Morning Market Review for March 3, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Overnight profit-taking sends grains lower. (Comments are updated by 7:30 a.m. Central Time.)

Minor losses capped by tight global supply forecasts following yesterday’s rally

  • Corn down 1-5 cents
  • Soybeans down 1-5 cents, soyoil up $0.26/lb, soymeal down $0.90/ton
  • Wheat down 4-8 cents

*Prices as of 6:50 am CST.

Editor’s Note: Our March 2021 survey is live! Click here to share 2021 acreage intentions with fellow Farm Futures readers across the country. We will release our 2021 acreage estimates in a few weeks, just ahead of USDA’s March 31 Prospective Plantings report. Thanks!

Corn

Corn prices edged $0.02-$0.05/bushel lower overnight as profit takers took the top off yesterday’s rally. However, losses are limited by drought damage in Argentina and planting delays in Brazil.

Cash grain prices held mostly steady across the Corn Belt yesterday as dealers continued to roll cash bids into the May 2021 Chicago corn futures contract. Basis widened at a processing plant and river terminal in the Western Corn Belt as slow farmer sales sent buyers’ bids higher to attract new supplies.

Corn basis and change

Ethanol data released by the U.S. Energy Information Administration (EIA) today will likely show a recovery to weekly production after a February cold snap depleted natural gas lines across the country and sent production idling amid soaring energy costs over the previous two reporting weeks.

Weekly ethanol output tumbled nearly 28% lower last week from the previous reporting week to 27.6 million gallons/day after natural gas shortages across the country due to the recent cold snap sent ethanol profit margins into the red.

Production dropped at such a rapid rate that even lower demand from blenders and refiners was able to decrease weekly ethanol stocks to 957 million gallons – the lowest weekly reading for ethanol supplies in nearly three months.

Consumer fuel demand fell over 14% on the week to 302.7 million gallons/day on the week as most of the continental U.S. bore down at home to avoid venturing out into subzero temperatures. Gasoline prices sky rocketed around the country the last couple weeks as refineries in the Gulf closed due to lower temperatures.

There are less than two weeks left to make final decisions on 2021 farm revenue insurance programs. While market prices for corn and soybeans are the highest in years, producers still have the option to add extra revenue insurance before March 15.

Farmers can expect to pay slightly higher premiums on ARC and PLC insurance products this year, due to increased volatility. Farm Futures contributing analyst Bryce Knorr explains these premium prices are derived from options prices, which are highly dependent on volatility. “The 23% volatility factor for corn and 19% for soybeans are the highest in a decade,” Knorr points out.

While farmers largely favored PLC (76%) over ARC-county (19%) on corn acres last year, Knorr’s analysis suggests ARC-County polices may be more preferably for corn acreage in 2021. But if market prices fall, PLC will be the better option.

Trigger prices were set last week, Knorr observes, and are the highest amounts in recent history. “Corn’s projected $4.58 price is the highest since 2014,” Knorr explains, “while the soybean value of $11.87 is the most since 2013.”

Soybeans

Soybean prices traded $0.02-$0.05/bushel lower overnight on a round of profit-taking. But losses were limited by further delays to Brazil’s soybean harvest. "There are harvesting issues in Brazil because of too much rain and we have dry weather in Argentina," Pranav Bajoria, a director at Singapore-based brokerage Comglobal, told Reuters last night. "This is likely to tighten world supplies."

Chinese soybean futures notched another record high overnight, despite another news report of African swine fever reported in a truckload of piglets in Yunnan province in southwest China. A few analyst estimates peg a fifth of China’s breeding herd in the north was impacted by African swine fever and other diseases during the winter.

Soybean futures on China’s Dalian Commodity Exchange closed 3% higher as domestic crush demand intensifies amid a slow start to Brazil’s shipping season.

A USDA attaché in Buenos Aires, Argentina estimates the South American country’s 2020/21 soybean crop at 1.745 billion bushels – 18.4 million bushels lower than USDA’s most recent projections in the February 2020 WASDE report. Argentine processing volumes recorded record lows in December 2020 following an oilseed workers strike. Widespread rainfall in January helped reduce further damage, though the recent hot streak in Argentina will likely not allow crops to escape unscathed. Argentina is the world’s third largest soybean exporter.

Cash soybean prices rose at crush facilities across the Heartland yesterday as dealers continued to roll cash bids over to the May 2021 Chicago soybean contract. Merchandisers are reporting low soybean and corn supplies across the Midwest after several months of rapid farmer sales. The slowdown in sales threatened to slow production without adequate processing supplies.

Soybean Basis Change

Monday’s second-highest monthly soybean crush reading from USDA and yesterday’s rising soybean futures prices haven’t really convinced many people that demand rationing for soybeans is currently in effect, Advance Trading’s Larry Shonkwiler observes.

U.S. soybean exports continue to leave terminals at record paces, though Shonkwiler points out that rate may lessen in the coming weeks as Chinese buyers refocus their attention to the Brazilian soybean crop. And marketing year to date domestic usage rates are nearly 5% ahead of last year’s paces.

When will the volatility ease? Oversold soybean export projections could U.S. crush plants to reduce production this summer. And falling Chinese hog prices suggest the latest resurgence of African swine fever and other winter diseases among the hog herd could throw another wrench into the soybean market. In the latest Ag Marketing IQ column, Shonkwiler doesn’t expect soybean markets to calm down soon.

Wheat

After recording the largest single-day price increase since February 18, Chicago wheat futures dropped 1% this morning on profit-taking. Losses were less severe for Kansas City and Minneapolis futures contracts, which gained more support from adverse weather conditions for the dormant winter wheat crop as well as reduced 2021/22 production forecasts in Australia as La Niña-powered rains in the Land Down Under are reduced in the growing season to come.

A stronger dollar did no favors to the wheat complex this morning.

Cash prices for soft red winter wheat in the Midwest eased at a Chicago processing facility yesterday. Other prices for both soft and hard red winter wheat around the country help mostly steady as dealers continued rolling over bids into their respective May 2021 futures contracts. New farmer cash sales were quiet despite yesterday’s higher futures prices.

wheat basis, daily change

Weather

Mostly clear skies and warm temperatures are forecast across the Midwest and Plains today through Friday, according to NOAA’s short-range forecasts. Farmers in the drought-stressed Southern Plains could see some relief late this week as a winter storm system begins to develop into rain across the Central and Southern Rockies tomorrow morning.

Corn and soybean export markets continue to hang in the balance of South American weather. Rain in top soybean producing state Mato Grosso in Brazil has delayed soybean harvest in the world’s top soybean exporter. Plus, scorching temperatures in Argentina could threaten corn yields.

More rain is expected in Mato Grosso over the next week, which will cause further delays to soybean harvest and safrinha corn planting. Delays are most pronounced in South Central Mato Grosso. More hot and dry weather in Argentina is forecast for the week.

Financials

Coronavirus cases in the U.S. rose by 55,050 to 28,719,654 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 1,956 lives to 516,616 deaths as of press time. More states have lifted pandemic restrictions as cases continue to fall.

Farmers across the country are in the final days of penciling out crop plans for 2021. Cost and revenue projections vary from state to state. Farm Futures executive editor Mike Wilson assembled a list of crop budgets for each state, compliments of the respective land grant universities. Many of these universities offer additional financing planning info, which Wilson also links. Because, as Wilson points out, “good financial planning is at the heart of every profitable farm.”

Wilson also pens a piece on navigating the hectic spring planting season in the latest This Business of Farming column. Wilson points out that extreme weather and economic events add stress during this critical time of year, especially while juggling inputs, people, equipment, and markets. Focusing on prioritizing these tasks is essential to keep progress rolling forward and communication plays a key role in navigating these channels.

“Think of ongoing operational coordination like the morning greasing routine on the combine,” Wilson surmises. “You do it to prevent future problems.”

Amid ongoing trade conflicts with Russian and Moroccan phosphate suppliers, the U.S. could be forced to turn to an untraditional fertilizer producer for adequate phosphate supplies in the future. Saudi Arabia’s Ma’aden Mining Co is increasing production capacity by 3 million tons of fertilizer by early 2022 on growing Chinese demand. Ma’aden is the Gulf’s largest miner and operates one of the largest phosphate production sites in the world.

Wall Street stock futures climbed this morning on optimism over progress on the pandemic stimulus bill and vaccine disbursal. Energy prices rose on the prospects of pandemic recovery. S&P 500 futures rose 0.43% to $3,884.25 at last glance.

Morning Ag Commodity Prices - 3/3/2021
Contract Units High Low Last Net Change % Change
MAR '21 CORN $ / BSH  5.6 5.55 5.57 -0.0375 -0.67%
MAY '21 CORN $ / BSH  5.4425 5.3775 5.4 -0.05 -0.92%
JUL '21 CORN $ / BSH  5.315 5.2625 5.285 -0.0425 -0.80%
SEP '21 CORN $ / BSH  4.9225 4.885 4.905 -0.025 -0.51%
DEC '21 CORN $ / BSH  4.7575 4.7225 4.7425 -0.015 -0.32%
MAR '22 CORN $ / BSH  4.83 4.8025 4.82 -0.015 -0.31%
MAY '22 CORN $ / BSH  4.87 4.84 4.8575 -0.0175 -0.36%
MAR '21 SOYBEANS $ / BSH  14.175 14.11 14.15 0.01 0.07%
MAY '21 SOYBEANS $ / BSH  14.1775 14.065 14.1175 -0.0075 -0.05%
JUL '21 SOYBEANS $ / BSH  14.0175 13.91 13.9625 -0.025 -0.18%
AUG '21 SOYBEANS $ / BSH  13.5525 13.46 13.5025 -0.025 -0.18%
SEP '21 SOYBEANS $ / BSH  12.7375 12.6675 12.6975 -0.0275 -0.22%
NOV '21 SOYBEANS $ / BSH  12.3025 12.23 12.26 -0.0375 -0.30%
JAN '22 SOYBEANS $ / BSH  12.26 12.1975 12.205 -0.0575 -0.47%
MAR '22 SOYBEANS $ / BSH  11.99 11.9525 11.955 -0.0525 -0.44%
MAY '22 SOYBEANS $ / BSH  11.93 11.915 11.915 -0.0125 -0.10%
MAR '21 SOYBEAN OIL  $ / LB 50.13 #N/A 51.27 0 0.00%
MAY '21 SOYBEAN OIL  $ / LB 50.03 49.32 49.96 0.3 0.60%
MAR '21 SOY MEAL $ / TON 424 422.4 422.4 -0.9 -0.21%
MAY '21 SOY MEAL $ / TON 423.8 419.4 420.5 -1.2 -0.28%
JUL '21 SOY MEAL $ / TON 421.9 417.6 418.7 -1.3 -0.31%
AUG '21 SOY MEAL $ / TON 410.6 406.8 407.7 -1.3 -0.32%
SEP '21 SOY MEAL $ / TON 398 394.5 394.5 -1.5 -0.38%
MAR '21 Chicago SRW $ / BSH  6.5825 6.5675 6.5675 -0.065 -0.98%
MAY '21 Chicago SRW $ / BSH  6.66 6.5825 6.6025 -0.06 -0.90%
JUL '21 Chicago SRW $ / BSH  6.5475 6.4825 6.495 -0.055 -0.84%
SEP '21 Chicago SRW $ / BSH  6.5125 6.4525 6.46 -0.055 -0.84%
DEC '21 Chicago SRW $ / BSH  6.555 6.4925 6.5 -0.05 -0.76%
MAR '21 Kansas City HRW $ / BSH  6.0825 #N/A 6.27 0 0.00%
MAY '21 Kansas City HRW $ / BSH  6.355 6.3025 6.3175 -0.035 -0.55%
JUL '21 Kansas City HRW $ / BSH  6.405 6.3575 6.37 -0.035 -0.55%
SEP '21 Kansas City HRW $ / BSH  6.4525 6.415 6.4175 -0.035 -0.54%
DEC '21 Kansas City HRW $ / BSH  6.5325 6.4925 6.4975 -0.0325 -0.50%
MAR '21 MLPS Spring Wheat $ / BSH  5.665 #N/A 6.4025 0 0.00%
MAY '21 MLPS Spring Wheat $ / BSH  6.4625 6.42 6.425 -0.0275 -0.43%
JUL '21 MLPS Spring Wheat $ / BSH  6.525 6.4825 6.49 -0.0275 -0.42%
SEP '21 MLPS Spring Wheat $ / BSH  6.5825 6.5475 6.5475 -0.035 -0.53%
DEC '21 MLPS Spring Wheat $ / BSH  6.66 6.63 6.63 -0.03 -0.45%
MAR '21 ICE Dollar Index $ 90.975 90.635 90.905 0.115 0.13%
 AP '21 Light Crude $ / BBL  61.1 59.24 60.66 0.91 1.52%
 MA '21 Light Crude $ / BBL  60.91 59.08 60.46 0.89 1.49%
APR '21 ULS Diesel $ /U GAL 1.8447 1.801 1.8283 0.0202 1.12%
MAY '21 ULS Diesel $ /U GAL 1.8369 1.7951 1.8213 0.0198 1.10%
APR '21 Gasoline $ /U GAL 1.9639 1.9241 1.9454 0.009 0.46%
MAY '21 Gasoline $ /U GAL 1.953 1.9135 1.9358 0.0104 0.54%
MAR '21 Feeder Cattle $ / CWT 0 #N/A 136.525 0 0.00%
APR '21 Feeder Cattle $ / CWT 0 #N/A 140.475 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 119.425 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 117.75 0 0.00%
APR '21 Live Hogs $ / CWT 0 #N/A 85.35 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 87.925 0 0.00%
MAR '21 Class III Milk $ / CWT 16.26 #N/A 16.34 0 0.00%
APR '21 Class III Milk $ / CWT 17.72 #N/A 17.8 0 0.00%
MAY '21 Class III Milk $ / CWT 18.02 18.02 18.02 0.03 0.17%
Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish