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Morning Market Review for April 9, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Rain delays send corn, wheat prices higher. (Comments are updated by 7:30 a.m. Central Time.)

Plus: a preview of today’s WASDE report

  • Corn up 3 cents
  • Soybeans up 1 cent, soyoil down $0.39/lb, soymeal up $2.60/ton
  • Wheat up 4-5 cents

*Prices as of 6:50 am CDT.

Happy WASDE day! Today's monthly World Agricultural Supply and Demand Estimates (WASDE) report will be the second major market report released by USDA in as many weeks. Admittedly, there will not likely be as many changes in this report as in previous ones, especially to supplies.

But that doesn’t mean you should sleep on this month’s report. Here is preview of factors the markets will be watching when today’s report is released.

Farm Futures will provide live coverage and analysis the reports on our website, FarmFutures.com, and on our Twitter page, @FarmFutures. USDA releases the updated data at 11am CDT.

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Last week’s Quarterly Grain Stocks report provided some hints about USDA’s adjustments that are likely in today’s WASDE report. USDA’s National Agricultural Statistics Service (NASS) pared 28 million bushels of corn from December 1, 2020 quarterly stocks last Wednesday, while adding 13 million bushels of soybeans and 29 million bushels of wheat to December 1 inventories.

The adjustments were made due to late-submitted reports from off-farm and commercial storage facilities. We will see the revision in the form of an adjustment to each commodity’s residual and feed usage category from WAOB.

Demand rationing will also be high on the list of factors to watch today, particularly for soybeans. Domestic loading paces have declined significantly in the past month as the Brazilian crop begins to enter international shipping channels. Weekly average soy export loading paces to China over the past eight weeks are over six times lower than the total weekly average shipping rate.

To be sure, the U.S. remains comfortably on track to reach its 2.25-billion-bushel soybean export target for the 2020/21 season. The most significant unknown at this point is the size of the Brazilian crop and how quickly – if at all – the South American country will run out of exportable supplies and force Chinese buyers back to U. S. shores for soybeans.

Domestic soybean crush rates slowed during the February 2021 cold snap, but marketing year to date crush rates remain 4% higher than the same time a year prior as demand for biodiesel continues to strengthen.

The USDA seems more likely to adjust ending stocks for corn lower on increased export demand. Weekly corn export shipments totaled 80.8 million bushels in yesterday’s weekly Export Sales report from USDA – the second highest weekly volume on record, not counting the weeks following government shutdowns. It’s worth noting that five of the largest weekly corn export loading volumes have been reported over the past six weeks.

Chinese demand played a large role in the large corn shipping paces – 28% of last week’s shipments (22.8M bu) were shipped to China. China’s total haul of U.S. corn this year currently registers at 356 million bushels. U.S. exports only shipped 83.1 million bushels of corn to China in the entire 2019/20 marketing year.

But China isn’t the only nation hungry for U.S. corn. Marketing year-to-date corn shipments to the next five largest U.S. buyers (Mexico, Japan, Columbia, South Korea, and Taiwan) are up nearly 25% from the same period in 2019/20. Southeast Asian countries are driving the largest increases, especially South Korea (290% increase), Japan (31%), and Taiwan (188%).

World Ending Stocks

Global wheat stocks are likely to see few shifts in ending stocks revisions in tomorrow’s report. And there isn’t much of a new story there – global supplies are likely to remain high to close out 2020/21 and are expected to grow even higher as top exporters Russia, the European Union, and Ukraine see favorable growing conditions. Expect the supply increases to be largely offset by strengthening global feed demand.

The real story will lie with corn and soybean global stocks. Any revisions to U.S. demand estimates and South American supply forecasts will tighten global supplies. But as soybean stocks remain tighter than those of corn, the oilseed complex could see more bullish trading activity as USDA’s forecasts are updated.

South American Corn Soy Production

Corn and soybean futures prices will likely see the most price action from any revisions USDA applies to South American grain production estimates. Brazil’s government ag forecasting agency, Conab, released updated production estimates this morning for the current crops under production.

Conab expects Brazil’s total 2020/21 corn crop will rise nearly 1% from March 2021 estimates to 4.290 billion bushels. However, estimates for the safrinha, or second rotation, corn crop fell 0.2% from last month as the majority of the crop has been planted outside of the optimal yield window to 3.252 billion bushels.

Brazil exports most of its safrinha corn crop, so any USDA reductions to Brazil’s 2020/21 corn production will likely result in an increase in U.S. corn exports. However, recent USDA attaché reports suggest that the WAOB could cut Brazil’s corn estimate down to 4.134 billion bushels.

Conab also forecasts the 2020/21 soybean crop to register 4.98 billion bushels, slightly higher from March estimates despite quality concerns amid excessive rainfall during the harvest season. USDA attaché projections indicate USDA will leave Brazil’s 2020/21 soybean production total at 4.924 billion bushels.

USDA World Production

Corn

Corn prices edged a couple cents higher overnight after China more than doubled its 2020/21 corn import targets to 866.1 million bushels in its latest Chinese Agricultural Supply and Demand Estimate report released overnight. Weather concerns continue to keep corn futures near an eight-year high as traders finalize positions ahead of this morning’s WASDE report.

Total Farm Marketing’s Naomi Blohm expects that today’s WASDE report could push grain markets out of the current trading patterns. “The agency [USDA] hasn’t shown much for demand changes or global supply changes in over two months, so trade is anxious for some fresh news,” Blohm writes in the latest Ag Marketing IQ column.

Corn has the largest potential for a bullish price run today. Blohm cites exports as an opportunity to increase usage targets for 2020/21 corn and speculates that ethanol could see a boost as well. “Corn used in last week’s production was estimated to be near 98.5 million bushels, ahead of the 96 million bushels needed each week to keep corn use for ethanol in line with the USDA projection of 4.95 billion bushels,” Blohm analyzes.

Blohm also notes that ADM will restart ethanol production at its plants in Cedar Rapids, Iowa and Columbus, Nebraska in the coming week. Farmers near those facilities should keep an eye on cash prices in the weeks to come, Blohm cautions. “Curiosity will get the best of me as I wonder how a start-up of those two facilities will affect cash prices and basis for corn in those Midwestern areas.”

Soybeans

Soybean futures prices were largely flat to a partial penny higher in the overnight trade. The minor gains to new crop futures suggested that the market isn’t too nervous – yet – about rains in the Midwest that could potentially delay planting progress. Traders expect domestic soybean stocks to remain unchanged today, so any downward stock revisions could cause upward price momentum.

Land values in Brazil are rising as commodity prices offer farmers comfortable working capital margins. And Commstock Investment’s Matthew Kruse points out that it is making finding land to rent more challenging. Kruse takes a deep dive into the dynamics of Brazilian land values in a recent Ag Marketing IQ column..

Wheat

Wheat prices continued $0.04-$0.06/bushel higher this morning as dry weather in the Plains continues to damper spring wheat planting progress. The wheat complex derived some of its strength from underlying gains in the corn market.

Weather conditions in Europe have presented some frost concerns in recent days, which could limit yield potential from the world’s largest wheat producer. Dry weather concerns are also raising new worries about yield damage as Europe’s winter wheat crop progress through the jointing stage.

Weather

Planting progress will largely remain at a standstill across the Heartland this weekend, according to NOAA’s short-range forecasts. Rain showers will continue to linger over the Upper Great Lakes states today while the Southern and Central Plains see another round of spring thunderstorms.  

Rains in the Plains tomorrow will push north into the Upper Midwest and Eastern Corn Belt by Sunday. The back-to-back rain systems will likely keep farmers out of the fields through at least the first part of next week.

After last week’s showers subsided, dry weather settled into the Heartland, sending drought conditions across the U.S., as reported in the University of Nebraska’s weekly drought monitor, 0.95% higher to 64.36%.

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Soil moisture levels grew more depleted in the Midwest, Northeast, South, and West through the week ending April 6. Areas of the Plains benefited from rainfall, but the extreme drought areas in the Dakotas grew from the previous week. This is especially important because prevent plant dates are approaching for corn and spring wheat in that area. The extremely dry soils could reduce acreage in both states, which would shrink supplies that are already projected to be tight this year.

There is some hope on the horizon – updated forecasts released yesterday point to easing La Niña weather patterns by the end of April. La Niña crop years typically result in dry weather across the U.S., South America, and the Black Sea region in Europe. While that could mean more showers in the coming months, NOAA’s short-term forecasts suggest a dry planting season this year.

Morning Ag Commodity Prices - 4/9/2021
Contract Units High Low Last Net Change % Change
MAY '21 CORN $ / BSH  5.82 5.77 5.815 0.0175 0.30%
JUL '21 CORN $ / BSH  5.65 5.5975 5.6425 0.0225 0.40%
SEP '21 CORN $ / BSH  5.1325 5.0925 5.1275 0.0275 0.54%
DEC '21 CORN $ / BSH  4.9875 4.94 4.9775 0.03 0.61%
MAR '22 CORN $ / BSH  5.0525 5.01 5.05 0.035 0.70%
MAY '22 CORN $ / BSH  5.09 5.0525 5.0875 0.0325 0.64%
JUL '22 CORN $ / BSH  5.1075 5.07 5.1 0.0275 0.54%
MAY '21 SOYBEANS $ / BSH  14.19 14.0725 14.155 0.0025 0.02%
JUL '21 SOYBEANS $ / BSH  14.135 14.02 14.1 0.0025 0.02%
AUG '21 SOYBEANS $ / BSH  13.7675 13.67 13.735 -0.0025 -0.02%
SEP '21 SOYBEANS $ / BSH  13.0275 12.9725 13.025 0.0025 0.02%
NOV '21 SOYBEANS $ / BSH  12.7475 12.685 12.7475 0.015 0.12%
JAN '22 SOYBEANS $ / BSH  12.725 12.675 12.725 0.01 0.08%
MAR '22 SOYBEANS $ / BSH  12.44 12.39 12.44 0.0075 0.06%
MAY '22 SOYBEANS $ / BSH  12.3825 12.34 12.37 -0.0025 -0.02%
JUL '22 SOYBEANS $ / BSH  12.3625 12.3625 12.3625 0.005 0.04%
MAY '21 SOYBEAN OIL  $ / LB 53.9 52.83 52.95 -0.43 -0.81%
JUL '21 SOYBEAN OIL  $ / LB 51.65 50.91 50.98 -0.43 -0.84%
MAY '21 SOY MEAL $ / TON 409.7 405.3 409.7 2.9 0.71%
JUL '21 SOY MEAL $ / TON 413.4 409.1 413.3 2.9 0.71%
AUG '21 SOY MEAL $ / TON 409.5 405.4 409.5 3 0.74%
SEP '21 SOY MEAL $ / TON 403.9 399.9 403.9 3.2 0.80%
OCT '21 SOY MEAL $ / TON 396.6 393.8 396.5 2.4 0.61%
MAY '21 Chicago SRW $ / BSH  6.335 6.2725 6.3225 0.035 0.56%
JUL '21 Chicago SRW $ / BSH  6.3475 6.285 6.34 0.035 0.56%
SEP '21 Chicago SRW $ / BSH  6.355 6.3075 6.3525 0.0325 0.51%
DEC '21 Chicago SRW $ / BSH  6.4 6.355 6.3975 0.03 0.47%
MAR '22 Chicago SRW $ / BSH  6.44 6.395 6.435 0.0275 0.43%
MAY '21 Kansas City HRW $ / BSH  5.8275 5.7675 5.805 0.04 0.69%
JUL '21 Kansas City HRW $ / BSH  5.9 5.8375 5.8775 0.04 0.69%
SEP '21 Kansas City HRW $ / BSH  5.9675 5.91 5.9475 0.0425 0.72%
DEC '21 Kansas City HRW $ / BSH  6.065 6.0175 6.0525 0.0475 0.79%
MAR '22 Kansas City HRW $ / BSH  6.15 6.1025 6.1375 0.04 0.66%
MAY '21 MLPS Spring Wheat $ / BSH  6.445 6.4025 6.445 0.0425 0.66%
JUL '21 MLPS Spring Wheat $ / BSH  6.5175 6.475 6.5175 0.0425 0.66%
SEP '21 MLPS Spring Wheat $ / BSH  6.5925 6.5475 6.5925 0.045 0.69%
DEC '21 MLPS Spring Wheat $ / BSH  6.68 6.64 6.68 0.0425 0.64%
MAR '22 MLPS Spring Wheat $ / BSH  6.7075 6.7075 6.7075 0.0025 0.04%
JUN '21 ICE Dollar Index $ 92.34 92.035 92.25 0.181 0.20%
 MA '21 Light Crude $ / BBL  59.95 59.13 59.6 0 0.00%
 JU '21 Light Crude $ / BBL  59.94 59.13 59.6 -0.03 -0.05%
MAY '21 ULS Diesel $ /U GAL 1.8124 1.7893 1.8032 -0.0066 -0.36%
JUN '21 ULS Diesel $ /U GAL 1.8148 1.7915 1.8053 -0.0065 -0.36%
MAY '21 Gasoline $ /U GAL 1.9632 1.94 1.9559 -0.0034 -0.17%
JUN '21 Gasoline $ /U GAL 1.9635 1.9402 1.9568 -0.0029 -0.15%
APR '21 Feeder Cattle $ / CWT 0 #N/A 147.125 0 0.00%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 151.6 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 124.15 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 125.025 0 0.00%
APR '21 Live Hogs $ / CWT 0 #N/A 103.475 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 105.425 0 0.00%
APR '21 Class III Milk $ / CWT 17.56 #N/A 17.63 0 0.00%
MAY '21 Class III Milk $ / CWT 19.4 19.4 19.4 0 0.00%
JUN '21 Class III Milk $ / CWT 19.65 19.56 19.56 -0.06 -0.31%
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