Morning Market Review for August 5, 2021

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

Plus – a look at how La Niña forecasts this fall will impact input prices

  • Corn up 1-4 cents
  • Soybeans down 3-8 cents, soymeal up $1.10/ton, soyoil down $0.51/lb
  • Wheat up 4-6 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

Traders continue to await results from next week’s WASDE reports. But corn futures rose overnight despite the concerns about improving yield prospects and weather forecasts in the Midwest. Gains were capped by another round of demand destruction as the coronavirus’s Delta variant continues to wreak havoc on the globe.

Weekly ethanol production for the week ending July 30 came in at the low end of recent trading volumes, as output remains stalled between 42.5 million – 44.8 million gallons/day since mid-May. Weekly production was largely unchanged from last week, coming in at 42.5 million gallons/day in the U.S. Energy Information Administration’s weekly Petroleum Inventory Status report.

But the reading came with a caveat this week. Gasoline consumption through the week ending July 30 topped out at 410.6 million gallons/day – the highest weekly estimate since the Independence Day holiday and the second-largest weekly volume since the pandemic’s onset.

Summer vacation travel is likely a key contributor to this upswing, Markets will be watching that gasoline consumption can sustain high levels as summer comes to a close in the coming weeks, which will largely determine the fate of the U.S. ethanol industry.

Soybeans

Soybean prices edged slightly lower as little export purchasing activity from China raised concerns about demand potential. Rising COVID-19 cases due to the more contagious Delta variant also weighed on traders’ minds as demand destruction was evaluated. Light rains across the Midwest today limited any upward potential for the soybean crop as peak pod development stages ensue over the next couple weeks.

Argentina’s grain flows have hit another roadblock this past week – literally. A trucker strike protesting higher wages at Argentina’s Bahia Blanca exporter terminal began last Friday. Truckers blocked off road access to Bahia Blanca, which sits on the Atlantic Ocean.

As the Parana River remains at critically low levels, Bahia Blanca has become increasingly significant as it tops off partially filled cargo ships that traversed the Parana. The process incurs higher shipping costs, which are estimated to have risen 300% prior to the strike.

The Parana River is at its lowest level in 80 years due to ongoing dry weather in Brazil and Argentina. Argentina is the world’s largest exporter of soymeal and the third largest global exporter of soybeans and corn.

Moving averages are a great technical tool to evaluate long-term price trends for grain futures. As Commstock’s Matthew Kruse points out, “They smooth out the price to give us a ‘cleaner’ view of what prices have done and they help eliminate the choppy volatility.”

Which is critical in times of high volatility – such as the present. However, Kruse also posits that moving averages can lag behind real-time trends, not dissimilar to some of USDA’s forecasting history. But determining yields this year may be tricky amid variable growing conditions across the country.

“This makes me hesitant to forward sell anything because I won’t know if I am selling 25% of my crop or 50% of my crop,” Kruse offers in the latest Ag Marketing IQ column. “Ending stocks are tight this year and any hiccup in production will send prices higher.”

But amidst the uncertainty, Kruse offers hedging strategies to help farmers mitigate price volatility. “That is why we identify price support levels, placing hedges to make sure we are protected,” Kruse advises.

Wheat

Wheat prices rose overnight as traders reevaluate domestic grain flows in the wake of tightening spring wheat crops in the U.S. Northern Plains and Canadian Prairies. Rains slowed harvest activity in Europe and forecasts for the Russian crop continue to be trimmed, contributing strength to the wheat complex overnight.

Concern is growing that this year’s drought could spill over into next year’s growing season, similar to 1988-1989. Millers around the globe are scrambling to make up for U.S. and Canadian spring wheat supplies by turning to Russia and Australia, according to a recent Reuters report.

“It’s pretty unique for this generation,” Adam Dyck, a program manager for a British wheat processor, said of the drought, noting that processors will need to add more water and other production adjustments to ensure quality specifications are met for the company’s bread and flour products in the wake of diminished quality from U.S. and Canadian supplies.

Weather

Light showers will fall over Upper Mississippi River Valley and Central and Southern Plains today and will slowly move east overnight, according to NOAA’s short-range forecasts. Total accumulation over the next 24 hours is likely to be light – not more than a half inch – but may be enough to encourage pod development in soybean pods over the next week.

Temperatures across the Corn Belt will largely remain in the 80’s today. Keep an eye on winds in the Upper Midwest – gusts of over 20 mph are expected in the Northern Plains, Wisconsin, and Eastern Iowa today which could cause crop damage.

NOAA expects another La Niña weather system to batter the globe beginning this fall. And that could have a big impact on farmers’ wallets. In my latest E-corn-omics column, I take a deep dive into what another La Niña means for famers (as previewed below) and other factors shaping input prices heading into harvest.

Increased rainfall is characteristic of a fall season during La Niña. And while farmers in the Upper Midwest would welcome any additional soil moisture, growers in the Eastern Corn Belt have had more than their fill of showers this year.

The likelihood of excess rains in the east will increase as fall rolls on, which could delay harvest in late planted fields and increase drying times. This could hit farmers’ pocketbooks and harvest schedules if early action is not taken.

Propane availability may be an issue as well if a wet fall ensues. Inflationary pressures and low inventories are likely to keep costs high going into harvest. Propane inventories are restocking after an active export season earlier this year, but weekly inventories remained nearly a quarter lower than the same time a year ago.

Farmers who cannot start harvest early this year should look at bulking up on-farm propane supplies as quickly as possible. Farmers compete with residential demand for the heating fuel as colder weather approaches. And with the Delta variant sending more workplaces back to home offices, competition for what little propane is available will be steep this fall.

Financials

Coronavirus cases in the U.S. rose to 35,334,422 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 614.804 deaths as of press time as the pandemic continues to deal devastating blows to individuals unvaccinated against the virus.

According to the CDC, over 70% of U.S. adults have received at least one COVID-19 vaccine. More than 165 million Americans (50%) are fully vaccinated. Over 4.2 billion vaccine doses have been administered worldwide.

 

Morning Ag Commodity Prices - 8/5/2021
Contract Units High Low Last Net Change % Change
SEP '21 CORN $ / BSH  5.5075 5.4575 5.4875 0.03 0.55%
DEC '21 CORN $ / BSH  5.505 5.4575 5.48 0.0125 0.23%
MAR '22 CORN $ / BSH  5.5825 5.5375 5.56 0.01 0.18%
MAY '22 CORN $ / BSH  5.625 5.5875 5.6075 0.0075 0.13%
JUL '22 CORN $ / BSH  5.6325 5.5925 5.6175 0.0075 0.13%
SEP '22 CORN $ / BSH  5.23 5.1975 5.2275 0.0125 0.24%
DEC '22 CORN $ / BSH  5.075 5.0425 5.065 0.005 0.10%
AUG '21 SOYBEANS $ / BSH  14.035 13.935 13.9725 -0.0625 -0.45%
SEP '21 SOYBEANS $ / BSH  13.35 13.22 13.285 -0.035 -0.26%
NOV '21 SOYBEANS $ / BSH  13.2725 13.15 13.2075 -0.05 -0.38%
JAN '22 SOYBEANS $ / BSH  13.31 13.2 13.25 -0.055 -0.41%
MAR '22 SOYBEANS $ / BSH  13.2925 13.19 13.235 -0.0525 -0.40%
MAY '22 SOYBEANS $ / BSH  13.295 13.21 13.2325 -0.0625 -0.47%
JUL '22 SOYBEANS $ / BSH  13.285 13.2 13.2425 -0.0475 -0.36%
AUG '22 SOYBEANS $ / BSH  13.135 13.0525 13.08 -0.06 -0.46%
SEP '22 SOYBEANS $ / BSH  12.6875 12.6725 12.6725 -0.08 -0.63%
AUG '21 SOYBEAN OIL  $ / LB 62.26 62.26 62.26 -0.51 -0.81%
SEP '21 SOYBEAN OIL  $ / LB 62.32 61.59 61.94 -0.38 -0.61%
AUG '21 SOY MEAL $ / TON 354 353.6 353.6 0.5 0.14%
SEP '21 SOY MEAL $ / TON 353.1 349.9 352.4 0.9 0.26%
OCT '21 SOY MEAL $ / TON 351.7 348.6 350.9 0.3 0.09%
DEC '21 SOY MEAL $ / TON 355 351.8 354.2 0.2 0.06%
JAN '22 SOY MEAL $ / TON 355.8 352.6 355.1 0.2 0.06%
SEP '21 Chicago SRW $ / BSH  7.2325 7.135 7.21 0.0375 0.52%
DEC '21 Chicago SRW $ / BSH  7.3475 7.25 7.3275 0.04 0.55%
MAR '22 Chicago SRW $ / BSH  7.4425 7.345 7.4225 0.0425 0.58%
MAY '22 Chicago SRW $ / BSH  7.45 7.3725 7.4325 0.0425 0.58%
JUL '22 Chicago SRW $ / BSH  7.215 7.13 7.2025 0.0475 0.66%
SEP '21 Kansas City HRW $ / BSH  7 6.9025 6.9825 0.04 0.58%
DEC '21 Kansas City HRW $ / BSH  7.11 7.02 7.0925 0.0375 0.53%
MAR '22 Kansas City HRW $ / BSH  7.2025 7.115 7.1825 0.0375 0.52%
MAY '22 Kansas City HRW $ / BSH  7.19 7.155 7.19 0.0225 0.31%
JUL '22 Kansas City HRW $ / BSH  7 6.95 7 0.0375 0.54%
SEP '21 MLPS Spring Wheat $ / BSH  9.1225 9.005 9.095 0.065 0.72%
DEC '21 MLPS Spring Wheat $ / BSH  9.01 8.9025 8.9825 0.065 0.73%
MAR '22 MLPS Spring Wheat $ / BSH  8.835 8.7725 8.835 0.05 0.57%
MAY '22 MLPS Spring Wheat $ / BSH  8.6425 8.6425 8.6425 -0.025 -0.29%
JUL '22 MLPS Spring Wheat $ / BSH  8.2375 #N/A 8.53 0 0.00%
SEP '21 ICE Dollar Index $ 92.36 92.14 92.165 -0.109 -0.12%
 SE '21 Light Crude $ / BBL  68.93 67.61 68.4 0.25 0.37%
 OC '21 Light Crude $ / BBL  68.46 67.22 67.99 0.2 0.30%
SEP '21 ULS Diesel $ /U GAL 2.0871 2.06 2.0739 -0.0002 -0.01%
OCT '21 ULS Diesel $ /U GAL 2.0888 2.0651 2.0767 -0.0003 -0.01%
SEP '21 Gasoline $ /U GAL 2.2609 2.2357 2.248 -0.002 -0.09%
OCT '21 Gasoline $ /U GAL 2.1109 2.0864 2.1004 -0.0021 -0.10%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 159.2 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 162.875 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 124.05 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 128.975 0 0.00%
AUG '21 Live Hogs $ / CWT 0 #N/A 109.475 0 0.00%
OCT '21 Live Hogs $ / CWT 0 #N/A 90.125 0 0.00%
AUG '21 Class III Milk $ / CWT 16.21 16.11 16.21 0.18 1.12%
SEP '21 Class III Milk $ / CWT 16.44 16.25 16.35 0.31 1.93%
OCT '21 Class III Milk $ / CWT 16.82 16.68 16.78 0.24 1.45%
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