Morning Market Review for August 2, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Wheat rises on global supply concerns. (Comments are updated by 7:30 a.m. Central Time.)

Corn, soy fall on favorable weather forecasts

  • Corn down 2-4 cents
  • Soybeans down 10-12 cents, soymeal up $0.20/ton, soyoil down $1.32/lb
  • Chicago & Kansas City wheat up 13-17 cents; Minneapolis wheat up 5-11 cents

*Prices as of 6:50 am CDT.

Good Morning!  More moderate temperatures are on the horizon for the Corn Belt. How are your crops surviving the heat? Click here to take our ongoing Feedback from the Field survey on 2021 crop conditions. Our Google Map, updated daily, provides all past responses for farm readers. Check out our latest Feedback from the Field analysis to see the most recent farmer comments from around the country.

Corn

It was a quiet weekend in the grain markets, with much of the trade focused on improving weather conditions across the Midwest (and probably the Olympics for certain market analysts!). Futures prices in Chicago started out the month traded $0.02-$0.04/bushel lower this morning as favorable weather forecasts raised expectations for improving crop conditions in today’s weekly Crop Progress report expected from USDA.

An early frost in Brazil had minimal impacts on the country’s safrinha corn crop, which was mostly harvested ahead of the worst seasonal cold snap for the country in almost 30 years. But Brazil’s other key crops, including coffee, oranges, and sugar cane, could be impacted. Keep that fun fact in mind when you have to shell out some extra change for your morning cup of joe.

Soybeans

Lower energy prices due in large part to a sharp drop in China’s manufacturing activity weighed on prospects for global edible oil demand overnight, dragging soyoil and soybean prices down in tandem. Soybean prices also traded $0.10-$0.12/bushel this morning on improving weather forecasts across the Midwest as soybeans enter peak reproductive stages in the coming weeks.

The European Union will continue to impose tariffs on U.S. biodiesel imports for another five years, according to comments released overnight. The European Commission determined that U.S. production remains at artificially low levels due in large part to government subsidies.

The Commission also purported that some U.S. biodiesel exports to developing countries were at prices lower than the cost of production. The ruling on the anti-dumping tariffs, which range up to $235.36/tonne, is not a surprise to U.S. soy exporters all too familiar with similar roadblocks faced in trade relations between the U.S. and the European Union.

USDA releases its monthly soybean crush estimates for June 2021 today. In a survey of market analysts, Reuters estimates today’s figure at 162.1 million bushels, with a range expected between 161.4 million – 163.1 million bushels.

If realized, it will be the lowest monthly crush rate in the 2020/21 marketing year and the smallest monthly volume recorded since June 2019 as more processors scheduled maintenance downtime in the wake of high soybean input costs and dwindling countryside supplies to continue production.

As soybean inputs continue to be scarce, do not be surprised if monthly crush rates continue to sink to low levels. Five of the seven largest monthly soybean crush volumes were recorded earlier in the 2020/21 marketing year, but those volumes also competed against an historically aggressive export market following a back-to-back growing seasons of short U.S. soybean production.

Processors will likely continue to post low monthly crush rates in the last few months of the 2020/21 marketing year amid scarce supplies. But the bigger story will be predicting crush rates this fall as the 2021 soybean crop is harvested. Processors will likely have to compete with exporters once again, but to what degree?

As marketing year to date new crop export sales to top buyer China remain nearly a third behind ordering paces for the same time last year and a larger U.S. soybean crop is expected than in 2019 and 2020, processors may have more readily available soybean supplies to last them through the 2021/22 marketing year.

Another year, another acreage increase for Brazil’s upcoming soybean crop. According to Brazilian agribusiness consultancy Datagro, Brazilian soy growers will likely plant 100.2 million acres of soybeans in 2021/22, a 4% increase from the prior marketing year. It will mark the 15th consecutive year Brazil has increased its soybean acreage.

Datagro forecasts 2021/22 Brazilian soy production at 5.3 billion bushels by the time harvest begins next January, marginally higher than USDA’s current projection for the crop. Barring any weather issues, Datagro expects Brazil will also harvest a larger corn crop next year as higher acreage and a hopeful return to more regular weather patterns encourage higher production.

Wheat

Supply concerns remain top of mind for wheat traders this morning as lower North America wheat yields tighten global spring wheat stocks. A weaker dollar also spurred higher prices in the wheat complex this morning.

Russian consultancy IKAR expects lower yields from the drought-stressed Central and Volga regions for the 2021/22 crop year, dropping estimates 3.7% to 2.88 billion bushels. USDA’s current estimate for 2021 Russian wheat production stands at 3.12 billion bushels.

The lower Russian volume weighed market prices higher overnight, which had previously been trading lower last week as better than expected yields were reported from Russia’s southern wheat-producing regions. The uptick in Russian wheat prices pulled up futures prices in Paris and Chicago over the weekend.

The International Grains Council (IGC) released slimmed down estimates for 2021/22 global wheat production late last week. Persistent drought in the Canadian prairies and U.S. Northern Plains was the key driver behind the monthly forecast’s reduction. A crop report from Saskatchewan’s government website noted that any rainfall at this point will have no effect on yields but will go a long way to replenishing soil moisture levels for next year.

IGC does expect better than anticipated yields from the European Union despite untimely rains during peak winter wheat harvest activities. The IGC now forecasts 2021/22 global wheat production at 28.95 billion bushels, down nearly 37 million bushels from its previous month’s estimate. The ICG also increased its 2021/22 global corn forecast by 39 million bushels to 47.3 billion bushels.

Weather

Clear skies and moderate temperatures will benefit soybean crops amid critical reproductive stages this week, according to NOAA’s short-range forecasts. Temperatures in the Upper Midwest and Eastern Corn Belt will hover in the 80’s today, though the mercury will likely remain in the 90s across the Plains.

Financials

Coronavirus cases in the U.S. rose to 35,004,592 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 613,228 deaths as of press time as the pandemic continues to deal devastating blows to individuals unvaccinated against the virus.

According to the CDC, 70% of U.S. adults have received at least one COVID-19 vaccine. Nearly 165 million Americans (50%) are fully vaccinated. Over 4.1 billion vaccine doses have been administered worldwide.

China’s top fertilizer producers are temporarily suspending phosphate and urea exports, which could send key buyers India and Pakistan in search of alternative sources the U.S. has come to rely on in the wake of its countervailing tariff dispute with Russia and Morocco.

China is the world’s largest producer of phosphate. Leading up to this announcement last Friday, there was some optimism that Chinese supplies could help offset phosphate shortages in the U.S. as phosphate imports from key producers Russia and Morocco all but vanished following the tariff enforcement.

Fertilizer costs have hit record levels this year in China as a government-sponsored acreage expansion increased the demand for inputs. Recent flooding in central China’s Henan province has also stalled fertilizer production. Rising production costs and increased export demand due to a global acreage increase this year have also played a significant role in dwindling Chinese phosphate supplies.

The USDA’s Illinois Department of Ag Market News Service released its bi-weekly report on farm-level input costs late last week and its latest update had little good news for farmers. Potash prices skyrocketed from the previous report, up nearly a quarter over the past two weeks to $600/ton.

The latest potash price surge is largely attributed to recent economic sanctions enforced on key producer Belarus by the European Union, United Kingdom, U.S., and Canada after the Belarus government imprisoned high-profile political protestors.

Potash suppliers were already tight leading up to the sanctions, which will further restrict international flows of the potassium fertilizer. It remains unclear if U.S. producers Nutrien and Mosaic will have the capacity to rachet up production in time for fall application season.

Countervailing tariff disputes continued to lead phosphate prices higher. New UAN dumping disputes levied against Russia and Trinidad and Tobago by the U.S. sent prices climbing over the past two weeks and could spur UAN prices higher as well.

Global nitrogen supplies continue to tighten as global acreage expansion climbs during this era of high commodity prices. Growers awaiting spring pricing in the coming weeks will need to pencil out 2022 profit and cost expectations rapidly in the next couple weeks to decide if availability is worth the current high costs of inputs or if they can afford to take a gamble and wait for prices to moderate in the increasingly volatile post-pandemic era.

U.S. stock futures ticked up this morning, buoyed by a strong earnings season on Wall Street. Traders remain confident about global economic expansion following the pandemic, though gains are likely limited by rising COVID-19 cases due to the more contagious Delta variant, higher inflation, and China’s ongoing crackdown of its tech companies. S&P 500 futures traded 0.46% higher at last glance to $4,409.50.

Morning Ag Commodity Prices - 8/2/2021
Contract Units High Low Last Net Change % Change
SEP '21 CORN $ / BSH  5.49 5.4025 5.4275 -0.0425 -0.78%
DEC '21 CORN $ / BSH  5.485 5.4075 5.4325 -0.02 -0.37%
MAR '22 CORN $ / BSH  5.56 5.4875 5.51 -0.0225 -0.41%
MAY '22 CORN $ / BSH  5.6075 5.535 5.5575 -0.0225 -0.40%
JUL '22 CORN $ / BSH  5.61 5.5425 5.56 -0.0225 -0.40%
SEP '22 CORN $ / BSH  5.1175 5.0775 5.0975 0.0025 0.05%
DEC '22 CORN $ / BSH  4.9875 4.94 4.9675 0.0175 0.35%
AUG '21 SOYBEANS $ / BSH  14.2025 14.045 14.045 -0.1025 -0.72%
SEP '21 SOYBEANS $ / BSH  13.6125 13.42 13.4225 -0.1325 -0.98%
NOV '21 SOYBEANS $ / BSH  13.555 13.365 13.365 -0.1275 -0.94%
JAN '22 SOYBEANS $ / BSH  13.5975 13.4125 13.4125 -0.13 -0.96%
MAR '22 SOYBEANS $ / BSH  13.515 13.3575 13.3625 -0.115 -0.85%
MAY '22 SOYBEANS $ / BSH  13.46 13.335 13.335 -0.1175 -0.87%
JUL '22 SOYBEANS $ / BSH  13.48 13.32 13.325 -0.115 -0.86%
AUG '22 SOYBEANS $ / BSH  13.21 13.1575 13.1575 -0.1075 -0.81%
SEP '22 SOYBEANS $ / BSH  12.6525 #N/A 12.8125 0 0.00%
AUG '21 SOYBEAN OIL  $ / LB 64.81 64.5 64.5 -1.32 -2.01%
SEP '21 SOYBEAN OIL  $ / LB 64.66 63.15 63.22 -1.2 -1.86%
AUG '21 SOY MEAL $ / TON 353.1 351 351 -1.6 -0.45%
SEP '21 SOY MEAL $ / TON 353.3 350.6 351.4 0.1 0.03%
OCT '21 SOY MEAL $ / TON 352.4 349.7 350.5 0.2 0.06%
DEC '21 SOY MEAL $ / TON 356 353.4 353.9 0 0.00%
JAN '22 SOY MEAL $ / TON 356.9 354.9 355.1 0 0.00%
SEP '21 Chicago SRW $ / BSH  7.1975 7.04 7.165 0.1275 1.81%
DEC '21 Chicago SRW $ / BSH  7.2875 7.13 7.26 0.13 1.82%
MAR '22 Chicago SRW $ / BSH  7.3575 7.22 7.335 0.13 1.80%
MAY '22 Chicago SRW $ / BSH  7.3375 7.22 7.32 0.1225 1.70%
JUL '22 Chicago SRW $ / BSH  7.12 7 7.105 0.095 1.36%
SEP '21 Kansas City HRW $ / BSH  6.9175 6.7225 6.89 0.1575 2.34%
DEC '21 Kansas City HRW $ / BSH  7.0275 6.8375 7 0.1575 2.30%
MAR '22 Kansas City HRW $ / BSH  7.0925 6.915 7.0725 0.1575 2.28%
MAY '22 Kansas City HRW $ / BSH  7.1075 6.985 7.1075 0.165 2.38%
JUL '22 Kansas City HRW $ / BSH  6.9475 6.8375 6.935 0.1275 1.87%
SEP '21 MLPS Spring Wheat $ / BSH  9.135 9.015 9.1025 0.055 0.61%
DEC '21 MLPS Spring Wheat $ / BSH  9.015 8.885 8.9625 0.0525 0.59%
MAR '22 MLPS Spring Wheat $ / BSH  8.8725 8.7675 8.8725 0.11 1.26%
MAY '22 MLPS Spring Wheat $ / BSH  8.67 8.635 8.635 0.005 0.06%
JUL '22 MLPS Spring Wheat $ / BSH  8.48 8.48 8.48 0.01 0.12%
SEP '21 ICE Dollar Index $ 92.18 91.92 91.99 -0.198 -0.21%
 SE '21 Light Crude $ / BBL  73.95 72.61 72.98 -0.97 -1.31%
 OC '21 Light Crude $ / BBL  73.19 72 72.33 -0.9 -1.23%
SEP '21 ULS Diesel $ /U GAL 2.1947 2.164 2.1757 -0.0199 -0.91%
OCT '21 ULS Diesel $ /U GAL 2.195 2.165 2.1746 -0.0218 -0.99%
SEP '21 Gasoline $ /U GAL 2.3349 2.3028 2.3138 -0.0209 -0.90%
OCT '21 Gasoline $ /U GAL 2.1947 2.1654 2.1752 -0.0206 -0.94%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 158.175 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 161.8 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 122.075 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 127.2 0 0.00%
AUG '21 Live Hogs $ / CWT 0 #N/A 106.2 0 0.00%
OCT '21 Live Hogs $ / CWT 0 #N/A 88.025 0 0.00%
JUL '21 Class III Milk $ / CWT 16.46 #N/A 16.48 0 0.00%
AUG '21 Class III Milk $ / CWT 16.42 16.33 16.33 0.04 0.25%
SEP '21 Class III Milk $ / CWT 16.39 #N/A 16.36 0 0.00%
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