Morning Market Review for April 21, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
China to reduce corn, soymeal volumes in livestock rations. (Comments are updated by 7:30 a.m. Central Time.)

Grains continue higher on spring weather concerns as markets digest potential for new global grain flows

  • Corn up 1-4 cents
  • Soybeans up 2-4 cents, soyoil up $0.74/lb, soymeal down $1.80/ton
  • Wheat up 3-8 cents

*Prices as of 6:50 am CDT.

The latest Feedback from the Field analysis is live on our site! In the first installment of the 2021 series, farmers across the country struggle to get a stable start to planting season amid depleted soil moisture levels and unseasonably cold temperatures.

Want to get in on the action?! Click here to take our ongoing farmer survey on crop progress at any point in the 2021 grain season. Our Google Map, updated daily, provides all past responses for farm readers. We can’t wait to hear from you!

Corn

China’s agricultural ministry published a memorandum overnight calling for lower corn and soymeal volumes to be used in hog and poultry rations amid soaring grain prices. The memo seemingly had little effect on the corn complex this morning, though it likely capped the overnight trading session’s gains after Brazilian corn crop ratings fell on an unusually dry stretch recently.

Brazilian corn crop ratings tumbled after a dry spell, sending U.S. corn prices over the $6/bushel benchmark yesterday. About 45% of Mato Grosso’s second crop of corn was planted after the optimal yield window. And in Parana, where 15% of Brazil’s safrinha corn is grown, only 62% of the crop is in good to excellent condition, down 30% in two weeks.

This raises uncertainty about the productivity of the safrinha crop, which is largely shipped into export channels. But as Brazilian domestic usage expands under a growing corn ethanol industry, supplies are likely to tighten in the coming months. U.S. exporters could stand to benefit by picking up some of Brazil’s customers or even shipping the South American supplies to allow its domestic usage rates to continue to rise.

In last week’s weekly Petroleum Inventory Status report from the U.S. Energy Information Administration (EIA), ethanol production and stockpiles drifted lower despite consumer and blender demand for fuel and the fuel additive that mirrored pre-pandemic levels.

But a significant development over the past week is likely to lift weekly ethanol production volumes a little closer to pre-pandemic levels this week. After a year of idling due to the pandemic, ADM resumed production at its ethanol plants in Cedar Rapids, Iowa and Columbus, Nebraska last week.

“We’ve been carefully monitoring a wide variety of industry ethanol conditions, and in recent weeks, we’ve seen consistent signs pointing to accelerating demand for domestic ethanol,” ADM said in statement released a few weeks ago. “Inventories across the industry are steadily coming down, China is importing volumes, we continue to expect driving miles to increase as the pace of vaccinations accelerates, and the EPA’s support of a strong Renewable Fuel Standard is helping drive great blending economics.”

Both plants expect to be at full capacity by late spring to meet the fuel demand in what will hopefully be the post-pandemic economy. But after six weeks of national ethanol output hovering in a narrow range between 38.7 million and 41.0 million gallons/day, today’s report is likely to finally see production break out of that range and inch closer to pre-pandemic levels a year after ethanol demand collapsed due to lockdown measures.

Yesterday’s rally in the corn market past the pivotal $6/bushel benchmark was no small feat, Farm Futures contributing analyst Bryce Knorr points out. But just how exactly did we get to that point after corn prices struggled to stay above $3/bushel less than a year ago?

Knorr points out that amid the pandemic, farmers planned to bulk up corn stocks in 2020. But Mother Nature had other plans. A smaller crop, drought, and derecho damage resulted in a second straight year of below-trendline yields as global demand – namely from China – soared to new heights.

As the South American corn crop struggles and planting delays mount in the U.S., corn futures prices have set new contract highs in recent days, Knorr reflects in the latest Ag Marketing IQ column. “USDA will keep estimating old crop inventories into the fall, but the market’s focus is turning to new crop as farmers watch snow blanket some field in the Midwest,” Knorr forecasts.

“The government’s first monthly forecast of 2021 crop supply and demand May 12 will set the stage for the next act, of what has already been a remarkable comeback story.”

Soybeans

Soymeal prices edged lower overnight after China’s memo about reducing soymeal rations for hog and poultry diets. Gains in the soybean complex were muted as markets digested a potential shift in global grain flows and ongoing cold weather slowing germination rates in the U.S.

Cargill and Love’s, the nationwide company of gas stations often spotted along interstate truck routes, are teaming up to capture efficiencies as demand for renewable diesel fuel in the U.S. rises. The companies announced yesterday that construction on a renewable diesel plant to be located in Hastings, Nebraska would break ground in the near future as plant operations are slated to begin in Spring 2023.

Once brought online, the plant is estimated to produce 80 million gallons of renewable diesel a year using vegetable oils – largely from soybeans – as well as natural fats, greases, and tallow as feedstock for production.

Rising demand for renewable fuel sources and aligning tax credits for companies expanding into the renewable energy market will likely create a perfect storm of higher demand for agricultural raw materials in the very near future.

Wheat

Growing diplomatic tensions between Russia and Ukraine sent Chicago wheat futures $0.07/bushel higher this morning as markets grow increasingly concerned about soft wheat trade flows from the world’s largest wheat exporting region. Frost concerns and persistent dry weather lifted Kansas City and Minneapolis wheat prices $0.02-$0.05/bushel higher overnight, with gains capped by a stronger dollar.

Weather

Early week rain and snow showers will largely shift into the Eastern Corn Belt and New England today, according to NOAA’s short-range forecasts. Highs today will reach the 40’s and 50’s across much of the Heartland, giving wet soils a chance to warm up and dry out as farmers brace for a ac couple days of break-neck planting progress before another round of showers spreads across the country later this week.

Financials

Coronavirus cases in the U.S. rose by 54,565 cases from yesterday to 31,738,944 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 746 lives to 568,475 deaths as of press time.

The pandemic has certainly taken a toll on everyone over this past year. But the one point that was hammered home during the darkest days of the pandemic last spring was the need for financial acumen in the farming community. Did the pandemic catch your farm’s financial record-keeping off guard? If so, Farm Futures’ Ag Finance Bootcamp on June 15 in Coralville, Iowa may be of great use to you.

The Ag Finance Bootcamp offers farmers insights on managing banker relationships, tax preparation, investment planning, and ultimately, how to become a more financially forward-focused operation. Interested in either the Ag Finance Bootcamp, Farm Futures Summit, or both? Check out the website for registration and more information.

Weather uncertainties continue to play a significant factor in recent market rallies. But the volatility can also plague farmers’ early season strategies as well. Water Street Solutions’ Darren Frye recommends farmers take a beginner’s approach to this growing season to help cope with the unknown in the latest Finance First column.

Using a beginner’s mindset when evaluating marketing plans and overall business strategy can help farmers to examine problems from a different perspective and eventually come up with innovative solutions. “The plans also need to change and shift as situations and conditions shift in the market,” Frye advises. “Business plans are good but plans that are responsive and adaptive are best.”

Trust is a critical part of building better family relationships on a farming operation. K Coe Isom’s Davon Cook finds the best way to cultivate trust in a business can be found through talking straight, clarifying expectations, delivering results, and creating transparency among team members.

These factors are critical to establishing a cohesive work environment especially in a family farm business, Cook emphasizes. “If you are not communicating relevant information, you’re leaving people no choice but to make assumptions that may or may not be correct,” Cook points out in the latest Family Farm Success column.

COVID-19 cases continue to rise across the globe as new mutations of the virus spread and infect more effectively and efficiently than strains previously identified last year. Japan and India are currently struggling to control the virus as health officials grow increasingly concerned that the high rate of spread could weaken resistance to current vaccines.

Traders are similarly growing concerned, slowing momentum on a furious recent rally as the world awaits the next steps. U.S. equity futures markets took a pause this morning on the sentiment, with S&P 500 futures trading 0.02% lower at $4,125.75 at last glance.

Morning Ag Commodity Prices - 4/21/2021
Contract Units High Low Last Net Change % Change
MAY '21 CORN $ / BSH  6.145 6.0825 6.1025 0.0375 0.62%
JUL '21 CORN $ / BSH  5.985 5.9275 5.945 0.025 0.42%
SEP '21 CORN $ / BSH  5.5225 5.47 5.4825 0.01 0.18%
DEC '21 CORN $ / BSH  5.3325 5.27 5.2925 0.0075 0.14%
MAR '22 CORN $ / BSH  5.3925 5.335 5.3525 0 0.00%
MAY '22 CORN $ / BSH  5.425 5.3675 5.3825 -0.0075 -0.14%
JUL '22 CORN $ / BSH  5.43 5.3725 5.4025 0.0025 0.05%
MAY '21 SOYBEANS $ / BSH  14.875 14.72 14.745 0.025 0.17%
JUL '21 SOYBEANS $ / BSH  14.7225 14.57 14.595 0.0175 0.12%
AUG '21 SOYBEANS $ / BSH  14.26 14.12 14.1425 0.0125 0.09%
SEP '21 SOYBEANS $ / BSH  13.4675 13.3625 13.3625 0 0.00%
NOV '21 SOYBEANS $ / BSH  13.085 12.99 13.0075 0.0125 0.10%
JAN '22 SOYBEANS $ / BSH  13.06 12.975 12.99 0.0125 0.10%
MAR '22 SOYBEANS $ / BSH  12.7925 12.7025 12.73 0.025 0.20%
MAY '22 SOYBEANS $ / BSH  12.715 12.6475 12.675 0.0425 0.34%
JUL '22 SOYBEANS $ / BSH  12.6825 12.63 12.63 0.0325 0.26%
MAY '21 SOYBEAN OIL  $ / LB 59.66 58.25 59.03 0.71 1.22%
JUL '21 SOYBEAN OIL  $ / LB 56.46 55.1 55.81 0.67 1.22%
MAY '21 SOY MEAL $ / TON 412.2 408 408.6 -1.8 -0.44%
JUL '21 SOY MEAL $ / TON 416.4 412.6 412.9 -1.8 -0.43%
AUG '21 SOY MEAL $ / TON 413.2 409.7 410 -1.9 -0.46%
SEP '21 SOY MEAL $ / TON 408 404.9 405.2 -1.6 -0.39%
OCT '21 SOY MEAL $ / TON 401 398 398.1 -1.6 -0.40%
MAY '21 Chicago SRW $ / BSH  6.73 6.605 6.66 0.0625 0.95%
JUL '21 Chicago SRW $ / BSH  6.7425 6.62 6.6725 0.06 0.91%
SEP '21 Chicago SRW $ / BSH  6.76 6.6425 6.69 0.055 0.83%
DEC '21 Chicago SRW $ / BSH  6.8025 6.6925 6.735 0.05 0.75%
MAR '22 Chicago SRW $ / BSH  6.8475 6.7425 6.7825 0.0475 0.71%
MAY '21 Kansas City HRW $ / BSH  6.3025 6.215 6.23 0.0225 0.36%
JUL '21 Kansas City HRW $ / BSH  6.3775 6.2875 6.305 0.025 0.40%
SEP '21 Kansas City HRW $ / BSH  6.4375 6.3525 6.365 0.0225 0.35%
DEC '21 Kansas City HRW $ / BSH  6.5225 6.4425 6.45 0.02 0.31%
MAR '22 Kansas City HRW $ / BSH  6.5975 6.5575 6.5825 0.0725 1.11%
MAY '21 MLPS Spring Wheat $ / BSH  6.79 6.7125 6.7525 0.0625 0.93%
JUL '21 MLPS Spring Wheat $ / BSH  6.865 6.77 6.825 0.065 0.96%
SEP '21 MLPS Spring Wheat $ / BSH  6.9175 6.84 6.89 0.08 1.17%
DEC '21 MLPS Spring Wheat $ / BSH  6.9675 6.88 6.9325 0.0725 1.06%
MAR '22 MLPS Spring Wheat $ / BSH  7 6.9 7 0.105 1.52%
JUN '21 ICE Dollar Index $ 91.37 91.11 91.33 0.103 0.11%
 JU '21 Light Crude $ / BBL  62.56 61.64 61.76 -0.91 -1.45%
 JU '21 Light Crude $ / BBL  62.47 61.57 61.71 -0.89 -1.42%
MAY '21 ULS Diesel $ /U GAL 1.8764 1.8549 1.8585 -0.0216 -1.15%
JUN '21 ULS Diesel $ /U GAL 1.879 1.857 1.8609 -0.0211 -1.12%
MAY '21 Gasoline $ /U GAL 2.018 1.9942 1.9952 -0.0222 -1.10%
JUN '21 Gasoline $ /U GAL 2.0217 1.9979 1.9996 -0.0213 -1.05%
APR '21 Feeder Cattle $ / CWT 0 #N/A 137.575 0 0.00%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 142.775 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 120.575 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 119.2 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 108.075 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 106.35 0 0.00%
APR '21 Class III Milk $ / CWT 17.67 #N/A 17.68 0 0.00%
MAY '21 Class III Milk $ / CWT 19.37 19.27 19.3 -0.02 -0.10%
JUN '21 Class III Milk $ / CWT 19.26 #N/A 19.3 0 0.00%
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