Morning Market Review for August 3, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Weather, Delta variant weigh on corn, soybean prices. (Comments are updated by 7:30 a.m. Central Time.)

Spring wheat falls on ratings improvement

  • Corn down 2-5 cents
  • Soybeans down 15-20 cents, soymeal down $1.20/ton, soyoil down $0.62/lb
  • Chicago & Kansas City wheat down 2-4 cents; Minneapolis wheat down 6-10 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: Corn prices fell $0.02-$0.06/bushel lower this morning as traders began to question the justification for higher prices as more favorable weather over the Midwest allowed for more optimal crop development in key reproductive stages over the past couple weeks.

"Grains and oilseed prices had rallied on the back of production concerns but now we have to see if these high prices are sustainable or not," Phin Ziebell, an agribusiness economist at National Australia Bank in Melbourne, told Reuters this morning.

Commodity markets were also wary of the spreading Delta variant across the country this morning, as well as an uptick in cases in China. "People are eating out less as COVID-19 cases are rising again. China is a big feed grain consumer and it is witnessing an increase in cases," said Ziebell.

USDA’s Crop Progress report released yesterday evening saw corn condition ratings slip 2% lower on the week to 62% good to excellent for the week ending August 1. Average analyst predictions were slightly higher at 63%, though the trade guesses ranged between 62%-65% good to excellent.

Pollination is virtually complete across the Corn Belt, as national silking rates stood at 91% complete as of Sunday. About 38% of the crop had reached the doughing phase by Sunday, up 20% from a week prior and 5% higher than the five-year average.

Ethanol production continues to recover from pandemic lows at better than expected rates, according to fresh corn consumption for ethanol data released yesterday by USDA. USDA increased May 2021 corn usage rates by 1.3 million bushels to 448.9 million bushels after revising usage rates at dry mill plants higher for the prior month.

However, ethanol production stalled in June as energy markets adapted to changing consumer fuel demand patterns. USDA estimates 439.9 million bushels of corn were milled for ethanol production in June 2021, down slightly from May’s total but still the second largest monthly volume of the 2020/21 marketing year as drivers returned to the roads in the post-pandemic travel rush.

Marketing year to date (MYTD) corn consumption for ethanol production is now 3.6% higher than volumes posted the same time a year ago as the country emerges from pandemic restrictions. But ethanol production is not in the clear yet.

As many workplaces continue remote activities and lingering pandemic fears remain, consumer fuel demand has not yet returned to pre-pandemic levels. As of June, MYTD corn volumes consumed for ethanol remained 7% lower than the same period in 2018/19, suggesting there is still some economic healing to be completed before the effects of the pandemic can be forgotten.

Fun Fact: Monthly corn consumption for beverage alcohol plateaued at 3.7 million bushels in June 2021. Even as pandemic restrictions have lifted and more people are openly socializing in public, monthly corn usage rates for booze production has largely stalled between 3.7 million – 3.9 million bushels since March 2021.

All of which leads me to believe Shot Girl Summer is a complete conspiracy theory invented by White Claw to reclaim their seltzer market share from up and coming competitors. Yes – that’s my professional opinion, folks. And here’s the data to prove it.

Jacquie HollandU.S. corn consumed alcoholic beveraves 17-21

Back to Business: Brazil was the world’s third largest corn exporter in 2020/21 and will be the second largest in the 2021/22 marketing year. But in 2020/21, the South American grains producer will actually see record-setting corn imports, writes AgBravo CEO Julio Bravo.

In the latest South American Crop Watch column, Bravo explains that a harvest shortfall due to heat stress, untimely rains, and planting delays left the Brazilian corn crop 58% lower than forecasts earlier this year. And as domestic usage and export rates rise, Brazil finds itself looking to other countries to satisfy domestic consumption rates.

Bravo estimates Brazil will import 157 million bushels of corn in 2020/21, which would be the highest volume for the country in the past 59 years. Its exports will shrink by over a fifth from the prior year as markets try to provide domestic users with enough stocks to maintain current consumption levels.

Soybeans: Soybean prices tumbled $0.13-$0.19/bushel lower this morning on favorable weather conditions and rising international COVID-19 concerns in China and the U.S. Reduced palm oil production estimates helped cap losses for the soyoil complex, though prices still fell on lower underlying soybean futures losses.

Soybean condition ratings improved in this week’s Crop Progress report, a favorable sign as crops enter peak reproductive stages over the next couple weeks. As of August 1, 60% of 2021 soybeans were in good to excellent condition, up 2% from the previous week. The rating was at the higher end of trade predictions, which ranged between 54%-60% for this week’s report.

About 58% of U.S. soybean acres in 2021 have began setting pods as of August 1, a 16%-increase from a week prior and 6% above the five-year average. The next two weeks will be critical for pod development.

June 2021 soybean crush rates fell to the smallest volume in two years as more processors scheduled maintenance downtime in June 2021 in the wake of high soybean input costs and dwindling countryside supplies to continue production.

USDA’s monthly crush report released yesterday afternoon saw 161.7 million bushels of soybeans crushed in June 2021, the lowest of the 2020/21 marketing year. There were few surprises to traders, who had predicted the June crush between 161.4 million – 163.1 million bushels with an average guess of 162.1 million bushels.

Jacquie HollandU.S. monthly soybean crush volume chart

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.

With USDA’s anticipated updates to 2021 yield estimates in next week’s Crop Production report, markets are preparing for a growing cycle featuring wildly variable yield and harvested acreage estimates in 2021.

Advance Trading’s Brian Basting points out that over the last 30 years, USDA’s average yield estimates for the final crop year’s production have come in either 2.2 bushels per acre (bpa) above the August forecast or 1.6 bpa below the metric. Soybeans could see more variability this year, Basting writes, as higher expected harvested acres this year could tilt the supply scales by nearly 50 million bushels either way.

“Uncertainty about yields this year is quite high given extremely divergent crop conditions across the country,” Basting speculates in the latest Ag Marketing IQ column. “History shows soybean yields can still change significantly before harvest. Plus, there is heightened uncertainty about the possibility of additional double crop soybean acreage in relation to the USDA’s most recent projection.”

At any rate, expect next week’s USDA reports to cause quite a bit of market uproar following their release.

Wheat: The uptick in condition ratings and harvest progress for spring wheat in yesterday’s Crop Progress report sent Minneapolis futures $0.06-$0.10/bushel lower this morning. Chicago and Kansas City futures shed $0.02-$0.04/bushel overnight in a round of profit-taking after brushing a three-month high in yesterday’s trading session. A weaker dollar also helped to curb losses in the wheat complex this morning.

Winter wheat harvest continues to shift further into the Northern Plains and Pacific Northwest. As of Sunday, 91% of winter wheat acreage had been harvested, up 7% from the week before and in line with analyst expectations. Harvest rates in every state continue to advance ahead of the five-year average as dry weather provides favorable combining conditions.

Spring wheat harvest activity is off to a rapid start amid a sweltering drought in the Northern Plains. As of August 1, 17% of the 2021 U.S. wheat crop had been harvested, representing a staggering 14%-increase from a week prior.

The rating surprised market analysts, who had predicted spring wheat harvest activity at 11% ahead of the Crop Progress report’s release yesterday. The devastating drought also led some farmers to abandon fields, also contributing to a faster harvest pace. The five-year average harvest completion rate for the same reporting period stands at 8%.

Spring wheat conditions saw a 1% weekly improvement, rising to 10% good to excellent for the week ending August 1. While the movement came as a surprise to trade watchers, who were expected a 1% weekly decline in condition ratings, as farmers in the Northern Plains enter in to peak harvest activity, the ratings discrepancy likely matters very little. The crop is more or less finished at this point with little hopes for yield or quality improvements amid the historic drought.

Corn and soybean growers may be surprised to know that they lack the support from wheat growers in the growing biofuels expansion debate. The American Bakers Association (ABA), a lobbying organization representing food businesses including Kroger and Krispy Kreme, pleaded with the Environmental Protection Agency (EPA) last week to curb fuel blending mandates.

The ABA argues that increasing biofuel production in an era of tightening global grain supplies could raise the price of food products, potentially limiting customer demand for those products. Rising soy and canola oil prices amid global shortages also threaten to increase the price of goods produced by companies represented by the ABA. About 40% of soyoil produced in the U.S. is used in biodiesel production while the remainder is used by the food production industry.

Though the increase has likely already happened, according to data from the U.S. Labor Department’s Bureau of Statistics. Average food prices in the U.S. had risen by 2.4% on the year as of the end of June 2021.

USDA released quarterly flour milling data yesterday. For the fourth quarter in the 2020/21 wheat marketing year spanning April through June 2021, wheat milled for flour totaled 223.3 million bushels, down 1.2 million bushels from the previous quarter on lower durum milling, which is ultimately used in pasta production.

Total quarterly wheat milling rates rose 2% from the same time a year prior as pandemic buying anomalies were smoothed out by the market. Fourth quarter wheat consumption for milling tends to be among the lowest volumes of the year, so yesterday’s report had little bearing on market prices.

But there may be more long-term trends at play here. USDA revised January through March 2021 flour milling data lower by 6,000 bushels on smaller non-durum wheat milling rates. Despite indications that consumers preferred to continue preparing baked goods at home in the pandemic’s aftermath, it appears the pandemic baking boom may be showing signs of going bust.

Jacquie HollandChart of quarterly wheat milling

Weather: It will be another day of clear skies and moderate temperatures across the Midwest today, benefiting soybean crops amid critical reproductive stages this week, according to NOAA’s short-range forecasts. Scattered showers are possible in the Great Lakes region, though any accumulation is likely to be minimal.

It will be a windy day on the Plains, where gusts could reach over 20 mph from South Dakota to Oklahoma.

Financials: Coronavirus cases in the U.S. rose to 35,133,969 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 613,758 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.

Any CEO struggles to do multiple tasks and be demanded in multiple places at once. So how does a farmer CEO manage those demands successfully? Water Street Solution CEO Darren Frye shed some light on that struggle and offers farmers some tips for success in the latest Finance First column.

In today’s digital age, Frye recommends taking a step back from seemingly urgent issues to evaluate if those problems are worth the leader’s focus. “It’s true that there will be some necessary firefighting, and the leader will have to pause whatever else they are doing at the moment and solve the problem,” Frye sympathizes with growers.

“The problem is this: Leaders can start to pay attention primarily to urgent items simply because they are in front of them, rather than stepping back to first ask whether that urgent thing is also important to the farm operation and whether it’s important that the leader address it themselves or not.”

U.S. stock futures ticked up this morning on optimism over corporate earnings results expected from second quarter financial statements being released over the coming days. S&P 500 futures rose 0.36% to $4,395.50 on the sentiment.

Morning Ag Commodity Prices - 8/3/2021
Contract Units High Low Last Net Change % Change
SEP '21 CORN $ / BSH  5.5675 5.5225 5.5275 -0.06 -1.07%
DEC '21 CORN $ / BSH  5.575 5.5325 5.5425 -0.05 -0.89%
MAR '22 CORN $ / BSH  5.65 5.6125 5.62 -0.0525 -0.93%
MAY '22 CORN $ / BSH  5.695 5.66 5.6675 -0.05 -0.87%
JUL '22 CORN $ / BSH  5.6975 5.66 5.675 -0.045 -0.79%
SEP '22 CORN $ / BSH  5.21 5.1725 5.2025 -0.02 -0.38%
DEC '22 CORN $ / BSH  5.0475 5.0125 5.0175 -0.035 -0.69%
AUG '21 SOYBEANS $ / BSH  14.12 14.04 14.06 -0.1275 -0.90%
SEP '21 SOYBEANS $ / BSH  13.5025 13.375 13.3775 -0.185 -1.36%
NOV '21 SOYBEANS $ / BSH  13.48 13.35 13.3525 -0.1825 -1.35%
JAN '22 SOYBEANS $ / BSH  13.53 13.4025 13.4025 -0.1825 -1.34%
MAR '22 SOYBEANS $ / BSH  13.4775 13.37 13.3725 -0.1575 -1.16%
MAY '22 SOYBEANS $ / BSH  13.4525 13.3525 13.3525 -0.1575 -1.17%
JUL '22 SOYBEANS $ / BSH  13.45 13.3275 13.3325 -0.16 -1.19%
AUG '22 SOYBEANS $ / BSH  13.275 13.22 13.2575 -0.07 -0.53%
SEP '22 SOYBEANS $ / BSH  12.6975 #N/A 12.905 0 0.00%
AUG '21 SOYBEAN OIL  $ / LB 64.15 #N/A 64.62 0 0.00%
SEP '21 SOYBEAN OIL  $ / LB 64.05 62.89 62.89 -0.82 -1.29%
AUG '21 SOY MEAL $ / TON 356 356 356 -1.2 -0.34%
SEP '21 SOY MEAL $ / TON 355.5 352.3 352.8 -3.6 -1.01%
OCT '21 SOY MEAL $ / TON 355 352.1 352.2 -3.7 -1.04%
DEC '21 SOY MEAL $ / TON 358.7 355.6 355.7 -3.9 -1.08%
JAN '22 SOY MEAL $ / TON 359.2 356.8 356.8 -3.9 -1.08%
SEP '21 Chicago SRW $ / BSH  7.28 7.2125 7.2375 -0.0575 -0.79%
DEC '21 Chicago SRW $ / BSH  7.38 7.3125 7.3375 -0.055 -0.74%
MAR '22 Chicago SRW $ / BSH  7.4575 7.39 7.4175 -0.0525 -0.70%
MAY '22 Chicago SRW $ / BSH  7.43 7.3775 7.4 -0.0525 -0.70%
JUL '22 Chicago SRW $ / BSH  7.195 7.13 7.165 -0.0525 -0.73%
SEP '21 Kansas City HRW $ / BSH  7.0475 6.9525 7.0025 -0.0325 -0.46%
DEC '21 Kansas City HRW $ / BSH  7.1575 7.0625 7.1125 -0.035 -0.49%
MAR '22 Kansas City HRW $ / BSH  7.23 7.145 7.1875 -0.035 -0.48%
MAY '22 Kansas City HRW $ / BSH  7.2175 7.205 7.2175 -0.0125 -0.17%
JUL '22 Kansas City HRW $ / BSH  7.015 6.96 7 -0.0475 -0.67%
SEP '21 MLPS Spring Wheat $ / BSH  9.2225 9.145 9.165 -0.0625 -0.68%
DEC '21 MLPS Spring Wheat $ / BSH  9.11 9.02 9.04 -0.0725 -0.80%
MAR '22 MLPS Spring Wheat $ / BSH  8.9575 8.8825 8.8825 -0.095 -1.06%
MAY '22 MLPS Spring Wheat $ / BSH  8.8125 8.8025 8.8125 -0.0325 -0.37%
JUL '22 MLPS Spring Wheat $ / BSH  8.585 8.585 8.585 -0.12 -1.38%
SEP '21 ICE Dollar Index $ 92.09 91.895 91.93 -0.135 -0.15%
 SE '21 Light Crude $ / BBL  71.96 70.97 71.39 0.13 0.18%
 OC '21 Light Crude $ / BBL  71.29 70.33 70.77 0.16 0.23%
SEP '21 ULS Diesel $ /U GAL 2.1587 2.1317 2.1477 0.0119 0.56%
OCT '21 ULS Diesel $ /U GAL 2.1589 2.1336 2.1484 0.012 0.56%
SEP '21 Gasoline $ /U GAL 2.3033 2.2727 2.2927 0.018 0.79%
OCT '21 Gasoline $ /U GAL 2.1622 2.1333 2.1528 0.0157 0.73%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 158.25 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 161.975 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 122.125 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 127.275 0 0.00%
AUG '21 Live Hogs $ / CWT 0 #N/A 107.5 0 0.00%
OCT '21 Live Hogs $ / CWT 0 #N/A 89.5 0 0.00%
JUL '21 Class III Milk $ / CWT 16.44 #N/A 16.46 0 0.00%
AUG '21 Class III Milk $ / CWT 16.22 16.12 16.12 0.01 0.06%
SEP '21 Class III Milk $ / CWT 16.16 16.11 16.11 -0.04 -0.25%
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