Morning Market Review for April 22, 2021

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Soy futures surge past $15/bushel benchmark. (Comments are updated by 7:30 a.m. Central Time.)

Planting delays continue to drive up prices in the grains complex

  • Corn up 2-6 cents
  • Soybeans up 11-16 cents, soyoil up $1.39/lb, soymeal down $1.40/ton
  • Wheat up 7-9 cents

*Prices as of 6:50 am CDT.

Corn

Corn prices notched a new eight-year high overnight on continued concerns about planting delays across the Midwest amid unseasonably cool soil temperatures. Deteriorating corn crop conditions in Brazil also contributed to the uptick in old crop corn futures prices overnight.

USDA releases its weekly export sales report today. Trade estimates suggest 2020/21 corn export sales are likely to range between 11.8 million – 31.5 million bushels while 2021/22 sales are anticipated to come in at 2.0 million – 11.8 million bushels for the week ending April 15. No large daily export sales of corn were reported to USDA during the April 8 – 15 reporting period.

Weekly ethanol production reported yesterday by the U.S. Energy Information Administration (EIA) saw a plateau in ethanol output and refiner and blender demand for the week ending April 16. Ethanol output remained unchanged at 39.5 million gallons/day while blender and refiner input steadied at 37.4 million gallons/day for a second straight week.

The steady readings came amid a 2% increase in weekly gasoline consumption, which returned to pre-pandemic levels last week. Inventory levels dropped to 858.7 million gallons on strong input rates, the lowest stocks reading in five months.

The news came as a bit of a surprise after two ADM plants in Columbus, Nebraska and Cedar Rapids, Iowa came back online last week a year after being idled due to the pandemic. The combined plants could add an extra 6.5 million gallons of weekly production to the weekly national ethanol output figure when the plants return to full capacity, suggesting that ethanol production readings could return to pre-pandemic levels just in time for summer travel season to begin.

Tuesday’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

Soybean futures matched June 2014 highs overnight, soaring past the $15/bushel benchmark as concerns mount about planting delays in the U.S. amid unfavorable weather conditions. The delays reduce the likelihood of higher acreage to be planted this spring, which would constrain tightening soybean stocks over the next year.

Weekly 2020/21 soybean export sales for the week ending April 15 are expected to be light in today’s report, with potential cancellations outweighing new sales. Trade estimates place today’s expected sales range between -3.7 million and 9.2 million bushels for old crop export sales and 9.2 million – 18.4 million bushels for new crop export sales.

A flurry of large sales booked by China and Bangladesh last week will help offset potential cancellations. USDA reported a 2.0-million-bushel sale of 2020/21 soybeans to Bangladesh last week and two 2021/22 sales totaling 6.9 million bushels to China (4.9M bu.) and Bangladesh (2.0M bu.)

Soybean prices charged past $15/bushel overnight, even amid shifting demand sentiments for soymeal and corn from China. Farm Futures senior editor Ben Potter and I break down the recent rally in the latest Midweek Markets podcast.

Wheat

Cool weather conditions overnight across the U.S. Plains boded unfavorably for both winter and spring wheat crops. Rising Chinese demand for feed and food wheat also rewarded the wheat complex this morning, especially amid a weakening dollar.

As China scours the world for cheap feed alternatives for its hog and poultry herds, U.S. exporters will likely have to compete more closely with French wheat exporters. China has booked an estimated 18.4 million – 22.0 million bushels of 2021/22 soft wheat from France for delivery in August 2021.

China has become one of France’s largest wheat buyers over the past two years, stepping in to supply the world’s second largest economy with wheat for milling and feed after geopolitical tensions between China and other countries (the U.S., Australia) sent China in search of other sources of wheat.

Old crop wheat export sales are likely to be slim in today’s export sales report from USDA. Trade estimates peg today’s 2020/21 total for the week ending April 15 as high as 7.3 million bushels. New crop sales are expected to be more robust, as only a handful of weeks remain in the 2020/21 marketing year for wheat. Analyst expectations for new crop sales range between 7.3 million – 18.4 million bushels.

Argentina will plant 16.1 million acres of wheat this year for the 2021/22 growing season. Acreage is expected to remain fairly identical to last year’s growing season. Wheat planting in Argentina will begin in just a couple weeks.

However, the ongoing drought due to La Niña weather patterns over the past year could delay sowing. Rising fertilizer costs and competitive profit prospects from corn and soybeans could reduce wheat acreage. A shift in political winds could also impact sowings. If the Argentine government raises taxes on wheat exports, farmers will also be more likely to opt for alternative crop rotations. Argentina is the world’s seventh largest exporter of wheat.

Weather

Temperatures across the Heartland will warm into the 50s and 60s today, allowing soil temperatures to warm to more conducive conditions for plant germination, according to NOAA’s short-range forecasts.

Scattered snow showers this afternoon across the Central Plains are likely to turn to rain by this evening, pushing east toward the Upper Mississippi River Valley by tomorrow afternoon. Total accumulation is expected to be light – likely not more than a half an inch – but could still delay planting progress if temperatures remain on the cool side over the weekend.

Financials

Coronavirus cases in the U.S. rose by 124,043 cases from yesterday to 31,862,987 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 929 lives to 569,404 deaths as of press time.

The current economic environment with low interest rates provides farmers a significant incentive to make farmland purchases. But even if cash flows support a new land grab, there is still the tax commitment to consider.

Some land costs can actually be used to decrease tax liabilities, Bob Krogmeier, a CPA at CliftonLarsonAllen LLP, points out. In the latest By the Books column, Krogmeier offers farmers a few helpful tricks to reduce tax costs associated with land purchases.

U.S. stock indices traded lower this morning, with profit takers taking advantage of yesterday’s higher close. Investors are waiting more first quarter earnings results from companies this week to offset rising COVID-19 cases in the U.S. and abroad that could stall a return to normal economic activity. S&P 500 futures shed 0.13% in overnight trading to $4,159.50 on the sentiments.

Morning Ag Commodity Prices - 4/22/2021
Contract Units High Low Last Net Change % Change
MAY '21 CORN $ / BSH  6.375 6.235 6.32 0.065 1.04%
JUL '21 CORN $ / BSH  6.1775 6.045 6.12 0.055 0.91%
SEP '21 CORN $ / BSH  5.65 5.5475 5.61 0.04 0.72%
DEC '21 CORN $ / BSH  5.445 5.34 5.405 0.04 0.75%
MAR '22 CORN $ / BSH  5.4925 5.3925 5.4525 0.03 0.55%
MAY '22 CORN $ / BSH  5.52 5.43 5.49 0.035 0.64%
JUL '22 CORN $ / BSH  5.525 5.4325 5.49 0.03 0.55%
MAY '21 SOYBEANS $ / BSH  15.2325 14.9825 15.165 0.1925 1.29%
JUL '21 SOYBEANS $ / BSH  15.045 14.8 14.9775 0.1825 1.23%
AUG '21 SOYBEANS $ / BSH  14.5425 14.325 14.48 0.1625 1.13%
SEP '21 SOYBEANS $ / BSH  13.6925 13.505 13.6475 0.1425 1.06%
NOV '21 SOYBEANS $ / BSH  13.2775 13.1 13.235 0.1325 1.01%
JAN '22 SOYBEANS $ / BSH  13.25 13.075 13.2125 0.1375 1.05%
MAR '22 SOYBEANS $ / BSH  12.985 12.82 12.94 0.1275 1.00%
MAY '22 SOYBEANS $ / BSH  12.8925 12.7575 12.8625 0.1275 1.00%
JUL '22 SOYBEANS $ / BSH  12.8325 12.8 12.825 0.13 1.02%
MAY '21 SOYBEAN OIL  $ / LB 61.79 60.22 61.59 1.4 2.33%
JUL '21 SOYBEAN OIL  $ / LB 58.47 56.93 58.29 1.35 2.37%
MAY '21 SOY MEAL $ / TON 417.3 412.6 415.1 2.8 0.68%
JUL '21 SOY MEAL $ / TON 421 416.2 418.6 2.5 0.60%
AUG '21 SOY MEAL $ / TON 417.3 413 415.2 2.2 0.53%
SEP '21 SOY MEAL $ / TON 411.3 407.3 409.6 2.1 0.52%
OCT '21 SOY MEAL $ / TON 403.3 399.7 402.7 2.3 0.57%
MAY '21 Chicago SRW $ / BSH  6.8275 6.7375 6.8125 0.08 1.19%
JUL '21 Chicago SRW $ / BSH  6.84 6.755 6.83 0.08 1.19%
SEP '21 Chicago SRW $ / BSH  6.8475 6.7675 6.84 0.0775 1.15%
DEC '21 Chicago SRW $ / BSH  6.885 6.8075 6.88 0.075 1.10%
MAR '22 Chicago SRW $ / BSH  6.92 6.855 6.9075 0.06 0.88%
MAY '21 Kansas City HRW $ / BSH  6.395 6.3075 6.3875 0.08 1.27%
JUL '21 Kansas City HRW $ / BSH  6.465 6.38 6.4575 0.08 1.25%
SEP '21 Kansas City HRW $ / BSH  6.5225 6.4525 6.5175 0.08 1.24%
DEC '21 Kansas City HRW $ / BSH  6.6075 6.525 6.6 0.075 1.15%
MAR '22 Kansas City HRW $ / BSH  6.6875 6.6525 6.685 0.0775 1.17%
MAY '21 MLPS Spring Wheat $ / BSH  6.8875 6.7875 6.8775 0.0925 1.36%
JUL '21 MLPS Spring Wheat $ / BSH  6.9625 6.8525 6.945 0.0925 1.35%
SEP '21 MLPS Spring Wheat $ / BSH  7.0125 6.9075 7.0125 0.0975 1.41%
DEC '21 MLPS Spring Wheat $ / BSH  7.0625 6.9675 7.0625 0.09 1.29%
MAR '22 MLPS Spring Wheat $ / BSH  7.05 7.0025 7.05 0.0475 0.68%
JUN '21 ICE Dollar Index $ 91.185 90.97 91.035 -0.094 -0.10%
 JU '21 Light Crude $ / BBL  61.27 60.61 60.98 -0.37 -0.60%
 JU '21 Light Crude $ / BBL  61.18 60.55 60.92 -0.35 -0.57%
MAY '21 ULS Diesel $ /U GAL 1.8539 1.8383 1.848 -0.0057 -0.31%
JUN '21 ULS Diesel $ /U GAL 1.8557 1.8397 1.8496 -0.0059 -0.32%
MAY '21 Gasoline $ /U GAL 1.9773 1.9608 1.9742 -0.0092 -0.46%
JUN '21 Gasoline $ /U GAL 1.9831 1.9665 1.9787 -0.0094 -0.47%
APR '21 Feeder Cattle $ / CWT 0 #N/A 135.1 0 0.00%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 139.6 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 119.775 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 117.25 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 107.6 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 104.525 0 0.00%
APR '21 Class III Milk $ / CWT 17.66 #N/A 17.7 0 0.00%
MAY '21 Class III Milk $ / CWT 19.16 19.1 19.1 -0.06 -0.31%
JUN '21 Class III Milk $ / CWT 18.93 #N/A 19.19 0 0.00%
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