Morning Market Review for June 11, 2021

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Weekend rains in Upper Midwest dampen grain prices. (Comments are updated by 7:30 a.m. Central Time.)

Grain markets continue to digest the fallout from yesterday’s WASDE report

  • Corn down 8-16 cents
  • Soybeans down 17-22 cents, soyoil down $2.01/lb, soymeal down $1.90/ton
  • Wheat down 7-16 cents

*Prices as of 6:50 am CDT.

Good Morning! Rains in the Northern Plains and Eastern Corn Belt have helped provide some relief to drought-stressed areas of both regions. The latest Feedback from the Field analysis chronicles farmer struggles across the Heartland.

Want to see how your farm stacks up against others across the country? Click here to take our ongoing farmer survey on crop progress at any point in the 2021 grain season. Our Google Map, updated daily, provides all past responses for farm readers.

Corn

Despite trading briefly yesterday above the $7/bushel benchmark, July corn futures slipped back under the $7/bushel mark and started the day out $0.06-$0.12/bushel lower than yesterday’s close as today’s forecast features rains that could provide relief to drought-stressed regions of the Upper Midwest and Northern Plains.

Higher than expected corn yields in Argentina also weighed on futures prices this morning after the Buenos Aires Grains Exchanged raised its outlook for 2020/21 Argentine corn production by 8% to 1.89 billion bushels. Argentina is the world’s third largest exporter of corn.

Despite optimistic weekly ethanol production readings over the past month, producers could face a new challenge in the coming future. A Reuters report overnight suggests that President Biden’s Administration is considering ways to help U.S. refiners find relief from biofuel blending mandates.

The Biden Administration, who also announced planned revisions to Navigable Waters Protection Rule regulations implemented during the Trump era on Wednesday, has actively rolled back President Trump’s significant expansion of blending exemption waivers for refiners during its first few months in office, so the news is somewhat of a shock to the agriculture industry.

The RIN credits refiners are forced to by as part of the Renewable Fuel Standard have soared to the highest prices on record as of late, compounding to the oil industry’s headaches over the past year during which time the pandemic ate away at consumer fuel demand and oil companies’ profits.

USDA fed corn bulls in the June 2021 World Agricultural Supply and Demand Estimates (WASDE) report released yesterday. The World Agricultural Outlook Board (WOAB) slashed 2020/21 corn ending stocks by 150 million bushels – about 100 million more than analysts were expecting – on rising export and ethanol demand.  A reduced corn crop from Brazil also lent bullish strength to the corn complex while wheat futures were mixed following higher global production estimates for the 2021 crop.

Old crop corn stole the show in yesterday’s WASDE report. March and April 2021 featured the largest two monthly corn export loading volumes – and revenues – in recorded history and USDA took that to heart. Strong Chinese demand – as well as rising overall global feed demand – triggered USDA’s upward revisions to the U.S. corn export forecast for 2020/21.

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As summer travel season heats up and more Americans take to the roads in the post-pandemic era, ethanol production has largely returned to pre-pandemic levels over the past month. Added capacity has returned online after idling during the pandemic and refiner and blender usage of ethanol continues to rise.

Both moves will shrink U.S. corn supplies to the tightest level since 1995/96. A smaller Brazilian crop due to ongoing drought stress and late planting issues with the safrinha crop further tightened global supplies as the corn supply situation begins to look increasingly more like that of soybeans. As drought conditions persist in the Upper Midwest and farmers battle slow emergence rates, corn futures will likely give soybeans a strong run their money in the coming weeks.

Soybeans

Soybean prices fell $0.14-$0.23/bushel lower overnight as markets continued to digest the prospect of increased 2020/21 U.S. soybean stocks following yesterday’s WASDE report from USDA.

Increases to the Brazilian soybean harvest also eased export pressure on U.S. soybean supplies while weekend showers in the Northern Plains and Upper Midwest offered hope for drought relief to the newly planted 2021 U.S. soybean crop.

It marks the first time in three weeks the soybean complex has suffered a weekly loss. Soyoil and soymeal prices also followed soybean prices lower this morning, though a global edible oil shortage and livestock demand could help to limit losses for both sectors in the coming days.

USDA walked back record highs for 2020/21 U.S. soybean crush volumes in yesterday’s WASDE report as processors scramble to source feedstocks from dwindling on-farm stocks following an aggressive export and crush season earlier in the 2020/21 marketing year. Cash offerings at crush plants in the Eastern Corn Belt have ranged between $0.45-$1.10/bushel over futures prices in recent days, reflecting scarce supplies and strong usage rates.

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Processing rates will likely decline until the 2021 crop is harvested, though it will face stiff competition from export markets at that time which could offer farmers some lucrative harvest pricing options. U.S. ending stocks widened back to the second-tightest level on record thanks to the lower crush rates.

More biodiesel production capacity is expected to come online in the coming years as the demand for green energy – especially for commercial vehicles – soars. Even with tight capacities, the demand forecasts suggest that high soybean prices may be around for a while.

A better than expected 2020/21 soybean harvest in Brazil also added to the lower prices in the soybean complex both yesterday and this morning. Despite a late planting season, untimely harvest rains, and a dry growing season, USDA raised Brazil’s 2020/21 soybean forecast by 36.7 million bushels to a staggering 5.0 million bushels, with growing paces in 2021/22 expected to slightly outpace the current year’s yields.

As processing demand eases this summer, Total Farm Marketing’s Naomi Blohm begs the question, “How high can this soybean market run?” In the latest Ag Marketing IQ column, Blohm examines the difference between past rallies in 2008 and 2012. USDA bucked historical trends yesterday by reducing U.S. soy crush rates.

But Blohm notes that bullish potential still underlies the soybean complex. “And going forward, due to the imperfect start to the 2021/22 growing season (drought, frost, heavy rain, high heat, not enough rain in some places) we likely will NOT see trendline yield nationwide for this growing season,” Blohm forecasts. “Buckle up friends, it is going to be a wild ride.”

Wheat

About 81% of France’s soft winter wheat crop is rated in good to excellent condition, a 1% improvement from last week as plentiful rains soak the European Union’s largest wheat producer. The prospect for more competitive European Union wheat exports this year, combined with a stronger dollar, higher global wheat production forecasts, and drought-relieving rains in the Northern Plains and Canada sent wheat futures $0.07-$0.13/bushel lower this morning.

In yesterday’s WASDE report, global wheat production rose nearly 7% from prior month estimates to a staggering 29.2 billion bushels expected to be harvested in the 2021/22 marketing year, as favorable spring rains in the European Union, Russia, the U.S., and Ukraine boost global yield expectations.

But rising livestock and human food demand increased global wheat consumption rates to 29.1 billion bushels, leaving global wheat stocks at the tightest level since the 2016/15 season. Ending global stocks for 2021/22 increased slightly higher than analyst expectations on the higher production as Chicago futures inched lower on the prospect of higher global soft wheat competition in the export market.

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Weather

A rain system is expected to move through the Northern Plains and Upper Midwest today, according to NOAA’s short-range forecasts. The system will linger over the Great Lakes tomorrow and shift into the Eastern Corn Belt by Sunday.

The Upper Midwest, Northern Plains, Central Plains, and Eastern Corn Belt could see between a half inch to over an inch of precipitation accumulation in the next 24 hours, which would help provide some relief to depleted soil moisture levels across the regions.

Financials

Coronavirus cases in the U.S. rose to 33,426,993 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 598,750 deaths as of press time. Both metrics have slowed considerably as vaccination rates rise and life begins to return to more normal patterns.

According to the CDC, nearly 52% of the total U.S. population has received at least one COVID-19 vaccine. Nearly 142 million Americans (43%) are fully vaccinated. Over 2.2 billion vaccine doses have been administered worldwide.

Grain markets have been nothing short of volatile this spring, due in large part to variable weather across the Midwest and Plains. But for those looking for more marketing insights, consider checking out Farm Future’s Business Summit, to be held June 16-17 at the Coralville Marriot in Coralville, Iowa.

The Summit will feature a market analyst panel that will break down current market conditions and offer insights as to how long this bull market may – or may not – last. For more information or to register, go to FarmFuturesSummit.com.

The Wall Street Journal reported overnight that meat processing behemoth JBS paid $11 million in Bitcoin to ransomware hackers who halted the company’s North American and Australian meat packing activities early last week. New revisions by the Environmental Protection Agency and Department of the Army are expected to change the definition of “waters of the United States,” In other hot-button ag issues breaking over the past day.

S&P 500 futures rose this morning, on track to close at another record high on gains in the technology sector. But much of the optimism surrounding the economic recovery from the pandemic has waned in recent days as higher inflation rates, the prospect of higher taxes, emergence of new COVID-19 variants, and stock overvaluations are also lingering in the back of traders’ minds. S&P 500 futures added 0.15% in overnight trading to $4,235.25.

Morning Ag Commodity Prices - 6/11/2021
Contract Units High Low Last Net Change % Change
JUL '21 CORN $ / BSH  7.03 6.8625 6.8775 -0.1125 -1.61%
SEP '21 CORN $ / BSH  6.415 6.2175 6.2325 -0.15 -2.35%
DEC '21 CORN $ / BSH  6.1975 5.9875 6.005 -0.16 -2.60%
MAR '22 CORN $ / BSH  6.25 6.045 6.06 -0.16 -2.57%
MAY '22 CORN $ / BSH  6.2775 6.08 6.09 -0.1625 -2.60%
JUL '22 CORN $ / BSH  6.2775 6.0775 6.1 -0.1475 -2.36%
SEP '22 CORN $ / BSH  5.475 5.4025 5.4025 -0.0725 -1.32%
JUL '21 SOYBEANS $ / BSH  15.5125 15.31 15.335 -0.105 -0.68%
AUG '21 SOYBEANS $ / BSH  15.1575 14.9375 14.955 -0.145 -0.96%
SEP '21 SOYBEANS $ / BSH  14.735 14.495 14.51 -0.1725 -1.17%
NOV '21 SOYBEANS $ / BSH  14.6425 14.39 14.405 -0.19 -1.30%
JAN '22 SOYBEANS $ / BSH  14.65 14.4075 14.4075 -0.2025 -1.39%
MAR '22 SOYBEANS $ / BSH  14.3675 14.155 14.155 -0.175 -1.22%
MAY '22 SOYBEANS $ / BSH  14.2925 14.0925 14.0975 -0.165 -1.16%
JUL '22 SOYBEANS $ / BSH  14.2875 14.1 14.1 -0.1575 -1.10%
AUG '22 SOYBEANS $ / BSH  13.98 #N/A 14.0525 0 0.00%
JUL '21 SOYBEAN OIL  $ / LB 70.6 68.57 68.73 -1.73 -2.46%
AUG '21 SOYBEAN OIL  $ / LB 68.9 66.97 67.02 -1.66 -2.42%
JUL '21 SOY MEAL $ / TON 383.9 379.6 380.1 -1.5 -0.39%
AUG '21 SOY MEAL $ / TON 386.4 382.2 382.6 -1.4 -0.36%
SEP '21 SOY MEAL $ / TON 389.2 384.8 385.1 -1.8 -0.47%
OCT '21 SOY MEAL $ / TON 390.6 386.9 386.9 -1.7 -0.44%
DEC '21 SOY MEAL $ / TON 395.9 390.9 391.3 -2.3 -0.58%
JUL '21 Chicago SRW $ / BSH  6.88 6.7625 6.77 -0.0675 -0.99%
SEP '21 Chicago SRW $ / BSH  6.9375 6.8175 6.8275 -0.07 -1.01%
DEC '21 Chicago SRW $ / BSH  7.0125 6.8875 6.895 -0.0775 -1.11%
MAR '22 Chicago SRW $ / BSH  7.07 6.9625 6.9625 -0.075 -1.07%
MAY '22 Chicago SRW $ / BSH  7.08 7.0075 7.015 -0.0375 -0.53%
JUL '21 Kansas City HRW $ / BSH  6.4275 6.3075 6.315 -0.0875 -1.37%
SEP '21 Kansas City HRW $ / BSH  6.5025 6.39 6.4025 -0.0825 -1.27%
DEC '21 Kansas City HRW $ / BSH  6.5875 6.48 6.485 -0.0875 -1.33%
MAR '22 Kansas City HRW $ / BSH  6.6475 6.565 6.565 -0.0925 -1.39%
MAY '22 Kansas City HRW $ / BSH  6.7275 #N/A 6.7125 0 0.00%
JUL '21 MLPS Spring Wheat $ / BSH  7.7975 7.6275 7.6275 -0.1275 -1.64%
SEP '21 MLPS Spring Wheat $ / BSH  7.8625 7.6875 7.71 -0.1075 -1.38%
DEC '21 MLPS Spring Wheat $ / BSH  7.88 7.72 7.72 -0.1125 -1.44%
MAR '22 MLPS Spring Wheat $ / BSH  7.77 7.705 7.7175 -0.11 -1.41%
MAY '22 MLPS Spring Wheat $ / BSH  7.8075 #N/A 7.8075 0 0.00%
JUN '21 ICE Dollar Index $ 90.295 89.96 90.285 0.207 0.23%
 JU '21 Light Crude $ / BBL  70.8 69.68 70.54 0.25 0.36%
 AU '21 Light Crude $ / BBL  70.54 69.47 70.29 0.2 0.29%
JUL '21 ULS Diesel $ /U GAL 2.1528 2.1301 2.1337 -0.0097 -0.45%
AUG '21 ULS Diesel $ /U GAL 2.1549 2.133 2.1369 -0.009 -0.42%
JUL '21 Gasoline $ /U GAL 2.2232 2.1975 2.2036 -0.0086 -0.39%
AUG '21 Gasoline $ /U GAL 2.222 2.1975 2.2033 -0.0082 -0.37%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 148.4 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 150.9 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 117.575 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 118.55 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 122.45 0 0.00%
JUL '21 Live Hogs $ / CWT 0 #N/A 121.325 0 0.00%
JUN '21 Class III Milk $ / CWT 17.21 17.2 17.2 0 0.00%
JUL '21 Class III Milk $ / CWT 17.49 #N/A 17.6 0 0.00%
AUG '21 Class III Milk $ / CWT 18.38 18.34 18.34 -0.03 -0.16%
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