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Morning Market Review for March 8, 2021

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Soybeans flirt with seven-year high. (Comments are updated by 7:30 a.m. Central Time.)

South American crop concerns translate to gains in Chicago this morning

  • Corn up 2-3 cents
  • Soybeans up 7-12 cents, soyoil up $0.68/lb, soymeal up $2.90/ton
  • Wheat up 3-6 cents

*Prices as of 6:50 am CST.

Corn

Corn prices followed those of soybeans higher this morning on weather concerns for the South American corn crop. Traders finalizing positions ahead of tomorrow’s USDA report was also a key reason for the morning’s gains, which ranged between $0.02 - $0.03/bushel.

The chief economist for Argentina’s Rosario Grains Exchange expects ag export values to soar to new heights in the 2020/21 marketing year. "The 2020/21 agricultural season should generate, at current prices, a record income of foreign currency from exports of about $37.5 billion," Emilce Terre, head economist at the major Rosario grains exchange, told Reuters.

Soaring global grains prices, reduced strike activity at Argentine ports, and firm international demand are likely to create a perfect storm for Argentine grains exporters and producers, provided January and February’s rains in the Pampas grains belt were adequate enough to stave off damage from the country’s recent flash drought. In fact, the Commodity Weather Group estimates 30% of Argentina’s soy belt could see severe yield losses over the next 10 days due to the recent spike in scorching temperatures.

Earlier this marketing year, the Argentine government toyed with the idea of increasing export taxes and quotas on corn and wheat exports. Farmers vocally disputed this proposal, arguing it would reduce foreign buying interest in Argentine grains. The government backed off the plans, paving the way for a lucrative shipping season for Argentine farmers.

Argentina’s economy depends heavily on ag exports, which are expected this year to help replenish foreign currency income levels after the Argentine government defaulted on sovereign debt payments last year. Bond prices crashed to historic lows as a result and inflation sky rocketed.

Soybeans

Despite reduced Chinese buying paces in the first part of 2021, soybean prices rose 1% higher this morning on continued concerns about rains in Brazil slowing harvest paces and persistent hot and dry weather in Argentina forecast for the next two weeks.

Customs data released yesterday by China shows that delayed shipments from Brazil led to a 0.8% annual drop in Chinese soy imports during January and February. China reported 482.8 million bushels of soybeans had been imported into the country during the January – February 2021 reporting period. Meat imports rose nearly 30% during the same period.

The Brazilian soybean harvest continues to lag behind historical paces due to dry planting conditions last fall and persistent rain showers the past several weeks. Quality issues with the Brazilian crop increasingly necessitate the need for blending as harvests in Mato Grosso report increasing amounts of fungus damage. This adds another roadblock for soybeans destined for Brazilian export terminals.

Meanwhile in Brazil, freight prices on soybean shipments have peaked at a two-and-a-half-year high on the delays. Truck freight rates ran about $0.66/bushel in February 2021, the highest since July 2018 according to a Reuters report.

The cost increase does not bode well for Brazilian farmers, who typically run higher costs than U.S. competitors. A weaker Brazilian currency favors a cheaper Brazilian soybean crop over that of the U.S., but increased costs could limit Brazil’s cost advantages, especially if the harvest delays and quality issues continue.

Pakistani soybean buyers are increasingly looking to the future with concern about tight soybean stocks for its poultry herd. The Middle Eastern country has snapped up 21.8 million bushels of 2021/22 soybeans over the past several weeks to ensure adequate feedstuffs. "Crush profit margins have come down but buyers in Pakistan are willing to book forward to ensure that they get the soybeans,” a trader told Reuters.

Origination of the soybean shipments is expected to remain optional, with the U.S. and Brazil as top contenders.

Wheat

The wheat complex also followed soybeans and corn higher this morning as traders finalized positions before tomorrow’s WASDE report from USDA. But wheat’s gains are largely limited by increased export activity in the European Union and a stronger dollar.

Preliminary data compiled by Reuters suggests that France may be the early beneficiary of reduced Russian exports. In February 2021, French wheat exports to countries outside of the European Union rose slightly to 30.2 million bushels. Purchases from China eased during the reporting period, while North African countries Morocco and Algeria picked up soft wheat ordering paces during the same time.

Earlier this month, the Russian government installed a formula-based export tax on wheat to reduce domestic food costs and ensure food availability to its consumers. The move is likely to reduce the amount of wheat earmarked for exports. Russia is the world’s largest exporter of wheat.

Weather

It’s beginning to feel like spring across the Heartland! Mostly clear skies and mild temperatures are forecast across the Midwest and Plains today, according to NOAA’s short-range forecasts. A storm system developing in the Northern Rockies could send some much-needed precipitation east to the Northern Plains tomorrow and Wednesday.

The Northern Plains will likely see 1-3 inches of snow through the weekend. Heavy rains are likely to drench the Central Mississippi River Valley as the system makes its way east.

Financials

Coronavirus cases in the U.S. rose to 28,999,540 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 525,035 deaths as of press time.

Freshly re-appointed Secretary of Agriculture sought to reassure farmers’ concerns about the Biden administration’s impact on the industry at last week’s virtual Commodity Classic. Vilsack, who previously served as President Obama’s Secretary of Agriculture, emphasized trade relations, COVID-19 pandemic assistance, infrastructure, and renewable fuels – all of which stand to benefit farmers immensely in the years to come.

But there is a ways to go, Vilsack acknowledged. Investing in new and more fair international markets will likely be a key area of focus for Vilsack, who has notoriously championed trade relationships under the Obama administration and as CEO of the U.S. Dairy Export Council.

“We’re digging ourselves out of economic and health holes,” Vilsack shared. “We can accelerate that process if more of us get vaccinated and shift focus away from COVID relief and disaster assistance, to investing in our future.”

One of the most contentious – and highest value – issues in farm transitions is farmland ownership. Farm Financial Strategies’ Mike Downey offers farmers several tips to ease the farmland transition process in the latest More than Dirt column.

Downey notes that while treating children equally in parceling land can be the easiest option, it is not always the most realistic. By designating separate land parcels in advance to siblings, partners, or limited liability operations, more flexibility and less emotion can arise during farm transitions.

Happy Monday! Did you stay up late watching Oprah’s interview with Prince Harry and Meghan Markle and miss out on catching up on marketing news? Same. But don’t fret – here are the most important ag marketing headlines from last week as well as the top four agribusiness stories. And here are another seven stories from the farm community that missed the top headlines last week as well.

Rising government bond yields sent S&P 500 futures falling this morning as investors continued to cycle out of the tech stocks that largely buoyed Wall Street during the pandemic. S&P 500 futures fell 0.70% this morning to $3,812.00.

Morning Ag Commodity Prices - 3/8/2021
Contract Units High Low Last Net Change % Change
MAR '21 CORN $ / BSH  5.7125 5.6525 5.6525 0.0325 0.58%
MAY '21 CORN $ / BSH  5.5625 5.465 5.4975 0.0425 0.78%
JUL '21 CORN $ / BSH  5.435 5.35 5.3775 0.0375 0.70%
SEP '21 CORN $ / BSH  5.0425 4.985 5.015 0.025 0.50%
DEC '21 CORN $ / BSH  4.8575 4.8175 4.8425 0.0275 0.57%
MAR '22 CORN $ / BSH  4.925 4.89 4.9125 0.0225 0.46%
MAY '22 CORN $ / BSH  4.96 4.93 4.95 0.0225 0.46%
MAR '21 SOYBEANS $ / BSH  14.535 14.47 14.535 0.1925 1.34%
MAY '21 SOYBEANS $ / BSH  14.6 14.3725 14.4675 0.1675 1.17%
JUL '21 SOYBEANS $ / BSH  14.4425 14.22 14.31 0.1725 1.22%
AUG '21 SOYBEANS $ / BSH  13.9825 13.7925 13.8725 0.1625 1.19%
SEP '21 SOYBEANS $ / BSH  13.145 12.9775 13.0625 0.14 1.08%
NOV '21 SOYBEANS $ / BSH  12.6525 12.52 12.5775 0.105 0.84%
JAN '22 SOYBEANS $ / BSH  12.5925 12.4675 12.5325 0.1075 0.87%
MAR '22 SOYBEANS $ / BSH  12.3125 12.2075 12.2625 0.0825 0.68%
MAY '22 SOYBEANS $ / BSH  12.24 12.1575 12.1925 0.0825 0.68%
MAR '21 SOYBEAN OIL  $ / LB 54.22 54.22 54.22 0.84 1.57%
MAY '21 SOYBEAN OIL  $ / LB 53.23 52.14 52.57 0.77 1.49%
MAR '21 SOY MEAL $ / TON 424 423.8 424 4 0.95%
MAY '21 SOY MEAL $ / TON 424.4 419.2 422.9 4.7 1.12%
JUL '21 SOY MEAL $ / TON 422.1 417.4 420.8 4.6 1.11%
AUG '21 SOY MEAL $ / TON 411.5 407.3 410.3 3.7 0.91%
SEP '21 SOY MEAL $ / TON 398.6 395.4 398.2 3.2 0.81%
MAR '21 Chicago SRW $ / BSH  6.595 6.595 6.595 0.055 0.84%
MAY '21 Chicago SRW $ / BSH  6.6275 6.5325 6.585 0.055 0.84%
JUL '21 Chicago SRW $ / BSH  6.52 6.4375 6.4825 0.05 0.78%
SEP '21 Chicago SRW $ / BSH  6.505 6.4275 6.46 0.04 0.62%
DEC '21 Chicago SRW $ / BSH  6.5475 6.475 6.51 0.04 0.62%
MAR '21 Kansas City HRW $ / BSH  0 #N/A 6.1725 0 0.00%
MAY '21 Kansas City HRW $ / BSH  6.35 6.265 6.3025 0.04 0.64%
JUL '21 Kansas City HRW $ / BSH  6.405 6.32 6.3525 0.035 0.55%
SEP '21 Kansas City HRW $ / BSH  6.455 6.37 6.4025 0.0325 0.51%
DEC '21 Kansas City HRW $ / BSH  6.525 6.45 6.4775 0.0325 0.50%
MAR '21 MLPS Spring Wheat $ / BSH  5.665 #N/A 6.375 0 0.00%
MAY '21 MLPS Spring Wheat $ / BSH  6.5225 6.465 6.505 0.0525 0.81%
JUL '21 MLPS Spring Wheat $ / BSH  6.5775 6.55 6.5525 0.0425 0.65%
SEP '21 MLPS Spring Wheat $ / BSH  6.6225 6.59 6.59 0.0375 0.57%
DEC '21 MLPS Spring Wheat $ / BSH  6.675 6.6525 6.66 0.045 0.68%
MAR '21 ICE Dollar Index $ 92.335 91.865 92.29 0.3 0.33%
 AP '21 Light Crude $ / BBL  67.98 65.76 66.34 0.25 0.38%
 MA '21 Light Crude $ / BBL  67.79 65.58 66.14 0.22 0.33%
APR '21 ULS Diesel $ /U GAL 1.9868 1.9243 1.9442 0.0002 0.01%
MAY '21 ULS Diesel $ /U GAL 1.983 1.9225 1.9416 -0.0003 -0.02%
APR '21 Gasoline $ /U GAL 2.1119 2.0535 2.0691 0.0044 0.21%
MAY '21 Gasoline $ /U GAL 2.1074 2.0502 2.0662 0.0046 0.22%
MAR '21 Feeder Cattle $ / CWT 0 #N/A 134.6 0 0.00%
APR '21 Feeder Cattle $ / CWT 0 #N/A 139.025 0 0.00%
 AP '21 Live Cattle $ / CWT 0 #N/A 119.025 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 118 0 0.00%
APR '21 Live Hogs $ / CWT 0 #N/A 87.175 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 89.475 0 0.00%
MAR '21 Class III Milk $ / CWT 16.35 16.35 16.35 0.05 0.31%
APR '21 Class III Milk $ / CWT 17.7 17.64 17.69 0.05 0.28%
MAY '21 Class III Milk $ / CWT 18.25 18.16 18.25 0.11 0.61%
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