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Morning Market Review for June 16, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Corn claws back gains on heat stress. (Comments are updated by 7:30 a.m. Central Time.)

Soybeans struggle to overcome easing supply forecasts

  • Corn mixed to up 1-2 cents
  • Soybeans down 13-17 cents, soyoil down $1.35/lb, soymeal up $0.30/ton
  • Chicago & Kansas City wheat up 1-2 cents; Minneapolis wheat up 8-9 cents

*Prices as of 6:50 am CDT.

Feedback from the Field update: Farmers across the country watched the rising thermometer evaporate hopes for top end yields over the past week as heat stress, drought, and a cool planting season continue to hinder crop development. USDA’s weekly Crop Progress report on Monday confirmed those concerns as ratings for corn, soybeans, and spring wheat tumbled.

Drought is by large the most significant concern for farmers across the Heartland, though the severity varies. “Corn is rolling in the afternoon even on heavy ground. Never seen corn roll this early in the growing season even in 1988, 2012 drought years. Soybeans showing slow growth due to lack of moisture,” a Feedback from the Field respondent in North Central Iowa shared last week.

The latest Feedback from the Field recap will go live on our website this morning. Farmers have been willing and eager to share their crop conditions over the past several weeks and we include all of those insights from every corner of the Corn Belt in this week’s recap!

Want to see how crop conditions on your farm stack 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

As trader optimism for next week’s rains shifted focus to current forecasts that antagonized an already heat-stress corn crop, corn futures prices sought to claw back minor price gains this morning.

Chinese state grain company, Sinograin, will auction off corn shipments it imported from Ukraine earlier this month to help ease high grain prices across the country amid tightening supplies and rising fears about inflation. Sinograin will sell 1.5 million bushels of corn on Friday, marking the second sale this month by the state-owned trading company as well as the first state corn import sales in years.

The move to control commodity supplies comes as China seeks to combat rising inflation concerns amid soaring commodity prices. "It is mainly a warning to the market, saying 'don't speculate on agriculture products'," a grain trader told Reuters. “The government has the tools (to cool prices,) but I am not sure how long it will keep at these operations."

USDA announced yesterday that biofuel producers would be eligible for $700 million in COVID-19 related assistance over the next 60 days. The industry suffered devastating financial losses as fuel demand plummeted during the pandemic, forcing many Midwestern ethanol facilities to idle production.

In a statement released with the announcement yesterday by USDA, Secretary of Agriculture Tom Vilsack reassured biofuel producers previously overlooked by aid packages that they had government support as the industry continues to recover from the pandemic.

"USDA is honoring its commitment to get financial assistance to producers and critical agricultural businesses, especially those left out or underserved by previous COVID aid," said Vilsack.

Today’s ethanol report will bear a little more significance than normal in the wake of last week’s report that the Biden Administration may consider relaxing biofuel blending mandates for oil companies following pandemic-related losses suffered by the energy industry.

While speculation about the fate of the biofuels industry will likely remain high in the coming weeks, today’s weekly Petroleum Inventory Status report issued by the U.S. Energy Information Administration could continue to show a trend of increasing consumer demand for gasoline as consumers resume pre-pandemic activities and summer driving season heats up.

Last week’s report saw ethanol output rise by 3.2% to 1.07 million barrels per week, the highest weekly production volume reading since late February 2020. Despite encompassing Memorial Day holiday travel activity, consumer fuel demand fell 7% for the week to 8.5 million barrels/day, likely due to inclement weather as widespread rain showers over the holiday weekend prevented motorists from enjoying their destinations.

As summer travel season heats up and pandemic-fatigued Americans look to enjoy time away from work and with families this summer, expect those numbers to continue climbing.

Soybeans

Soybean futures are on pace to notch a fifth straight trading session of losses this morning, as easing crush rates and favorable weather conditions next week ease price pressure on tightening supplies.

The National Oilseed Producers Association (NOPA) released updated crush values for May 2021 yesterday. With maintenance downtime scheduled at several crush plants across the Midwest during the month, NOPA’s May crush estimate of 163.5 million bushels came in on the lower end of analyst expectations.

Analysts had expected the May crush rate to come in around 165.2 million bushels, with a range of 160 million to 170.4 million bushels. The lower monthly crush volume is a trend likely to continue as processors scramble to source scarce countryside soybean stocks (Fun fact – that is a great tongue twister. You’re welcome!) and production costs remain high.

Soybean prices have fallen $1.1850/bushel since last Wednesday, due in large part to concerns about the future of biofuel blending. Farm Futures contributing analyst Bryce Knorr breaks down the recent biofuel blues in the latest Ag Marketing IQ column, noting that despite the recent runup in soybeans due to the green energy push, biodiesel could be facing a similar fate to waning production volumes in ethanol.

“Biodiesel faces some of the same concerns as ethanol,” Knorr points out. “But because it can be used with or without petroleum blending, the surge in environmental interest fueled a gold rush mentality in the vegetable oil market globally.”

But the U.S. isn’t as big of a player in the international soyoil market as the recent rally would suggest. “Soybeans account for 29% of total vegetable oil production, behind palm oil, which is forecast to have a 35% market share in the 2021 marketing year,” Knorr explains.

And without renewable energy credits, gasoline and diesel producers have little incentive to continue blending corn ethanol and soy biodiesel. “e overall soybean processing industry faces CBOT crush margins near the low end of their range since 2016, with the exception of a brief rally this spring,” Knorr observes, offering insights into potential weaknesses in the biofuels rally.

Wheat

The wheat complex clawed back its first daily price gains in four trading sessions led by concerns for spring wheat crop development amidst a drought in the Northern Plains. Chicago and Kansas City futures received price support from a slow start to harvest in the U.S., though gains were likely muted by strong harvest prospects in the Northern Hemisphere.

Weather

Clear skies and hot temperatures are expected across the Midwest and Plains again today, according to NOAA’s short-range forecasts. Scattered showers will be on the horizon in the Upper Midwest this evening, though total accumulation is not likely to top a half inch.

Financials

Coronavirus cases in the U.S. rose to 33,486,925 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 600,287 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 53% of the total U.S. population has received at least one COVID-19 vaccine. Nearly 146 million Americans (44%) are fully vaccinated. Over 2.4 billion vaccine doses have been administered worldwide.

U.S. stock futures took a breather overnight ahead of comments expected by the Federal Reserve later today about potential policy changed the central bank could potentially enact to reign in high inflation. The Fed has maintained the uptick in prices is a temporary phenomenon as the country emerges from the pandemic, though falling retail sales data announced yesterday adds a new layer of economic uncertainty to the outlook.

S&P 500 futures edged 0.04% lower to $4,234.50 on the sentiment at last glance.

Morning Ag Commodity Prices - 6/16/2021
Contract Units High Low Last Net Change % Change
JUL '21 CORN $ / BSH  6.755 6.6375 6.695 0.02 0.30%
SEP '21 CORN $ / BSH  5.99 5.845 5.9175 0 0.00%
DEC '21 CORN $ / BSH  5.815 5.66 5.74 0.0025 0.04%
MAR '22 CORN $ / BSH  5.8775 5.73 5.8075 0 0.00%
MAY '22 CORN $ / BSH  5.92 5.7725 5.855 0.005 0.09%
JUL '22 CORN $ / BSH  5.9275 5.7825 5.8575 -0.0025 -0.04%
SEP '22 CORN $ / BSH  5.3 5.2475 5.2825 0 0.00%
JUL '21 SOYBEANS $ / BSH  14.75 14.5 14.5275 -0.13 -0.89%
AUG '21 SOYBEANS $ / BSH  14.3525 14.065 14.1275 -0.1325 -0.93%
SEP '21 SOYBEANS $ / BSH  13.9325 13.62 13.7075 -0.14 -1.01%
NOV '21 SOYBEANS $ / BSH  13.8125 13.475 13.5875 -0.1475 -1.07%
JAN '22 SOYBEANS $ / BSH  13.8375 13.5 13.6175 -0.1425 -1.04%
MAR '22 SOYBEANS $ / BSH  13.6325 13.29 13.395 -0.1625 -1.20%
MAY '22 SOYBEANS $ / BSH  13.575 13.25 13.3575 -0.16 -1.18%
JUL '22 SOYBEANS $ / BSH  13.585 13.2825 13.375 -0.17 -1.26%
AUG '22 SOYBEANS $ / BSH  13.145 13.145 13.145 -0.2125 -1.59%
JUL '21 SOYBEAN OIL  $ / LB 66.09 63.81 64.25 -1.32 -2.01%
AUG '21 SOYBEAN OIL  $ / LB 63.85 61.49 61.85 -1.49 -2.35%
JUL '21 SOY MEAL $ / TON 373.5 370.4 372.8 0.4 0.11%
AUG '21 SOY MEAL $ / TON 375 371.8 374.1 0.3 0.08%
SEP '21 SOY MEAL $ / TON 376.9 373.8 375.9 0.2 0.05%
OCT '21 SOY MEAL $ / TON 376.9 373.6 376.4 0.6 0.16%
DEC '21 SOY MEAL $ / TON 380.9 377.1 379.7 0.4 0.11%
JUL '21 Chicago SRW $ / BSH  6.6775 6.5875 6.6325 0.0175 0.26%
SEP '21 Chicago SRW $ / BSH  6.72 6.63 6.6725 0.0125 0.19%
DEC '21 Chicago SRW $ / BSH  6.7825 6.69 6.7425 0.02 0.30%
MAR '22 Chicago SRW $ / BSH  6.8425 6.7625 6.8125 0.0225 0.33%
MAY '22 Chicago SRW $ / BSH  6.8425 6.8 6.83 0.0175 0.26%
JUL '21 Kansas City HRW $ / BSH  6.1775 6.095 6.15 0.0225 0.37%
SEP '21 Kansas City HRW $ / BSH  6.26 6.18 6.23 0.0175 0.28%
DEC '21 Kansas City HRW $ / BSH  6.345 6.285 6.3225 0.025 0.40%
MAR '22 Kansas City HRW $ / BSH  6.415 6.3975 6.4125 0.025 0.39%
MAY '22 Kansas City HRW $ / BSH  6.47 6.47 6.47 0.0175 0.27%
JUL '21 MLPS Spring Wheat $ / BSH  7.5675 7.5 7.56 0.0825 1.10%
SEP '21 MLPS Spring Wheat $ / BSH  7.6425 7.5775 7.64 0.0875 1.16%
DEC '21 MLPS Spring Wheat $ / BSH  7.65 7.5925 7.65 0.0825 1.09%
MAR '22 MLPS Spring Wheat $ / BSH  7.6525 #N/A 7.575 0 0.00%
MAY '22 MLPS Spring Wheat $ / BSH  7.64 #N/A 7.56 0 0.00%
SEP '21 ICE Dollar Index $ 90.535 90.41 90.5 -0.002 0.00%
 JU '21 Light Crude $ / BBL  72.83 72.12 72.4 0.28 0.39%
 AU '21 Light Crude $ / BBL  72.55 71.86 72.14 0.28 0.39%
JUL '21 ULS Diesel $ /U GAL 2.1195 2.0994 2.1055 -0.0068 -0.32%
AUG '21 ULS Diesel $ /U GAL 2.1209 2.1024 2.1082 -0.0065 -0.31%
JUL '21 Gasoline $ /U GAL 2.1802 2.16 2.1657 -0.0048 -0.22%
AUG '21 Gasoline $ /U GAL 2.1828 2.163 2.1683 -0.0046 -0.21%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 156.825 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 158.65 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 121.225 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 123.9 0 0.00%
JUL '21 Live Hogs $ / CWT 0 #N/A 118.5 0 0.00%
AUG '21 Live Hogs $ / CWT 0 #N/A 114.7 0 0.00%
JUN '21 Class III Milk $ / CWT 17.26 17.26 17.26 0.01 0.06%
JUL '21 Class III Milk $ / CWT 17.13 17.13 17.13 0 0.00%
AUG '21 Class III Milk $ / CWT 17.9 #N/A 17.97 0 0.00%
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