Global supply concerns amid regional weather headaches lifts grains overnight
- Corn up 1-2 cents
- Soybeans up 6-9 cents, soymeal up $2.80/ton, soyoil up $0.37/lb
- Wheat up 4-10 cents
*Prices as of 6:50 am CDT.
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Corn prices edged slightly higher this morning on concerns about early frost damage to the remaining safrinha crops awaiting harvest in Brazil. Worries about heat damage amid pollination across the U.S. also lent a modicum of support to the corn complex this morning.
USDA releases updated export information this morning. After a week of lackluster corn export sales data, traders do not seem overly optimistic about the prospects for new corn export sales for the week ending July 22. Trade estimates peg 2020/21 sales for the week between -3.9 million to 11.8 million bushels while 2021/22 sales are estimated between 3.9 – 11.8 million bushels.
Corn export volumes are likely to remain steady for the week, though Monday’s Grains Inspection for Export report from USDA suggests that the trend of slowing shipping paces over the past month will likely continue in today’s report.
U.S. exporters weighed 40.8 million bushels of corn destined for international channels for the week ending July 22 in Monday’s report. It marked a 4% decrease in shipping volumes from the previous week.
Corn prices received a boost yesterday after fresh reports of frost in Brazil. AgBravo CEO Julio Bravo can attest to those weather conditions, noting that coffee, sugarcane, orange, and wheat crops are all at risk of damage following the recent cold snaps.
“Fortunately, the corn harvest is nearly complete and soybean planting doesn’t begin for at least another month or so,” Bravo shares in the latest South American Crop Watch column. “The Brazilian weather forecast is predicting a cold front again next week. Let’s see how things go.”
Fresh weekly ethanol data released yesterday by the U.S. Energy Information Administration saw weekly output volumes shrink over 1% to 42.6 million gallons/day as stockpiles rose on flat consumer gasoline demand.
Weekly ethanol stocks rose 1% on the week to 955 million gallons – the highest stockpile since the mid-February cold snap. Weekly gasoline usage averaged 392 million gallons/day for the week ending July 23, which is in line with the 356 million – 398 million gallon/day- weekly range in which Americans have been purchasing gasoline this summer.
There was a glimmer of hope for the ethanol industry in today’s dataset. Ethanol blending by refiners increased 2.5% on the week to 39 million gallons/day. As drivers navigate the post-pandemic era, the fate of ethanol will increasingly rely on gasoline consumption breaking out of the current summer usage range to lift ethanol prospects for corn growers.
Farm Futures contributing analyst Bryce Knorr reminds growers that the August WASDE is coming up and farmers may want to start creating some hedges against further downside price risk ahead of USDA’s updated yield estimates.
“While new crop lags nearly a dollar below May contract highs, history suggests potential for more pain ahead,” Knorr cautions in the latest Ag Marketing IQ column. “Over the past 10 years futures dropped half the time the day of the August report, and were lower six times two weeks later.”
Knorr argues that puts can be a valuable strategy to pursue in the event prices continue on a downward spiral, though pursuing that strategy may depend on your cost structure. “Evaluating options in this fashion isn’t easy,” Knorr surmises. “But knowing how a position might respond can help decide whether it’s better to pay a little or a lot for a put – or perhaps forgo this type of protection altogether.”
Dry weather in the U.S. Northern Plains continued to lift soybean futures, though the soy complex could see more upward price movement later this morning if USDA reports favorable new crop export sales for the week ending July 22.
USDA confirmed late last night that hogs in the Dominican Republic had tested positive for African swine fever (ASF), the deadly virus that decimated over half of China’s hog herd after its onset in 2019. It is the first time in 40 years the virus has been detected in North America.
The Department of Homeland Security’s Customs and Border Protection unit will be increasing its diligence in preventing the highly contagious virus from entering the U.S. by way of more inspections of flights entering the U.S. from the DR. Health officials will be closely examining how the virus, which is fatal to pigs, entered the country.
After a bullish week of new crop sales offerings last week, U.S. exporters will attempt to replicate those results for a second straight week in today’s Export Sales report. Market analysts continue to have little enthusiasm for 2020/21 weekly soybean export sales, which are estimated at -1.8 million – 7.3 million bushels. Optimism for 2021/22 weekly soybean shipments is much more optimistic, with trade analysts predicting a range between 7.3 million – 16.5 million bushels.
Even though soybean shipping paces are at seasonally low levels, there is some hope for a volume increase this week from Mexico and Southeast Asia. For the week ending July 22, U.S. exporters shipped 8.9 million bushels of soybeans into international channels, according to Monday’s Grains Inspection for Export report from USDA.
If today’s Export Sales report from USDA confirms Monday’s total, it would be the largest weekly export volume for U.S. soybeans in over a month, after supply concerns and negative crushing margins in China dampened usage outlooks.
Crop tours in North Dakota and reduced forecasts for the Russian wheat crop lifted prices in the wheat complex this morning. A stronger dollar also paved the way for wheat’s gains in the overnight trading session. Spring wheat crops across the Northern Plains continue to blister in the heat, sending shock ripples through the market as far as to Paris, where Euronext milling wheat futures climbed to a two-month high overnight on global supply concerns.
The Wheat Quality Council’s (WQC) annual spring wheat tour will wrap up today in Northeastern North Dakota. Yesterday’s stops in northwestern regions of the Roughrider State found yield estimates calculated at a measly 24.6 bushels per acre, with yields and quality conditions varying based on scattered showers received in the region this year. Five-year average yields stand at 42.4 bpa.
The entire state of North Dakota is experiencing moderate to exceptional drought conditions. On Monday, USDA only estimated 9% of U.S. spring wheat acreage to be in good to excellent condition – the lowest rating since the devastating drought of 1988.
Seasonally high wheat export shipments will offer traders and farmers alike a boost of optimism ahead of this morning’s weekly Export Sales report. Market analysts expect today’s weekly wheat export sales tally to range between 12.9 million – 22.0 million bushels.
Hydrometcentre, Russia’s state weather forecaster, expects the 2021/22 Russian grain crop will fall by 9% from a year prior to 121 million tonnes. Drought in Central Russia and untimely rains in the South have increased quality and yield variability in crops across the country.
Early yield estimates from Russia’s southern regions suggest wheat crops in that region may turn out higher than expected yields though the final count hangs in the balance of drought-stressed central regions of the country.
Predictions for weekly wheat export shipments are even more robust. For the week ending July 22, U.S. wheat inspected at export terminals measured at 17.6 million bushels, a 2-million-bushel weekly decline according to Monday’s Grains Inspection for Export report from USDA.
Despite the slight weekly decline – which could be reversed in today’s report as more data becomes available – peak wheat shipping season remains in full effect as freshly harvested winter wheat supplies fill export channels. China and Mexico will likely continue to be strong players in this week’s report, though after recording a combined total of 6.4 million bushels last week, several African nations including Djibouti, Nigeria, Somalia, and Sudan could give China some competition for U.S. wheat.
Cooler temperatures are moving into the Upper Midwest as showers from earlier this week move out, according to NOAA’s short-range forecasts. Temperatures will likely fall into the 80’s in the Upper Midwest by this afternoon, though blistering temperatures will likely remain in place in the Southern Plains. The cooldown bodes well for crops – especially corn crops that are entering into peak pollination activity this week.
The showers will shift into the Eastern Corn Belt today, where up to an inch of accumulation is possible over the next 24 hours. Showers will also move into the Northern Plains later this evening, which could provide some relief to drought-stressed crops in the region.
Coronavirus cases in the U.S. rose to 34,675,359 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 611,805 deaths as of press time.
According to the CDC, 69% of U.S. adults have received at least one COVID-19 vaccine. Over 163 million Americans (49%) are fully vaccinated. Nearly 4 billion vaccine doses have been administered worldwide.
It’s halfway through the 2021 growing season and Water Street Solutions CEO Darren Frye points out that it is a great time to evaluate how your farm’s progress towards financial goals are going. “You can revisit projections created earlier in the year to make updates and changes, now that you probably know more information about things like costs, revenues, and the current state of your crops,” Frye suggests.
In the latest Finance First column, Frye recommends that farmers take some time in the next few weeks to evaluate 2021 crop year projections, long-term operational goals, and financial metrics. “Once you’ve checked in with these three areas, you may have a clearer picture of where your operation currently stands,” Frye explains.
|Morning Ag Commodity Prices - 7/29/2021|
|Contract||Units||High||Low||Last||Net Change||% Change|
|SEP '21 CORN||$ / BSH||5.525||5.465||5.5||0.0075||0.14%|
|DEC '21 CORN||$ / BSH||5.525||5.4625||5.5||0.01||0.18%|
|MAR '22 CORN||$ / BSH||5.6||5.5425||5.575||0.0075||0.13%|
|MAY '22 CORN||$ / BSH||5.635||5.5825||5.615||0.0075||0.13%|
|JUL '22 CORN||$ / BSH||5.645||5.59||5.62||0.0075||0.13%|
|SEP '22 CORN||$ / BSH||5.1475||5.0975||5.1375||0.015||0.29%|
|DEC '22 CORN||$ / BSH||4.985||4.945||4.96||-0.005||-0.10%|
|AUG '21 SOYBEANS||$ / BSH||14.44||14.2775||14.385||0.065||0.45%|
|SEP '21 SOYBEANS||$ / BSH||13.83||13.66||13.7775||0.075||0.55%|
|NOV '21 SOYBEANS||$ / BSH||13.7425||13.57||13.685||0.075||0.55%|
|JAN '22 SOYBEANS||$ / BSH||13.7825||13.6175||13.7325||0.0775||0.57%|
|MAR '22 SOYBEANS||$ / BSH||13.69||13.5425||13.625||0.0575||0.42%|
|MAY '22 SOYBEANS||$ / BSH||13.65||13.4975||13.6075||0.075||0.55%|
|JUL '22 SOYBEANS||$ / BSH||13.6375||13.48||13.6375||0.125||0.93%|
|AUG '22 SOYBEANS||$ / BSH||13.36||#N/A||13.3075||0||0.00%|
|SEP '22 SOYBEANS||$ / BSH||12.7875||#N/A||12.84||0||0.00%|
|AUG '21 SOYBEAN OIL||$ / LB||67.27||66.35||66.92||0.37||0.56%|
|SEP '21 SOYBEAN OIL||$ / LB||65.63||64.68||65.24||0.31||0.48%|
|AUG '21 SOY MEAL||$ / TON||359.1||356||358.9||2.8||0.79%|
|SEP '21 SOY MEAL||$ / TON||358.3||355.3||358.2||2.7||0.76%|
|OCT '21 SOY MEAL||$ / TON||357.1||354.1||356.8||2.2||0.62%|
|DEC '21 SOY MEAL||$ / TON||360.8||357.4||360||1.9||0.53%|
|JAN '22 SOY MEAL||$ / TON||360.8||358||360||1.4||0.39%|
|SEP '21 Chicago SRW||$ / BSH||6.985||6.89||6.9425||0.055||0.80%|
|DEC '21 Chicago SRW||$ / BSH||7.0725||6.9775||7.0325||0.055||0.79%|
|MAR '22 Chicago SRW||$ / BSH||7.135||7.0475||7.1025||0.055||0.78%|
|MAY '22 Chicago SRW||$ / BSH||7.14||7.095||7.14||0.0875||1.24%|
|JUL '22 Chicago SRW||$ / BSH||6.9525||6.87||6.9225||0.0475||0.69%|
|SEP '21 Kansas City HRW||$ / BSH||6.695||6.58||6.665||0.07||1.06%|
|DEC '21 Kansas City HRW||$ / BSH||6.8075||6.695||6.775||0.0675||1.01%|
|MAR '22 Kansas City HRW||$ / BSH||6.8725||6.77||6.8575||0.075||1.11%|
|MAY '22 Kansas City HRW||$ / BSH||6.8925||6.86||6.8925||0.085||1.25%|
|JUL '22 Kansas City HRW||$ / BSH||6.77||6.6875||6.755||0.065||0.97%|
|SEP '21 MLPS Spring Wheat||$ / BSH||9.17||9.0675||9.14||0.1025||1.13%|
|DEC '21 MLPS Spring Wheat||$ / BSH||9.035||8.93||9||0.0925||1.04%|
|MAR '22 MLPS Spring Wheat||$ / BSH||8.885||8.79||8.8475||0.08||0.91%|
|MAY '22 MLPS Spring Wheat||$ / BSH||8.73||8.685||8.6925||0.06||0.70%|
|JUL '22 MLPS Spring Wheat||$ / BSH||8.535||8.535||8.535||0.0525||0.62%|
|SEP '21 ICE Dollar Index||$||92.29||91.975||92.055||-0.262||-0.28%|
|SE '21 Light Crude||$ / BBL||73.27||72.26||72.75||0.36||0.50%|
|OC '21 Light Crude||$ / BBL||72.64||71.66||72.15||0.36||0.50%|
|AUG '21 ULS Diesel||$ /U GAL||2.1751||2.1535||2.1657||0.0097||0.45%|
|SEP '21 ULS Diesel||$ /U GAL||2.1773||2.1537||2.1672||0.0095||0.44%|
|AUG '21 Gasoline||$ /U GAL||2.3281||2.3062||2.315||0.0068||0.29%|
|SEP '21 Gasoline||$ /U GAL||2.3||2.278||2.2886||0.0066||0.29%|
|AUG '21 Feeder Cattle||$ / CWT||0||#N/A||160.175||0||0.00%|
|SEP '21 Feeder Cattle||$ / CWT||0||#N/A||163.45||0||0.00%|
|AU '21 Live Cattle||$ / CWT||0||#N/A||123.075||0||0.00%|
|OC '21 Live Cattle||$ / CWT||0||#N/A||128.525||0||0.00%|
|AUG '21 Live Hogs||$ / CWT||0||#N/A||105.7||0||0.00%|
|OCT '21 Live Hogs||$ / CWT||0||#N/A||89.525||0||0.00%|
|JUL '21 Class III Milk||$ / CWT||16.48||16.48||16.48||-0.04||-0.24%|
|AUG '21 Class III Milk||$ / CWT||16.39||16.39||16.39||0.04||0.24%|
|SEP '21 Class III Milk||$ / CWT||16.5||16.45||16.45||-0.05||-0.30%|