Afternoon Market Recap for May 7, 2021

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Corn closes with weekly gains of 6.7%

Soybeans and wheat also make major inroads Friday

Grain prices capped off another successful week with another round of grains after a round of technical buying Friday as traders maintain their focus on strong demand and dwindling supplies. Corn prices firmed more than 1.5% today, while soybeans rose another 1% higher. Most wheat contracts also finished Friday’s session nearly 1.5% higher, although spring wheat futures saw much more modest gains today.

Wetter weather is returning to parts of the eastern Corn Belt starting this weekend, with large portions of Illinois, Indiana and Ohio set to see at least 1.5” between Saturday and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. Seasonally wet weather in the central U.S. is likely to extend between May 14 and May 20, according to NOAA’s latest 8-to-14-day outlook. Warmer-than-normal temperatures are likely in the Central Plains during this time.

On Wall St., the Dow climbed another 209 points higher in afternoon trading to a new record high of 34,758 on confidence that the Federal Reserve won’t raise interest rates and continue to engage in bond buying. Energy futures saw mild to moderate gains this afternoon. Crude oil inched up around 0.15%, staying just below $65 per barrel. Diesel rose nearly 1% higher, with gasoline up around 0.75%. The U.S. Dollar softened moderately.

On Thursday, commodity funds were net buyers of all major grain contracts, including corn (+10,000), soybeans (+15,000), soymeal (+13,000), soyoil (+3,000) and CBOT wheat (+6,000).

Corn prices closed with weeklong gains of around 6.7%, with traders still engaged in technical buying Friday amid strong supply fundamentals and some stubborn drought problems, some of which are occurring in key production areas like Iowa and parts of Illinois and Indiana. Today, May futures rose 12.5 cents to $7.72, with July futures up 12.25 cents to $7.31.

Corn basis bids were steady to soft across the central U.S. Friday after falling 1 to 6 cents lower at a handful of Midwestern locations today.

Private exporters have announced two more large corn sales to USDA Friday. The first was for 53.5 million bushels for delivery to China during the 2021/22 marketing year, which begins September 1. The second was for 7.4 million bushels to unknown destinations. Of that total, 3.4 million bushels is for delivery during the current marketing year, with the remaining 4.0 million bushels for delivery in 2021/22.

China is anticipating its 2021 corn production will rise 4.3% year-over-year to 10.708 billion bushels according to official agency forecasts. That’s largely due to an expected acreage rise of 3.3% this year, for a total footprint of around 105.3 million acres.

Ukraine’s grain exports during the current marketing year have dropped more than 23% below the pace set in 2019/20, according to the latest data from the country’s agriculture ministry. That includes corn exports of around 762 million bushels. Ukrainian wheat exports have topped 556 million bushels since last July.

France’s 2021 corn crop is now 89% planted, according to farm office FranceAgriMer. That’s well ahead of least week’s mark of 74% and the prior year’s pace of 76%.

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.

According to past Farm Futures surveys, larger farms can be three times more vulnerable to financial risk. That’s one big reason why we brought on Dick Wittman, Idaho rancher and farm management consultant, as the keynote speaker for the 2021 Farm Futures Business Summit, returning live June 16-17 in Coralville, Iowa. Click here to for a sneak peek at what Wittman and other speakers will cover at this event.

Preliminary volume estimates were for 487,542 contracts, inching slightly below Thursday’s final count of 491,844.

Soybean prices moved another 1% higher on another round of technical buying today, as traders remain focused on historically tight domestic supplies. Spillover strength from corn also proved helpful. May futures firmed 15.5 cents to $16.21, while July futures climbed 20.25 cents to $15.8975.

Soybean basis bids showed some variability at three interior river terminals, firming as much as 7 cents at an Illinois location while softening as much as 5 cents at an Iowa facility. Bids held mostly steady elsewhere across the central U.S. today.

China, which is by far the world’s No. 1 soybean importer, could see its domestic output fall 6.1% this year, to 676 million bushels, according to the country’s National Grain & Oils Information Center.

Statistics Canada reports the country’s canola stocks through March 31 fell 37.7% year-over-year, dropping to 291 million bushels.

Preliminary volume estimates were for 217,652 contracts, moving slightly ahead of Thursday’s final count of 208,719.

Wheat prices trended higher again on Friday as traders continue to track overly dry conditions in large parts of the Great Plains and downward revisions to Russia’s production potential. Spillover strength from corn and soybeans applied additional tailwinds. July Chicago SRW futures added 9.75 cents to $7.63, July Kansas City HRW futures rose 10.75 cents to $7.3750, and July MGEX spring wheat futures picked up 1.5 cents to $7.92.

Russian consultancy IKAR slightly trimmed its estimates for the country’s 2021 wheat crop, now predicting a total haul of 2.903 billion bushels after struggling with overly dry weather in some production regions earlier this year. Russia is the world’s No. 1 wheat exporter.

Statistics Canada estimates that the country’s total wheat stocks are now at 595.2 million bushels, which is a year-over-year decline of 13.6%. Canadian barley stocks are also down 20.5% from a year ago, falling to 128.6 million bushels.

French farm office FranceAgriMer once again lowered its quality ratings for the country’s 2020/21 soft wheat crop, with 79% of the crop now in good-to-excellent condition versus 81% a week ago – citing cool, dry weather through much of April. French barley ratings were unchanged week-over-week.

If you haven’t swung by in the past few days, “7 ag stories you may have missed this week” is one of the easiest ways to quickly catch up. The latest batch of updates includes stories about the permanent closure of CME’s trading pits, the upward trend of beef byproduct sales, a look at India’s bin-busting wheat harvest and more. Click here for the full list.

Preliminary volume estimates were for 102,128 CBOT contracts, sliding below Thursday’s final count of 129,945.

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