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Morning Market Review for June 22, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Corn falls on uncertain global ethanol outlook. (Comments are updated by 7:30 a.m. Central Time.)

Soy edges lower on weekend rains despite declining crop conditions

  • Corn down 5-9 cents
  • Soybeans down 1-7 cents, soyoil down $0.09/lb, soymeal down $0.90/ton
  • Chicago & Kansas City wheat up 2-4 cents; Minneapolis wheat up 26-31 cents

*Prices as of 6:50 am CDT.

Good Morning! How much rain did you receive over the weekend? 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 lower crop condition ratings, concerns about the future of ethanol sent corn futures $0.03-$0.09/bushel lower this morning as forecasts for tight supplies erode profit margins for the corn-based fuel additive both at home and abroad. Weekend showers over the Corn Belt alleviated drought conditions as weekly crop condition ratings further declined.

A Reuters report released overnight suggests that ethanol production in the U.S. and Brazil will likely shrink in the coming months as tight corn supplies and high corn costs in both countries send ethanol profit margins into the red.

Ethanol producers are likely to limit further production increases as gasoline costs soar and corn supplies become increasingly scarce in both countries following an aggressive export season early in each country’s marketing year.

A large cattle inventory in the U.S. has also played a significant role in increased corn disappearance in recent months.

"We do expect ethanol production this summer to slightly lag the output rates we saw during the summers of 2019 and 2018, and high corn prices and regionally tight corn supplies are a major reason for that," Geoff Cooper, president of the Renewable Fuels Association, told Reuters in the report.

Despite weekend rains, corn conditions across the Midwest and Plains continued their descent over the past week, according to the latest Crop Progress report from USDA. Yesterday afternoon’s update saw corn conditions fall 3%, with only 65% of anticipated 2021 corn acres rated in good to excellent condition as of June 20.

Ratings have slipped 11% over the past three weeks as increasingly dry conditions take a toll on the young crop. The ratings decline did not come as much of a surprise to the markets, where analysts expected weekly conditions to come in between 64% - 67% good to excellent for the week.

Feedback from the Field responses echo USDA’s sentiments. Most grower respondents report “Good” to “Fair” conditions on their corn crops with signs of heat stress prevalent across the Upper Midwest.

“Leaves are rolling up by afternoon every day,” said one grower in Western Minnesota. “We need rain.”

Price volatility continues to roil the markets as outside money fluctuates in and out of markets, weather patterns cause tectonic price shifts, and end users brace for another year of high commodity prices. Advance Trading’s Kent Stutzman continues to be in awe of these massive market moves but is not taking the news lying down.

"What happens in July? What happens in the next 6 months? We don’t have the answers to any of those questions,” Stutzman surmises. “So how can we predict where this market will go?”

But Stutzman advises farmers to focus less on price prediction and more on protecting profit margins. “Supply AND demand are ever changing,” Stutzman points out in the latest Ag Marketing IQ column.

“The story isn’t truly written until the end of each marketing year. Knowing that things are always changing, you realize price prediction is impossible, and you can set your sights on a marketing plan that protects profit, not price.”

Soybeans

The weekend’s rains were likely enough to offset declining soybean condition ratings in yesterday’s Crop Progress report. "In some cases, that moisture stopped what would have been a certain drop in conditions," Karen Braun, a global agricultural analyst with Reuters, reported yesterday.

Chicago futures prices shed $0.01-$0.07/bushel on the sentiments.

Soybeans did not fare much better than corn in yesterday’s Crop Progress report. Planting progress in the South slipped below five-year averages in Tennessee and Louisiana as a wet spring in the Southeast stalled field activity. About 97% of anticipated 2021 acres are in the ground as of June 20, ahead of the five-year average of 94% for the same time period.

Emergence rates continue to stay ahead of the five-year average, though some of that progress is likely inflated due to an early planting season. About 91% of the soybean crop has emerged from the ground, up 5% from the previous week and 6% higher than the five-year average. But cool planting conditions and increasingly dry weather has caused young plants to struggle developmentally.

USDA reported on blooming rates for the first time in the 2021 season this week. For the week ending June 20, 5% of the nation’s soybeans were blooming, in line with the five-year average. It is still early to tell if blooming rates have been significantly impacted by poor crop development, but the first week of blooming data suggests that soybean growth across the country varies widely already this year.

Soybean conditions fell 2% on the week to 60% good to excellent as of June 20. “Overall, the crop looks good,” said one Feedback from the Field respondent from Iowa. “But it needs rain soon. The no-till fields are slow growing.”

Wheat

Despite a stronger dollar, wheat prices in Chicago and Kansas City inched $0.02-$0.03/bushel higher as winter wheat harvest in the U.S. slogs along at a slower than normal pace. A bigger than expected cut to spring wheat condition ratings sent Minneapolis futures $0.26-$0.31/bushel higher in overnight trading.

Winter wheat harvest continues at a slower pace relative to previous years due to more showers across the South last week. The rains help boost winter wheat crop conditions up 1% from the previous week to 49% good to excellent as of June 20.

But last week’s showers, paired with dry conditions in the Upper Midwest, continue to stall harvest progress. As of last Sunday, only 17% of 2021 winter wheat acres had been harvested, down 9% from the five-year average despite rising 13% from the previous week.

USDA’s winter wheat harvest reading was more optimistic than analysts had been expecting. Market analysts had forecast yesterday’s winter wheat harvest rate at 15% complete. While USDA’s metric was higher than that expectation, continued delays will likely add bullish support to Chicago and Kansas City wheat prices in the coming days.

Spring wheat crops continue to mature at rapid rates as heat and dry soil moisture conditions further erode crop quality. As of June 20, 27% of U.S. spring wheat acres had reached the heading phase of crop development, up 19% from the previous week and 11% ahead of the five-year average for the same time period.

But another week of blistering heat and little rainfall in the Northern Plains continued to take a toll on spring wheat conditions. As of Sunday, only 27% of the crop was rated in good to excellent condition, with South Dakota and Washington only reporting 5% and 10%, respectively, of their crops to be in good condition. Neither state reported any acreage in excellent condition.

Nationwide spring wheat conditions fell a staggering 10% from the previous week on the furnace-like weather conditions. The ratings lent bullish support to Minneapolis futures prices this morning as the weekly readings came in well below market expectations.

Trade analysts had pegged yesterday’s ratings between 34%-38% with an average guess of 35%. So USDA’s updated reading of 27% good to excellent further drove home the fact that crop development in the Northern Plains and Upper Midwest – for spring wheat as well as corn and soybeans – continues to decline into concerning conditions as the growing season progresses.

Weather

Cooler temperatures and clear skies are expected across the Heartland today, according to NOAA’s short-range forecasts. A chance of showers is possible this afternoon over Iowa and Michigan, with accumulation in Eastern Iowa reaching as much as an inch and a quarter.

Financials

Coronavirus cases in the U.S. rose to 33,555,018 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 602,107 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. Over 150 million Americans (45%) are fully vaccinated. Over 2.6 billion vaccine doses have been administered worldwide.

Morning Ag Commodity Prices - 6/22/2021
Contract Units High Low Last Net Change % Change
JUL '21 CORN $ / BSH  6.68 6.5375 6.56 -0.0325 -0.49%
SEP '21 CORN $ / BSH  5.7925 5.645 5.6625 -0.05 -0.88%
DEC '21 CORN $ / BSH  5.66 5.485 5.4975 -0.0725 -1.30%
MAR '22 CORN $ / BSH  5.72 5.5575 5.5575 -0.0825 -1.46%
MAY '22 CORN $ / BSH  5.765 5.5975 5.5975 -0.0825 -1.45%
JUL '22 CORN $ / BSH  5.76 5.615 5.615 -0.075 -1.32%
SEP '22 CORN $ / BSH  5.16 5.0475 5.0475 -0.075 -1.46%
JUL '21 SOYBEANS $ / BSH  14.2725 14.01 14.1575 0.0075 0.05%
AUG '21 SOYBEANS $ / BSH  13.8075 13.54 13.695 -0.0075 -0.05%
SEP '21 SOYBEANS $ / BSH  13.36 13.08 13.2375 -0.02 -0.15%
NOV '21 SOYBEANS $ / BSH  13.29 12.99 13.1475 -0.045 -0.34%
JAN '22 SOYBEANS $ / BSH  13.325 13.04 13.1675 -0.065 -0.49%
MAR '22 SOYBEANS $ / BSH  13.1775 12.8825 13.02 -0.07 -0.53%
MAY '22 SOYBEANS $ / BSH  13.16 12.8825 13.0125 -0.0725 -0.55%
JUL '22 SOYBEANS $ / BSH  13.1925 12.9775 13.06 -0.0575 -0.44%
AUG '22 SOYBEANS $ / BSH  12.935 12.9075 12.935 -0.0475 -0.37%
JUL '21 SOYBEAN OIL  $ / LB 61.04 59.5 60.63 0.3 0.50%
AUG '21 SOYBEAN OIL  $ / LB 59.3 57.67 58.75 0.07 0.12%
JUL '21 SOY MEAL $ / TON 375.6 369 372.2 -0.9 -0.24%
AUG '21 SOY MEAL $ / TON 374.9 367.8 371.2 -1.2 -0.32%
SEP '21 SOY MEAL $ / TON 375.2 367.9 370.9 -1.6 -0.43%
OCT '21 SOY MEAL $ / TON 373.7 367.7 368.7 -2.9 -0.78%
DEC '21 SOY MEAL $ / TON 377.5 370.4 372.9 -2 -0.53%
JUL '21 Chicago SRW $ / BSH  6.7275 6.635 6.6375 0.0225 0.34%
SEP '21 Chicago SRW $ / BSH  6.765 6.6725 6.6825 0.0325 0.49%
DEC '21 Chicago SRW $ / BSH  6.815 6.725 6.735 0.03 0.45%
MAR '22 Chicago SRW $ / BSH  6.875 6.7875 6.7975 0.03 0.44%
MAY '22 Chicago SRW $ / BSH  6.885 6.805 6.82 0.0375 0.55%
JUL '21 Kansas City HRW $ / BSH  6.125 6.035 6.04 0.0425 0.71%
SEP '21 Kansas City HRW $ / BSH  6.22 6.1225 6.13 0.0375 0.62%
DEC '21 Kansas City HRW $ / BSH  6.3225 6.23 6.2325 0.0325 0.52%
MAR '22 Kansas City HRW $ / BSH  6.4275 6.34 6.34 0.0325 0.52%
MAY '22 Kansas City HRW $ / BSH  6.495 6.48 6.48 0.105 1.65%
JUL '21 MLPS Spring Wheat $ / BSH  8.025 7.85 7.9625 0.3175 4.15%
SEP '21 MLPS Spring Wheat $ / BSH  8.0225 7.87 7.9625 0.2875 3.75%
DEC '21 MLPS Spring Wheat $ / BSH  7.9575 7.835 7.92 0.2725 3.56%
MAR '22 MLPS Spring Wheat $ / BSH  7.9125 7.8025 7.9125 0.295 3.87%
MAY '22 MLPS Spring Wheat $ / BSH  7.8625 7.745 7.8475 0.2725 3.60%
SEP '21 ICE Dollar Index $ 92.135 91.89 92.02 0.139 0.15%
 JU '21 Light Crude $ / BBL  73.8 72.97 73.15 -0.51 -0.69%
 AU '21 Light Crude $ / BBL  73.36 72.49 72.56 -0.56 -0.77%
JUL '21 ULS Diesel $ /U GAL 2.1334 2.1167 2.1192 -0.0076 -0.36%
AUG '21 ULS Diesel $ /U GAL 2.1365 2.1185 2.12 -0.0097 -0.46%
JUL '21 Gasoline $ /U GAL 2.2041 2.1839 2.1922 -0.0047 -0.21%
AUG '21 Gasoline $ /U GAL 2.2101 2.19 2.1947 -0.0084 -0.38%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 155.1 0 0.00%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 157.375 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 120.975 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 121.025 0 0.00%
JUL '21 Live Hogs $ / CWT 0 #N/A 107.05 0 0.00%
AUG '21 Live Hogs $ / CWT 0 #N/A 103.675 0 0.00%
JUN '21 Class III Milk $ / CWT 17.3 #N/A 17.31 0 0.00%
JUL '21 Class III Milk $ / CWT 16.48 #N/A 16.46 0 0.00%
AUG '21 Class III Milk $ / CWT 16.99 #N/A 16.99 0 0.00%
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