Morning Market Review for June 21, 2021

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Corn, soy tumble on weekend rains. (Comments are updated by 7:30 a.m. Central Time.)

Wheat edges down on winter wheat harvest progress

  • Corn down 14-18 cents
  • Soybeans down 18-27 cents, soyoil down $0.35/lb, soymeal down $6.70/ton
  • Wheat down 5-10 cents

*Prices as of 6:50 am CDT.

Crop Progress report out today: USDA releases its weekly Crop Progress update this afternoon. After last week’s report saw crop conditions tumble for corn, soybeans, and spring wheat across the Midwest and Plains, it seems likely that trend will continue for another week after blistering hot temperatures and scarce showers across the Heartland.

Top end yields are likely a thing of the past after this week, but the situation isn’t as dire at this point as the media makes it out to be. Drought-stressed regions of the Upper Midwest, including Michigan, Wisconsin, Iowa, Nebraska, and Northern Kansas received over an inch of precipitation over the past three days. The Eastern Corn Belt, including Illinois, Indiana, and Ohio also saw showers this weekend.

Dry topsoil conditions had a chance to be replenished over the weekend as crop roots continue to tunnel down into the subsoil to find available moisture supplies. Increasing reports of leaf rolling continue to trickle in from Feedback from the Field responses, but subsoil moisture levels remain largely available to young plants, stimulating root development that will likely favor pollination conditions for corn and soybean crops in the coming weeks.

Grain markets are already trending lower this morning on the weekend showers, suggesting the results from this afternoon’s Crop Progress report may have little impact on potential upward prices movements.

Last week’s report saw corn conditions fall 4% to 68% good to excellent, while soybean conditions slipped 5% to 62% good to excellent. Showers continue to delay winter wheat harvest progress in the Southern Plains, which was 4% complete as of last week compared to the five-year average of 15% for the same reporting period. Spring wheat conditions continue to suffer amid drought, falling 1% in last week’s report to 37% good to excellent.

Speaking of Feedback from the Field: 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!

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.

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

Chicago corn futures fell $0.14-$0.18/bushel after over an inch of rain fell on drought-stressed regions of the Upper Midwest over the weekend, providing moisture relief to the young crop. Losses were limited by steady export paces to China and Southeast Asia in recent weeks.

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 followed those of corn lower on weekend rain showers, falling $0.18-$0.27/bushel at last glance. Steady Chinese buying paces in recent months from top global soy supplier, Brazil, also weighed soybean prices lower this morning, especially as U.S. soy shipping paces to China settle into seasonal lows.

Chinese soybean buyers continue to focus solely on Brazilian exportable supplies, snapping up 339.1 million bushels from Brazil in May 2021, an 82% increase over April 2021 volumes as a delayed Brazilian soybean harvest finally came to market.

Despite a delayed shipping season, Chinese soybean purchases from Brazil in May 2021 were 13.6 million bushels higher than a year prior. But year-to-date soy shipping volumes from Brazil to China were nearly 29% lower than the same time a year ago due to the slow start to the exporting season.

"Soybean prices on the foreign market are quite high while we don't see an obvious increase in demand for soymeal in China," Wang Xiaoyang, an analyst with Sinolink Futures, told Reuters.

However, as China’s hog herd returns to pre-African swine fever outbreak volumes and the Brazilian soybean crop becomes readily available at export terminals, expect shipping volumes between the two countries to climb to new heights. On Friday, China also booked eight cargoes of U.S. soybeans to be delivered this fall after Chicago new crop futures fell to the lowest price since March 2021, signaling strong demand expected in the coming months.

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

Wheat prices fell $0.05-$0.09/bushel this morning as harvest activity on the winter wheat crop ramps up across the Northern Hemisphere. A weaker dollar helped limit the morning’s losses which were pressured lower by favorable weather conditions in the U.S. Southern Plains and Midwest.

Weather

Cooler temperatures after weekend showers today should provide some relief to growing crops across the Heartland, according to NOAA’s short-range forecasts. More rains are expected this afternoon in the Central Plains and Eastern Corn Belt, though total accumulation is expected to be light. Skies are likely to clear out by tomorrow.

Financials

Coronavirus cases in the U.S. rose to 33,542,382 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 601,825 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, over 53% of the total U.S. population has received at least one COVID-19 vaccine. Nearly 150 million Americans (45%) are fully vaccinated. Over 2.6 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."

Morning Ag Commodity Prices - 6/21/2021
Contract Units High Low Last Net Change % Change
JUL '21 CORN $ / BSH  6.5125 6.365 6.435 -0.1175 -1.79%
SEP '21 CORN $ / BSH  5.73 5.535 5.6025 -0.1725 -2.99%
DEC '21 CORN $ / BSH  5.62 5.4 5.4825 -0.18 -3.18%
MAR '22 CORN $ / BSH  5.6875 5.5 5.5575 -0.175 -3.05%
MAY '22 CORN $ / BSH  5.695 5.5625 5.6375 -0.1375 -2.38%
JUL '22 CORN $ / BSH  5.735 5.5625 5.6175 -0.165 -2.85%
SEP '22 CORN $ / BSH  5.0475 4.87 4.9425 -0.145 -2.85%
JUL '21 SOYBEANS $ / BSH  13.95 13.71 13.8025 -0.1575 -1.13%
AUG '21 SOYBEANS $ / BSH  13.5125 13.3 13.34 -0.21 -1.55%
SEP '21 SOYBEANS $ / BSH  13.115 12.9025 12.9225 -0.25 -1.90%
NOV '21 SOYBEANS $ / BSH  13.0625 12.8525 12.875 -0.255 -1.94%
JAN '22 SOYBEANS $ / BSH  13.0975 12.895 12.895 -0.2725 -2.07%
MAR '22 SOYBEANS $ / BSH  12.955 12.755 12.77 -0.25 -1.92%
MAY '22 SOYBEANS $ / BSH  12.94 12.7525 12.765 -0.24 -1.85%
JUL '22 SOYBEANS $ / BSH  12.97 12.7825 12.825 -0.21 -1.61%
AUG '22 SOYBEANS $ / BSH  12.6975 12.685 12.685 -0.205 -1.59%
JUL '21 SOYBEAN OIL  $ / LB 58.54 56.89 57.83 -0.29 -0.50%
AUG '21 SOYBEAN OIL  $ / LB 57.05 55.38 56.21 -0.5 -0.88%
JUL '21 SOY MEAL $ / TON 371.4 366.6 367.1 -6.3 -1.69%
AUG '21 SOY MEAL $ / TON 371.5 366.6 367.7 -6.1 -1.63%
SEP '21 SOY MEAL $ / TON 372.3 368.7 368.9 -6.3 -1.68%
OCT '21 SOY MEAL $ / TON 372.5 369 369.2 -6.3 -1.68%
DEC '21 SOY MEAL $ / TON 376.3 372.1 372.5 -6.6 -1.74%
JUL '21 Chicago SRW $ / BSH  6.625 6.515 6.5475 -0.08 -1.21%
SEP '21 Chicago SRW $ / BSH  6.65 6.54 6.5725 -0.085 -1.28%
DEC '21 Chicago SRW $ / BSH  6.7 6.5775 6.6225 -0.09 -1.34%
MAR '22 Chicago SRW $ / BSH  6.7575 6.6575 6.6775 -0.095 -1.40%
MAY '22 Chicago SRW $ / BSH  6.7375 6.67 6.69 -0.09 -1.33%
JUL '21 Kansas City HRW $ / BSH  6.075 5.97 5.98 -0.085 -1.40%
SEP '21 Kansas City HRW $ / BSH  6.1775 6.06 6.075 -0.0825 -1.34%
DEC '21 Kansas City HRW $ / BSH  6.2625 6.17 6.175 -0.0875 -1.40%
MAR '22 Kansas City HRW $ / BSH  6.3525 6.285 6.295 -0.0725 -1.14%
MAY '22 Kansas City HRW $ / BSH  6.3875 6.38 6.3825 -0.05 -0.78%
JUL '21 MLPS Spring Wheat $ / BSH  7.615 7.495 7.545 -0.08 -1.05%
SEP '21 MLPS Spring Wheat $ / BSH  7.645 7.535 7.58 -0.0825 -1.08%
DEC '21 MLPS Spring Wheat $ / BSH  7.595 7.5125 7.59 -0.05 -0.65%
MAR '22 MLPS Spring Wheat $ / BSH  7.5225 7.5225 7.5225 -0.0925 -1.21%
MAY '22 MLPS Spring Wheat $ / BSH  7.475 7.475 7.475 -0.0925 -1.22%
SEP '21 ICE Dollar Index $ 92.36 92.025 92.085 -0.124 -0.13%
 JU '21 Light Crude $ / BBL  72.41 71.48 71.66 0.02 0.03%
 AU '21 Light Crude $ / BBL  72.05 71.12 71.29 0 0.00%
JUL '21 ULS Diesel $ /U GAL 2.1181 2.0789 2.0799 -0.0133 -0.64%
AUG '21 ULS Diesel $ /U GAL 2.1219 2.082 2.0823 -0.0144 -0.69%
JUL '21 Gasoline $ /U GAL 2.19 2.1542 2.1565 -0.0118 -0.54%
AUG '21 Gasoline $ /U GAL 2.196 2.1606 2.1613 -0.0127 -0.58%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 155.025 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 157.225 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 121.05 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 121.55 0 0.00%
JUL '21 Live Hogs $ / CWT 0 #N/A 108.675 0 0.00%
AUG '21 Live Hogs $ / CWT 0 #N/A 106.675 0 0.00%
JUN '21 Class III Milk $ / CWT 17.31 #N/A 17.33 0 0.00%
JUL '21 Class III Milk $ / CWT 16.9 16.76 16.76 0.04 0.24%
AUG '21 Class III Milk $ / CWT 17.23 17.23 17.23 0 0.00%
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