts but were net sellers of soyoil (-500).

Corn

Corn prices have been on a clear upward trajectory on a blend of bullish supply, demand and weather fundamentals since the beginning of April, and they moved even higher Thursday on another round of technical buying. May futures added 7.75 cents to $7.61, with July futures up 11.25 cents to $7.1975.

Corn basis bids fell 5 to 8 cents lower at three interior river terminals and dropped 3 cents at an Ohio elevator while holding steady across other Midwestern locations on Thursday.

Old crop corn sales slumped 72% below the prior four-week average, to 5.4 million bushels. New crop sales only contributed another 4.2 million bushels, for a tepid total of 9.6 million bushels. Trade guesses ranged between 11.8 million and 59.1 million bushels. However, cumulative totals for the 2020/21 marketing year still have a huge lead over last year’s pace, reaching 1.713 billion bushels.

Corn export shipments were more robust, climbing 19% above the prior four-week average to 86.4 million bushels. China was the No. 1 destination, with 27.5 million bushels.

Wondering when the rally is going to reach its peak? Naomi Blohm, senior market adviser with Stewart Peterson, has some advice. “While it is nearly improbable to know for sure when the top will be, we can apply a few analysis tools to corn and soybean markets that might suggest approximately when and where that high may occur,” she writes in the latest Ag Marketing IQ blog. Blohm offers five factors to track that could help shape prices moving forward – click here to learn more.

Is this a weather rally or a supply/demand rally? What other factors are pushing prices higher right now? We took a closer look in the latest Midweek Markets podcast – click here to listen.

South Korean feed makers have purchased around 10.9 million bushels of animal feed corn from optional origins in an international tender that closed earlier today. The grain is for arrival beginning in September.

Preliminary volume estimates were for 493,615 contracts, trending 18% above Wednesday’s final count of 418,035.

Soybeans

Soybean prices saw plenty of positive forward momentum after another round of technical buying Thursday lifted prices more than 1.5% higher in a sometimes-choppy session. May futures rose 21.5 cents to $16.0350, while July futures climbed 27 cents to $15.69.

Soybean basis bids trended 5 cents higher at an Indiana processor and slid a penny lower at an Illinois river terminal while holding steady elsewhere across the central U.S. today.

Soybean export sales saw old crop sales tumble 86% below the prior four-week average, to 6.1 million bushels. New crop sales added 7.1 million bushels, for a total of 13.2 million bushels. This was in the middle of trade guesses, which were as low as net zero and as high as 29.4 million bushels. Cumulative totals for the 2020/21 marketing year are still more than 800 million bushels ahead of last year’s pace, with 2.070 billion bushels so far.

Soybean export shipments were down 22% week-over-week and 20% below the prior four-week average, with 9.7 million bushels. Mexico was the No. 1 destination, with 3.5 million bushels.

Curious about how planting progress is unfolding across the Midwest so far this spring? Farmers are sharing their stories on Feedback From The Field, and you can, too. Click here to see the latest updates and find out how to contribute.

Preliminary volume estimates were for 208,954 contracts, firming moderately above Wednesday’s final count of 162,895.

Wheat

Wheat prices continued to find positive traction Thursday on healthy demand fundamentals and some weather concerns across the Great Plains, with spillover strength from corn and soybeans applying additional tailwinds today. July Chicago SRW futures added 11 cents to $7.5550, July Kansas City HRW futures rose 12.5 cents to $7.2950, and July MGEX spring wheat futures picked up 8.75 cents to $7.9075.

Old crop wheat export sales fell to a marketing-year low last week, with net reductions of 3.5 million bushels. New crop sales fared much better, with 14.7 million bushels, leaving a balance of 11.2 million bushels. That was in line with analyst expectations, who offered trade guesses ranging between 3.7 million and 27.6 million bushels. Cumulative totals for the 2020/21 marketing year remain slightly ahead of last year’s pace, with 826.1 million bushels.

Wheat export shipments were more robust, staying 6% above the prior four-week average with 21.5 million bushels. China was the No. 1 destination, with 7.3 million bushels.

Bangladesh has received multiple offers in its international tender to purchase 1.8 million bushels of wheat from optional origins that recently closed. Offers are still being considered, and the grain is for shipment 40 days after a contract is signed.

Preliminary volume estimates were for 129,945 CBOT contracts, moving moderately ahead of Wednesday’s final count of 86,707.

Settlement Prices for Key Commodities 
  High Low Last Change
Corn                     $/bushel  cents/bu    
21-May 768 746.25 759.5 7.75
21-Jul 722.5 705.5 718.75 11.25
Soybeans        
21-May 1609 1589.75 1605.5 21.5
21-Jul 1571 1543 1569.5 27
Soymeal                $/ton        
21-Jul 430.1 424.3 427.3 4.5
Soyoil                    cents/lb        
21-Jul 64.85 63.58 64.35 1.16
Wheat                    $/bushel        
21-May 763.5 745 764.25 8.5
21-Jul 755.75 732 753.25 11
KC Wheat        
21-May 712.75 709.5 717.75 3
21-Jul 729.75 709.25 726.75 12.5
MPLS Wheat        
21-May 773.5   784.5  
21-Jul 792.75 774.5 790.5 8.75
Live Cattle             cents/lb        
21-Jun 115.625 113.4 115.225 0.8
Feeder Cattle         cents/lb        
21-Aug 145.1 141.525 143.25 -1.975
Lean Hogs             cents/lb        
21-Jun 115 113.1 114.475 0.05
Crude Oil  $/barrel *Energy prices may not represent final settlements      
21-Jun 65.98 64.5 64.77 -0.86
Diesel        
21-Jun 2.0116 1.9794 1.9914 -0.0111
Unleaded Gasoline   $/gallon        
21-Jun 2.1543 2.109 2.1142 -0.0371
Natural Gas        
21-Jul 3.014 2.954 2.983 0.001
Ethanol Futures        
21-Jun     2.34  
U.S. Dollar Index        
21-Jun 91.38 90.88 90.93 -0.363
Gold                      $/ounce        
21-Jun 1818.6 1781.8 1813.8 29.7
Copper        
21-May 4.62 4.515 4.616 0.077
Fertilizer Swaps     (as of 04/30)  
DAP Tampa-index              589.5 0
DAP-New Orleans              592.5 -3
Urea-New Orleans              417.8 29
Urea-Middle East              348.0 11
Urea-Black Sea              329.0 0
UAN (32%) New Orleans              316.9 -5.51
 
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