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Morning Market Review for March 4, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
New crop corn, soybean prices rise on South American weather worries. (Comments are updated by 7:30 a.m. Central Time.)

Grains post slight to sideways gains after a quiet overnight trading session

  • Corn up 1 cent
  • Soybeans up 4-8 cents, soyoil up $0.51/lb, soymeal down $2.20/ton
  • Wheat up 1-3 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 were largely unchanged this morning, with old crop futures edging marginally lower and new crop futures up by a fraction of a penny. Weather concerns about wet and delayed Brazilian safrinha planting conditions and a flash drought impacting Argentina’s corn crop have largely been priced into the markets.

Markets are expecting lower export sale readings across all three main grain commodities today after a week of quiet sales notices. Analysts predict 2020/21 corn export sales to range between 15.7 million – 31.5 million bushels. 2021/22 corn export sales for the week ending February 25 are expected at 2.0 million – 9.8 million bushels. No large daily flash export sales of corn were reported by USDA during the February 19 – 25 reporting period.

Corn export loading paces might provide more optimism in today’s weekly export report. Monday’s Grains Inspection for Export report saw a 29% weekly increase in corn export volumes to 64.4 million bushels. If that volume is realized, it would be the highest weekly export loading volume for corn in the 2020/21 marketing year. It would also be the largest weekly export volume since late May 2019.

Weekly ethanol production rebounded last week following industry-wide slowdowns as the cold snap depleted natural gas supplies necessary for plant operations. After falling 28% the prior week, ethanol output for the week ending February 26 reversed course and rose 28% as production came back online.

But at 35.3 million gallons/day of output, last week’s total from the U.S. Energy Information Administration (EIA) since early June 2020 if the previous week is uncounted. Ethanol stocks tightened nearly 2% to 941.9 million gallons on rising consumer demand for gasoline while the ethanol industry restarted following the cold snap.

Refiner demand for ethanol surged 12% higher on the week to 34.2 million gallons/day – the highest volume of ethanol added by blenders since the last week of 2020. While the numbers may not have appeared bullish at first glance in yesterday’s report, they were indicative of improving production conditions in the ethanol sector in the weeks to come.

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

Weather concerns in South America pulled new crop soybean prices higher this morning as Brazilian soybean harvest paces continue to struggle amid widespread rains in Mato Grosso, the country’s top soybean-producing region. Old crop prices also saw modest increases on the sentiment as markets prepare for a tight global supply situation in the coming months.

Market watchers are eagerly awaiting today’s soybean export sale and loading volumes. Old crop export sales are forecast lower than last week at 3.7 million – 18.4 million bushels. New crop soybean export sales are likely to range as high as 11.0 million bushels. No large daily flash export sales of soybeans were reported by USDA during the February 19 – 25 reporting period.

Even more hotly anticipated will be today’s soybean loading volumes. Chinese global soybean demand continues to remain firm, though it will likely shift from the U.S. in the coming weeks to Brazil. Delayed soybean harvest in Brazil continues to lengthen the window for price opportunity for U.S. soybean exporters, but it will likely shrink in the coming weeks as the Brazilian crop finally makes it to port.

If Monday’s Grains Inspection for Export report is any indication, soybean export shipments out of U.S. export terminals for the week ending February 25 will come in at 32.3 million bushels – a 10% increase from the prior week. While a volume in that ballpark would be among the lowest in the 2020/21 marketing year, it is a great sign that Chinese soybean demand has not yet completely shifted to Brazilian suppliers.

University of Minnesota agricultural economist Ed Usset is a big fan of booking crop sales during the spring. But as 2020 showed farmers, sometimes prices are not always at optimal levels during the spring. Usset challenges reader to take a new approach in the latest Advanced Marketing Class column.

Using a minimum price objective on new crop sales that is consistent with break even levels allows farmers to book advance sales but still have the flexibility to capture upward price potential. In fact, Usset points out that this strategy has beat harvest prices every year since 1989 by $0.16/bushel for corn and $0.41/bushel for soybeans.

Wheat

Technical buyers reentered the wheat complex this morning a day after taking the tops of Tuesday’s rally. Improving weather conditions in the Black Sea region raised global production projections in the world’s top wheat exporting region, limiting Chicago wheat’s gains. Kansas City and Minneapolis wheat futures were more certain in the morning’s gains, up $0.01-$0.03/bushel on technical buying, despite a stronger dollar.

Weekly wheat export sales in today’s weekly export sales report from USDA will likely trend lower. 2020/21 wheat export sales are projected between 3.7 million – 18.4 million bushels while new crop sales could reach 3.7 million bushels. No large daily flash export sales of wheat were reported by USDA during the February 19 – 25 reporting period.

Wheat export loading volumes are expected to stay steady or edge lower in today’s report, based off data from Monday’s Grains Inspection for Export report. Monday’s figures showed wheat export loading rates at 10.0 million bushels for the week ending February 25, down nearly 2 million bushels from the previous week.

Despite worldwide La Niña weather patterns, Ukraine’s 2021 wheat crop continues to thrive amid idyllic growing conditions. Ukraine’s deputy economy minister for agriculture Taras Vysotskiy expects 2021 wheat yields to notch a new record high, barring any significant weather events.

"We understand that the weather will affect the volume, but as of now ... if we do not predict any force majeure, we see a very positive result," Vysotskiy told Reuters overnight. Vysotskiy estimates 2021 Ukrainian wheat production between 1.065 billion – 1.102 billion bushels. The previous high of 1.072 billion bushels was recorded in 2019/20. Ukraine is the world’s sixth largest wheat exporter.

Favorable weather conditions also helped Russian winter wheat conditions improve. Mild winter temperatures largely offset dry planting conditions last fall, suggesting that Russia could see more record yields in the 2021 wheat harvest as well. Only 7-9% of winter wheat crops are in bad condition, compared to 4% a year ago. As of last December, 22% of wheat crops were in poor condition, a seven-year high.

Weather

Mostly clear skies and mild temperatures are forecast across the Midwest and Plains today and tomorrow, according to NOAA’s short-range forecasts. Scattered snow showers are forecast in Michigan’s Upper Peninsula, though accumulation is expected to be light. Farmers in the drought-stressed Southern Plains could see some relief late as soon as tonight as a winter storm system in the Central and Southern Rockies begins to move farther east in the early morning hours.

Financials

Coronavirus cases in the U.S. rose by 42,048 to 28,761,702 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 1,843 lives to 518,459 deaths as of press time.

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.”

The March 1 tax deadline for farmers has passed and LattaHarris CPA Bob Krogmeier expects life to calm down a little. But as planting season approaches, Krogmeier recommends farmers take a second look at how they are handling interest accruals and payments.

“Accrued interest building until you make your cash payment (and deduct on your taxes),” Krogmeier explains. So, farmers who financed crop inputs last fall but didn’t make payments until this January will not be able to deduct that accrued interest until next year. It’s a simple concept but as Krogemeier reflects in the latest By the Books column, “the more you know about how loans and taxes work, the better chances you’ll keep more money in your bank account.”

Investors are nervous about Federal Reserve Chairman Jerome Powell’s comments about rising government bond yields expected later today. The rising yields suggest increased inflation, which could lead the Federal Reserve to raise interest rates more quickly than originally planned. The 10-year Treasury bond yield was down slightly this morning to 1.461% - though still trading at some of the highest levels this week – while S&P 500 futures fell 0.22% to $3,808.50.

Morning Ag Commodity Prices - 3/4/2021
Contract Units High Low Last Net Change % Change
MAR '21 CORN $ / BSH  5.5275 5.4825 5.4975 -0.005 -0.09%
MAY '21 CORN $ / BSH  5.3825 5.3225 5.35 -0.0025 -0.05%
JUL '21 CORN $ / BSH  5.2675 5.215 5.24 0 0.00%
SEP '21 CORN $ / BSH  4.9225 4.88 4.9 0.0025 0.05%
DEC '21 CORN $ / BSH  4.765 4.7225 4.7375 0.0025 0.05%
MAR '22 CORN $ / BSH  4.84 4.8 4.815 0.0025 0.05%
MAY '22 CORN $ / BSH  4.8775 4.8475 4.86 0.005 0.10%
MAR '21 SOYBEANS $ / BSH  14.1875 14.1875 14.1875 0.08 0.57%
MAY '21 SOYBEANS $ / BSH  14.155 14.05 14.1325 0.0575 0.41%
JUL '21 SOYBEANS $ / BSH  13.995 13.885 13.9775 0.0625 0.45%
AUG '21 SOYBEANS $ / BSH  13.54 13.4525 13.53 0.05 0.37%
SEP '21 SOYBEANS $ / BSH  12.7425 12.665 12.73 0.04 0.32%
NOV '21 SOYBEANS $ / BSH  12.2975 12.2075 12.2725 0.0325 0.27%
JAN '22 SOYBEANS $ / BSH  12.26 12.1825 12.24 0.03 0.25%
MAR '22 SOYBEANS $ / BSH  12.0275 11.9575 11.9725 -0.005 -0.04%
MAY '22 SOYBEANS $ / BSH  11.935 11.8875 11.935 0.0325 0.27%
MAR '21 SOYBEAN OIL  $ / LB 52.12 52.07 52.07 0.72 1.40%
MAY '21 SOYBEAN OIL  $ / LB 50.49 49.71 50.26 0.48 0.96%
MAR '21 SOY MEAL $ / TON 420.5 420.5 420.5 0.3 0.07%
MAY '21 SOY MEAL $ / TON 420.7 417.4 420.3 1.5 0.36%
JUL '21 SOY MEAL $ / TON 418.7 415.7 418.5 1.2 0.29%
AUG '21 SOY MEAL $ / TON 407.6 404.9 407.6 1 0.25%
SEP '21 SOY MEAL $ / TON 394.6 392.2 394 0.2 0.05%
MAR '21 Chicago SRW $ / BSH  6.53 6.4975 6.53 0.01 0.15%
MAY '21 Chicago SRW $ / BSH  6.6075 6.515 6.5475 -0.0125 -0.19%
JUL '21 Chicago SRW $ / BSH  6.5025 6.42 6.4575 -0.0075 -0.12%
SEP '21 Chicago SRW $ / BSH  6.475 6.4 6.4375 -0.0075 -0.12%
DEC '21 Chicago SRW $ / BSH  6.5275 6.455 6.48 -0.015 -0.23%
MAR '21 Kansas City HRW $ / BSH  6.1525 #N/A 6.175 0 0.00%
MAY '21 Kansas City HRW $ / BSH  6.31 6.24 6.285 0.025 0.40%
JUL '21 Kansas City HRW $ / BSH  6.36 6.295 6.34 0.03 0.48%
SEP '21 Kansas City HRW $ / BSH  6.41 6.35 6.39 0.0275 0.43%
DEC '21 Kansas City HRW $ / BSH  6.485 6.43 6.465 0.0225 0.35%
MAR '21 MLPS Spring Wheat $ / BSH  6.25 #N/A 6.355 0 0.00%
MAY '21 MLPS Spring Wheat $ / BSH  6.47 6.3975 6.4525 0.0225 0.35%
JUL '21 MLPS Spring Wheat $ / BSH  6.52 6.465 6.505 0.015 0.23%
SEP '21 MLPS Spring Wheat $ / BSH  6.5825 6.53 6.56 0.02 0.31%
DEC '21 MLPS Spring Wheat $ / BSH  6.6275 6.6075 6.625 0 0.00%
MAR '21 ICE Dollar Index $ 91.24 90.985 91.205 0.263 0.29%
 AP '21 Light Crude $ / BBL  61.98 60.52 61.51 0.23 0.38%
 MA '21 Light Crude $ / BBL  61.79 60.36 61.32 0.22 0.36%
APR '21 ULS Diesel $ /U GAL 1.85 1.8025 1.8291 -0.0066 -0.36%
MAY '21 ULS Diesel $ /U GAL 1.8457 1.7991 1.8239 -0.0072 -0.39%
APR '21 Gasoline $ /U GAL 1.9555 1.9166 1.9416 -0.0102 -0.52%
MAY '21 Gasoline $ /U GAL 1.9494 1.9115 1.9356 -0.0088 -0.45%
MAR '21 Feeder Cattle $ / CWT 0 #N/A 137 0 0.00%
APR '21 Feeder Cattle $ / CWT 0 #N/A 141.3 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 119.4 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 117.675 0 0.00%
APR '21 Live Hogs $ / CWT 0 #N/A 87.925 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 89.35 0 0.00%
MAR '21 Class III Milk $ / CWT 16.25 16.25 16.25 -0.15 -0.91%
APR '21 Class III Milk $ / CWT 17.8 17.75 17.75 -0.19 -1.06%
MAY '21 Class III Milk $ / CWT 18.05 17.88 18.05 -0.1 -0.55%
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