Morning Market Review for Feb. 26, 2021

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Grains stumble on slow exports, financial market selloff. (Comments are updated by 7:30 a.m. Central Time.)

Soybeans take the hardest hit as ASF concerns in China threaten export demand forecasts

  • Corn down 7-10 cents
  • Soybeans down 15-26 cents, soyoil down $0.96/lb, soymeal down $5.30/ton
  • Wheat down 8-14 cents

*Prices as of 6:50 am CST.

Corn

Corn futures prices fell 1% as the losses continued after weak export sale data was released by USDA yesterday. Prices also took a hit on falling financial markets and a round of profit-taking after yesterday morning’s six-and-a-half-year highs.

Spring is less than a month away and as market watchers continue to compare this year to 2008, Total Farm Marketing’s Naomi Blohm takes a deep dive into pricing similarities between the two years. Blohm finds that in 2008, corn and soybean markets both saw sharp downward corrections during the month of March.

Could we see a repeat in 2021? It’s not impossible. But there is a silver lining – Blohm points out that the March 2008 correction provided the legs for a summer rally in the latest Ag Marketing IQ column.

The aftermath of last week’s cold snap continues to rattle markets, as evidenced by yesterday’s eye-popping drop in weekly ethanol production. My colleague, Ben Potter, and I dig into the impacts the cold weather continues to have on the ag supply chain in the latest Midweek Markets podcast.

Soybeans

Concerns about Chinese demand amid increasing concern about new African swine fever outbreaks across China drove soybean futures prices over 1.5% lower this morning. Profit-taking was also at play as a weak export report from USDA yesterday also played a significant role in investors’ willingness to pay for higher soybean prices.

Losses are likely limited by harvest delays in Brazil, but don’t expect that price floor to remain in place for long. Brazil’s shipping season is likely to build momentum in the next week or two and the cheaper-priced crop will dominate international shipping channels for several months to come.

New African swine fever outbreaks in China sent Chinese soymeal futures 5% lower in overnight trade as concerns about demand weighed heavily on traders’ minds. The outbreaks, which began in China’s northern and northeastern provinces, have spread farther south suggesting this latest round of outbreaks may be more problematic to China’s goal of a pre-ASF hog herd volume by June 2021.

Quite frankly, yesterday was not a good day for U.S. soybean exports. It was the second straight week of low reported soybean export loading paces, led by a decline in shipments destined for China. At 8.2 million bushels, soy export volumes to China were the lowest of the marketing year for the week ending February 18.

Total shipments for the February 12 - 18 reporting week were the second lowest of the current marketing year to date. Soybean exports rose nearly 2 million bushels from last week’s marketing year low to 38.7 million bushels.

New export sales for both old and new crop shipments fell to the second-lowest volumes of the marketing year. Noticeably absent from the buying pool last week was China, as buyers in the world’s second largest economy turn their attention to the Brazilian crop.

Chinese buyers only booked 2.4 million bushels of 2021/22 soybeans last week, tying for the third-lowest weekly sale volume for new crop soybean export sales in the 2020/21 marketing year. In fact, Chinese and unknown buyers cancelled 12.7 million bushels worth of 2020/21 soybean export orders over the week ending February 18.

The shift in Chinese soybean buying and loading paces were palpable, sending Chicago March 2021 futures prices $0.175/bushel lower yesterday. But was it unexpected? Not exactly. Chinese crush plants are already scaling back production amid high prices and tightening supplies. The Brazilian shipping season should start to ramp up in the next week or two and Chinese buyers are ready for the cheaper Brazilian soybeans to arrive.

It’s not great news for U.S. soy producers in the short run. If last year’s shipping patterns are any indication, farmers should expect Chinese demand to shrivel up as the Brazilian soy crop takes over international channels. But U.S. farmers’ window for opportunity may be a little bigger than last year.

USDA forecasts slightly fewer soybean exports out of Brazil this year relative to last year. This means that international buyers may turn back to U.S. shores for soybeans by mid to late summer if Brazil runs out of exportable soybean supplies again.

Wheat

Wheat prices followed the losses in the grains complex lower this morning, with lackluster export data yesterday continuing to wreak havoc on prices. It was the lowest weekly export sale volume for wheat in over a year. A stronger dollar was the final nail in the coffin for wheat prices this morning

Despite a cold snap earlier this month, France’s winter wheat crop remains in good condition. As spring approaches, the winter wheat crop was rated at 87% good to excellent as of Monday according to French farm office FranceAgriMer, down from 96% good to excellent in November 2020. Favorable growing conditions will likely lead the 2021/22 French winter wheat crop to surpass last year’s yields, which struggled amid a wet planting season and late season drought.

Money managers and speculators have largely flocked back to grain commodities in recent weeks amid strong export forecasts and tight projected 2021/22 ending stocks. Today’s weekly Commitment of Trade report from the CFTC will provide more insights into investor sentiment for the February 17 – 23 reporting week.

Wheat, corn, and soybeans are likely to see another week of supportive speculator buying amid mixed winter wheat conditions in the U.S. and Russia, soybean harvest delays in Brazil, corn planting delays in Brazil, tight new crop ending stock projections, and strong long-term export forecasts as announced by USDA in last week’s outlook.

Weather

A storm system in the south will push precipitation further north late this evening, according to NOAA’s short-range forecasts. Expect a rain-snow mix in areas of the Eastern Corn Belt and Wisconsin over the next 24 hours, with the more northern areas of the storm receiving a higher chance of snow and ice.

Snow systems developing in the Northern Rockies could also send scattered snow showers into the Northern Plains over the weekend.

Financials

Coronavirus cases in the U.S. rose by 77,069 to 28,413,635 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 2,415 lives to 508,314 deaths as of press time.

Managing a marketing plan in the middle of planting is one of the last things farmers want to worry about in the spring. As planting activity ramps up, one good business goal to keep in mind is to replenish working capital. “Just make sure the farm gets a little healthier,” Illinois farmer Matt Bennett recommends while juggling both planting and marketing activities during the spring.

Keeping break even costs in the front of one’s mind also provides more flexibility to capitalize on marketing opportunities. “My go-to that has always worked for me is to try and stay consistent,” Bennett shares.

“You can have a bad day or two and still be off very well,” he says. “Being profitable without hitting the high is still more of a blessing than a curse.”

Spring is coming and the race for profits starts now. Looking for some helpful management tips to ensure a profitable harvest this fall? Farm Futures editors Mike Wilson and Ben Potter dig into marketing, scheduling, and delegation strategies to get the 2021 season started off on the right foot.

U.S. stock market futures prices are poised to open the day lower as investors continue their selloff of technology stocks. Overvaluation concerns continue to run rampant through traders’ circles as investors cycle out of safe-haven tech stocks and into companies they believe will thrive in the looming post-pandemic recovery. Dow futures fell 0.15% to $31,323S while &P 500 futures inched up 0.16% to $3824.25 on the sentiments

Morning Ag Commodity Prices - 2/26/2021
Contract Units High Low Last Net Change % Change
MAR '21 CORN $ / BSH  5.545 5.4625 5.4825 -0.065 -1.17%
MAY '21 CORN $ / BSH  5.4875 5.4 5.41 -0.0875 -1.59%
JUL '21 CORN $ / BSH  5.3875 5.2925 5.3 -0.0975 -1.81%
SEP '21 CORN $ / BSH  4.9175 4.8375 4.8425 -0.0875 -1.77%
DEC '21 CORN $ / BSH  4.725 4.6525 4.66 -0.08 -1.69%
MAR '22 CORN $ / BSH  4.7975 4.73 4.735 -0.08 -1.66%
MAY '22 CORN $ / BSH  4.8275 4.7675 4.7775 -0.0725 -1.49%
MAR '21 SOYBEANS $ / BSH  14.05 13.8 13.8525 -0.2075 -1.48%
MAY '21 SOYBEANS $ / BSH  14.06 13.7825 13.8475 -0.2275 -1.62%
JUL '21 SOYBEANS $ / BSH  13.955 13.6775 13.7425 -0.23 -1.65%
AUG '21 SOYBEANS $ / BSH  13.545 13.2925 13.355 -0.21 -1.55%
SEP '21 SOYBEANS $ / BSH  12.7325 12.51 12.55 -0.205 -1.61%
NOV '21 SOYBEANS $ / BSH  12.3 12.085 12.1175 -0.19 -1.54%
JAN '22 SOYBEANS $ / BSH  12.225 12.0425 12.0725 -0.1775 -1.45%
MAR '22 SOYBEANS $ / BSH  11.945 11.81 11.81 -0.16 -1.34%
MAY '22 SOYBEANS $ / BSH  11.795 11.745 11.745 -0.1425 -1.20%
MAR '21 SOYBEAN OIL  $ / LB 50.87 50.15 50.21 -0.75 -1.47%
MAY '21 SOYBEAN OIL  $ / LB 49.71 48.83 48.9 -0.77 -1.55%
MAR '21 SOY MEAL $ / TON 423.3 417 419.3 -4.8 -1.13%
MAY '21 SOY MEAL $ / TON 422.4 415.3 417.1 -5.9 -1.39%
JUL '21 SOY MEAL $ / TON 420 413.2 415 -5.4 -1.28%
AUG '21 SOY MEAL $ / TON 408.2 402.3 403.9 -4.9 -1.20%
SEP '21 SOY MEAL $ / TON 394.5 390 390.9 -5.4 -1.36%
MAR '21 Chicago SRW $ / BSH  6.6575 6.6 6.6 -0.1175 -1.75%
MAY '21 Chicago SRW $ / BSH  6.74 6.6225 6.645 -0.1125 -1.66%
JUL '21 Chicago SRW $ / BSH  6.62 6.5 6.5175 -0.1175 -1.77%
SEP '21 Chicago SRW $ / BSH  6.5825 6.4675 6.485 -0.115 -1.74%
DEC '21 Chicago SRW $ / BSH  6.6175 6.5025 6.52 -0.1125 -1.70%
MAR '21 Kansas City HRW $ / BSH  6.37 6.3175 6.3275 -0.115 -1.79%
MAY '21 Kansas City HRW $ / BSH  6.505 6.38 6.4025 -0.1225 -1.88%
JUL '21 Kansas City HRW $ / BSH  6.54 6.42 6.4425 -0.12 -1.83%
SEP '21 Kansas City HRW $ / BSH  6.58 6.4675 6.4675 -0.1375 -2.08%
DEC '21 Kansas City HRW $ / BSH  6.615 6.535 6.5525 -0.12 -1.80%
MAR '21 MLPS Spring Wheat $ / BSH  6.36 6.36 6.36 -0.055 -0.86%
MAY '21 MLPS Spring Wheat $ / BSH  6.4875 6.415 6.415 -0.09 -1.38%
JUL '21 MLPS Spring Wheat $ / BSH  6.565 6.49 6.505 -0.08 -1.21%
SEP '21 MLPS Spring Wheat $ / BSH  6.6325 6.56 6.56 -0.095 -1.43%
DEC '21 MLPS Spring Wheat $ / BSH  6.7 6.64 6.64 -0.09 -1.34%
MAR '21 ICE Dollar Index $ 90.775 90.135 90.565 0.43 0.48%
 AP '21 Light Crude $ / BBL  63.57 62.07 62.43 -1.1 -1.73%
 MA '21 Light Crude $ / BBL  63.24 61.74 62.09 -1.13 -1.79%
MAR '21 ULS Diesel $ /U GAL 1.9099 1.8695 1.8755 -0.0311 -1.63%
APR '21 ULS Diesel $ /U GAL 1.9044 1.8603 1.8692 -0.0287 -1.51%
MAR '21 Gasoline $ /U GAL 1.8979 1.8685 1.8685 -0.0238 -1.26%
APR '21 Gasoline $ /U GAL 1.9894 1.949 1.9596 -0.0168 -0.85%
MAR '21 Feeder Cattle $ / CWT 0 #N/A 140.425 0 0.00%
APR '21 Feeder Cattle $ / CWT 0 #N/A 145.075 0 0.00%
 FE '21 Live Cattle $ / CWT 0 #N/A 117 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 121.675 0 0.00%
APR '21 Live Hogs $ / CWT 0 #N/A 89.75 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 91.15 0 0.00%
FEB '21 Class III Milk $ / CWT 15.63 #N/A 15.65 0 0.00%
MAR '21 Class III Milk $ / CWT 16.56 #N/A 16.56 0 0.00%
APR '21 Class III Milk $ / CWT 17.47 17.4 17.47 0.07 0.40%
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