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Morning Market Review for June 18, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Grain markets bounce back after yesterday’s selloff. (Comments are updated by 7:30 a.m. Central Time.)

Soybeans on track for another volatile day of trading

  • Corn up 13-18 cents
  • Soybeans up 44-55 cents, soyoil up $1.70/lb, soymeal up $4.40/ton
  • Wheat up 11-16 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 is live on our website. 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

Even with a stronger dollar and showers on the forecast in the Upper Midwest over the weekend, persistent drought conditions across the Corn Belt – and a round of bargain buying – sent Chicago corn futures prices $0.13-$0.18/bushel higher this morning.

As drought continues to grip the Upper Midwest, Total Farm Marketing’s Naomi Blohm offers farmers some key trading insights as price volatility intensifies. “This is not a drought year like 2012,” Blohm cautions. “However, it’s definitely not a perfect growing season. Corn prices will have serious volatility heading into month end as trade watches rain totals, weekly crop progress ratings, and the June 30th report consisting of both Quarterly Stocks and Planted Acres.”

“Continue to focus on cash sales, and make sure you have a good handle on the crop insurance you purchased this year,” Blohm advises in the latest Ag Marketing IQ column. Price volatility will continue to be an unknown, but Blohm offers suggestions for both sides of potential market movements.

“If you are of a bullish tone, consider fixed risk strategies like buying call options or bull call spreads, (where you buy an at the money call, and sell an out of the money call),” Blohm suggests. “If you are concerned that prices may fall lower, then start looking at buying puts, or bear put spreads (also a fixed risk position where you buy an at the money put and sell an out of the money put).”

Soybeans

Soybean prices geared up for another very volatile day of trading this morning, rising a staggering $0.44-$0.55/bushel on bargain buying and renewed drought concerns to the U.S. crop. The Chicago Board of Trade expanded soybean futures daily trading limit on Wednesday to $1.50/bushel as market volatility intensifies.

Confusion over the future of U.S. biofuel policies in the Biden Administration, tightening global vegetable oil supplies, COVID-19 demand fluctuations in India, and uncertainty about Chinese export demand for the 2021/22 season continue to loom large over the soy complex and increase price volatility.

Subsoil moisture is all the rage these days and with good reason, writes Commstock Investment’s Matthew Kruse.

“Markets are focused entirely on forecast rain chances and cooler temps, selling in anticipation,” he shares in a recent Ag Marketing IQ column.

“They are selling the rumor so the market will have the rain built in before it falls. It is going to take a lot of rain and a significant pattern change to end the drought. In the markets defense, forecast conditions are the best they have been with two systems showing potential to bring rain to dry soils soon. The market is reflecting that.”

With tight global supplies, Kruse estimates that a single inch of rain is not likely to reverse drought conditions or crop damage. And with global grain demand soaring, “there is no ‘cushion’ available to offset anything less than a good U.S. crop,” Kruse concludes.

Wheat

Despite a stronger dollar, which is rallying on the Federal Reserve’s most recent market outlook to raise interest rates in 2023, wheat markets followed corn and soybean prices higher this morning, with a little extra support found from dry spring wheat conditions in the Northern Plains. Wheat futures traded $0.11-$0.16/bushel higher this morning as a favorable winter wheat harvest gets underway in the Northern Hemisphere.

French farm office FranceAgriMer reported soft wheat ratings to be in stable condition relative to last week. For the week ending June 14, FranceAgriMer found soft wheat ratings to be 81% good to excellent for the second consecutive week.

Timely spring rains in Western Europe this spring has helped the French soft wheat crop flourish, though a hot and dry forecast could take a bite out of bountiful yields in the coming days. France is the European Union’s largest producer of wheat. The EU is the world’s second largest wheat exporter.

Weather

Rains will linger over the Eastern Corn Belt over the next couple days, with drought-stressed Michigan seeing a much-needed chance of showers, according to NOAA’s short-range forecasts. Total accumulation over the next 24 hours is expected to range between one to two inches in the region, with Wisconsin, Illinois, and Eastern Iowa seeing a chance of showers totaling up to an inch.

Keep an eye on a rain system developing in the U.S. Gulf this weekend. Forecasters – and farmers – are expecting it to support wetter weather across the Corn Belt over the next week. The Northern Plains will likely see showers on Sunday as a low-pressure system moves through the area.

Financials

Coronavirus cases in the U.S. rose to 33,509,737 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 600,935 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, 53% of the total U.S. population has received at least one COVID-19 vaccine. Over 147 million Americans (45%) are fully vaccinated. Over 2.5 billion vaccine doses have been administered worldwide.

In response to rising global fertilizer prices and increasingly tight supplies, China will likely begin stockpiling fertilizer supplies to ensure availability and affordability for the nations’ farmers. A Reuters report released overnight predicted the Chinese Agriculture Ministry will likely ensure fertilizer stocks are readily accessible to farmers as planting season continues.

The Chinese government plans to offer $3.1 billion in subsidies to farmers to help them navigate an era of rising input prices and encourage production. China’s feed demand from grain production has soared over the past year as its hog herd has returned to pre-African swine fever levels and consumer demand for meat intensifies.

In an effort to build up supplies and reduce import costs, the Chinese government offered grain farmers additional financial incentives to expand grain production acreage earlier this year. China is expected to be the world’s largest grain importer in the 2021/22 marketing year, bringing in 1.0 billion bushels of corn and 3.8 billion bushels of soybeans, according to USDA. It is expected to trail the EU as the world’s second largest importer of wheat, importing an estimated 1.3 billion bushels from international sources.

It is the latest in a series of moves 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."

U.S. stock markets are on track for another day of losses following Wednesday’s updated Federal Reserve outlook that hinted that it may start raising interest rates in 2023 – earlier than markets were previously expecting. Banking and energy stocks bore the brunt of the news, though tech stocks saw a boost as concerns about inflation and rising interest rates loomed large. S&P 500 futures fell 0.29% to $4,200.00 on the news.

Morning Ag Commodity Prices - 6/18/2021
Contract Units High Low Last Net Change % Change
JUL '21 CORN $ / BSH  6.48 6.295 6.455 0.125 1.97%
SEP '21 CORN $ / BSH  5.675 5.4675 5.645 0.16 2.92%
DEC '21 CORN $ / BSH  5.5175 5.305 5.495 0.17 3.19%
MAR '22 CORN $ / BSH  5.58 5.3825 5.565 0.17 3.15%
MAY '22 CORN $ / BSH  5.625 5.425 5.61 0.175 3.22%
JUL '22 CORN $ / BSH  5.6275 5.4325 5.6125 0.175 3.22%
SEP '22 CORN $ / BSH  5.02 4.8975 5.015 0.1 2.03%
JUL '21 SOYBEANS $ / BSH  13.92 13.3075 13.845 0.5475 4.12%
AUG '21 SOYBEANS $ / BSH  13.53 12.95 13.4225 0.4725 3.65%
SEP '21 SOYBEANS $ / BSH  13.16 12.595 13.05 0.465 3.69%
NOV '21 SOYBEANS $ / BSH  13.11 12.5275 13.0025 0.475 3.79%
JAN '22 SOYBEANS $ / BSH  13.14 12.5675 13.04 0.4725 3.76%
MAR '22 SOYBEANS $ / BSH  12.9625 12.465 12.8675 0.45 3.62%
MAY '22 SOYBEANS $ / BSH  12.935 12.4625 12.845 0.44 3.55%
JUL '22 SOYBEANS $ / BSH  12.9575 12.5 12.8925 0.4475 3.60%
AUG '22 SOYBEANS $ / BSH  12.6925 #N/A 12.31 0 0.00%
JUL '21 SOYBEAN OIL  $ / LB 58.98 55.49 58.24 1.67 2.95%
AUG '21 SOYBEAN OIL  $ / LB 57.28 53.73 56.72 2.38 4.38%
JUL '21 SOY MEAL $ / TON 367.7 360.9 366.2 4.7 1.30%
AUG '21 SOY MEAL $ / TON 368.2 362.2 366.8 4 1.10%
SEP '21 SOY MEAL $ / TON 369.6 364.1 368.5 3.8 1.04%
OCT '21 SOY MEAL $ / TON 369.8 365.4 369.8 4 1.09%
DEC '21 SOY MEAL $ / TON 373.7 369.1 372.7 3.3 0.89%
JUL '21 Chicago SRW $ / BSH  6.585 6.39 6.5575 0.1675 2.62%
SEP '21 Chicago SRW $ / BSH  6.6225 6.43 6.5925 0.1625 2.53%
DEC '21 Chicago SRW $ / BSH  6.68 6.4975 6.655 0.1575 2.42%
MAR '22 Chicago SRW $ / BSH  6.73 6.5725 6.705 0.14 2.13%
MAY '22 Chicago SRW $ / BSH  6.7425 6.605 6.7425 0.155 2.35%
JUL '21 Kansas City HRW $ / BSH  6.045 5.855 6.0125 0.16 2.73%
SEP '21 Kansas City HRW $ / BSH  6.13 5.9475 6.1025 0.16 2.69%
DEC '21 Kansas City HRW $ / BSH  6.235 6.05 6.2125 0.165 2.73%
MAR '22 Kansas City HRW $ / BSH  6.315 6.17 6.2875 0.135 2.19%
MAY '22 Kansas City HRW $ / BSH  6.41 6.3525 6.395 0.1725 2.77%
JUL '21 MLPS Spring Wheat $ / BSH  7.6825 7.4975 7.6825 0.17 2.26%
SEP '21 MLPS Spring Wheat $ / BSH  7.7225 7.54 7.71 0.1475 1.95%
DEC '21 MLPS Spring Wheat $ / BSH  7.675 7.535 7.675 0.12 1.59%
MAR '22 MLPS Spring Wheat $ / BSH  7.545 7.545 7.545 0.0075 0.10%
MAY '22 MLPS Spring Wheat $ / BSH  7.5625 #N/A 7.5 0 0.00%
SEP '21 ICE Dollar Index $ 92.06 91.805 91.95 0.077 0.08%
 JU '21 Light Crude $ / BBL  71.12 70.33 70.57 -0.47 -0.66%
 AU '21 Light Crude $ / BBL  70.85 70.04 70.28 -0.5 -0.71%
JUL '21 ULS Diesel $ /U GAL 2.0679 2.0432 2.0578 -0.009 -0.44%
AUG '21 ULS Diesel $ /U GAL 2.0709 2.0464 2.0608 -0.0086 -0.42%
JUL '21 Gasoline $ /U GAL 2.1337 2.112 2.1264 -0.0078 -0.37%
AUG '21 Gasoline $ /U GAL 2.139 2.1173 2.1319 -0.0069 -0.32%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 157.4 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 159.1 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 120.1 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 121.1 0 0.00%
JUL '21 Live Hogs $ / CWT 0 #N/A 111 0 0.00%
AUG '21 Live Hogs $ / CWT 0 #N/A 107.2 0 0.00%
JUN '21 Class III Milk $ / CWT 17.31 17.3 17.3 0.01 0.06%
JUL '21 Class III Milk $ / CWT 16.84 16.77 16.84 0.02 0.12%
AUG '21 Class III Milk $ / CWT 17.35 17.31 17.32 -0.12 -0.69%
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