Morning Market Review for May 10, 2021

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No news is bad news for grain markets. (Comments are updated by 7:30 a.m. Central Time.)

Grains start the week off in the red as markets await Wednesday’s WASDE report

  • Corn down 8-15 cents
  • Soybeans down 6-13 cents, soyoil down $0.43/lb, soymeal down $3.10/ton
  • Wheat down 15-20 cents

*Prices as of 7:00 am CDT.

Corn

Corn prices walked back from Friday’s eight-year highs this morning as traders finalize positions ahead of Wednesday’s WASDE report. Technical selling played a significant role in the morning’s losses, which are capped by growing supply pressure as Brazil’s safrinha crop continues to battle drought stress.

USDA releases updated Crop Progress data today and expect corn planting progress to continue to turn in some eye-popping rates. Growers from Farm Futures’ Feedback from the Field series reported rapid planting rates over the past week, which left most farmers across the Heartland racing against the rain to finish sowing the 2021 crop.

A week ago, 46% of expected 2021 corn acres have been planted, up a staggering 29% from the previous week and 10% higher than the five-year average for the same reporting period, led by growers in the “I” states – historically the top producers of corn in the U.S.

China’s National Grain and Oils Information Center (CNGOIC) released new corn production estimates last week, suggesting that the 2021 Chinese corn crop will likely reach 10.7 billion bushels of production, a 4.3% increase from last year’s haul. It marked the first estimate for 2021 Chinese corn production released by a Chinese organization this year.

Acreage cuts in recent years ordered by the Chinese government to preserve soil quality are likely to be reversed this year as dwindling grain and oilseed stocks and soaring prices encourage farmers to increase acreage. The Chinese government has already committed to increasing corn acreage in 2021 as a matter of food security.

Chinese soybean acreage will likely take a hit as corn acres rise. “The national policy is also shifting. Incentives on soybeans are not as (strong) as a couple years ago,” Meng Jinhui, a senior analyst with Shengda Futures, told Reuters. CNGOIC, which is a Chinese think tank, expects 2021 soybean production in China to fall to 676 million bushels, a 6.1% decrease from last year’s output.

Weather uncertainty is likely to be the biggest driver of market prices in the coming months, Farm Futures’ executive editor Mike Wilson and contributing analyst Bryce Knorr explain. Revenue protection insurance is likely to provide little benefit to growers this year.

Success will boil down to two key components: maintaining yield and sound marketing execution. “Doing nothing has its own risk,” Wilson and Knorr surmise. “Trying to pick the top of the market could mean waiting too long, then becoming that deer frozen in the headlights if prices crash into harvest. Losses are possible on both corn and soybeans if prices and yields fall enough.”

Farmers from across the Corn Belt share financial tips and strategies for capturing marketing opportunities and improving operational efficiencies in these volatile times in this cover story featured in our June 2021 print issue. “If this market gets spicy, this summer may be the best chance in a long time to put your business on the right track to prosperity.” 

Soybeans

Soybean prices followed those of corn lower this morning on a round of technical selling, though losses remain capped due to shrinking global supply outlooks for the 2021/22 marketing year.

Canada’s canola stocks likely fell by nearly 38% from a year ago as of the end of March 2021, according to updated data released by Statistics Canada late last week. The news limited losses in the soyoil complex this morning, which edged lower on news that Malaysian palm oil stocks rose in April on weak demand from India amid ongoing COVID-19 restrictions.

Live hog futures in China took a 7% hit in overnight trading as high volumes of heavy pigs enter slaughterhouses across the country. It is the largest loss for the live hog contract on the Dalian exchange as farmers overproduced in response to profitable prices.

The trend suggests soymeal consumption could be called into concern in the coming months in China. Nearly 20% of China’s hog herd in the northern region was culled this winter due to a resurgence of African swine fever (ASF) and other winter diseases. ASF is believed to be more likely to spread through the county’s southern regions in the coming weeks as the rainy season, further limiting China’s domestic hog stocks.

This could provide the upward price momentum Chinese live hog futures need to overcome the heavier hogs currently being sold into the market place. However, it creates more uncertainty for U.S. soybean growers, as a smaller Chinese hog herd would demand fewer bushes of soybean feed going into the new marketing year.

Soybean planting progress will likely mirror that of corn in today’s weekly Crop Progress report from USDA. Scattered showers may have led to slight planting disruptions, but with low soil moisture levels across much of the Plains and Midwest, any delay was likely short-lived.

Many growers planted soybeans earlier this year as high prices increased the profit potential for growers. That early progress will make a difference if rains continue to push planting outside the optimal yield window.

And farmers were able to make decent progress in last week’s report, despite dodging rain drops for the better part of the week. For the week ending May 2, farmers increased planting paces on projected 2021 soybean acres by 16% from the previous week, putting 24% of the crop in the ground. Planting progress for the week soared above the five-year average of 11% for the same reporting period.

Growers across the Heartland have battled cool temperatures during planting this spring. Indiana farmer Kyle Stackhouse is no exception but has pivoted by “using the data from our cold saturation results to guide our seed selection.”

“Simply put, we are starting with the best scores, 90% plus,” Stackhouse explains in the latest Between the Fencerows column. “Today we may plant some in the high 80% range, but that will be done from a pollination/grain fill risk management standpoint as most of the corn we have planted has been in the same geographical location and had similar maturity.”

Stackhouse is not currently pressed to finish planting, noting that the window to plant for optimal yields will remain open for another week or two. But as Stackhouse points out, “it’s the first week of May, and it’s time to make things happen regardless. Though we have an adequate length of a growing season, the pinch starts to set in when the calendar turns into the second or third week of May.”

Wheat

Wheat prices succumbed to the pressure of lower corn prices this morning. Rains forecast in the Southern Plains are likely to improve condition ratings for winter wheat crops in the region. Friday also saw better-than-expected condition ratings for France’s winter wheat crop, suggesting that the early spring global cold snaps were not likely to critically damage yields. A weaker dollar capped the morning’s losses.

Wheat conditions will be top of mind for traders and growers alike in today’s weekly Crop Progress report from USDA. Drought continues to plague the Northern Plains, where the spring wheat crop continues to be planted at record paces.

As of May 2, growers in the Northern Plains had 49% of anticipated 2021 spring wheat acreage planted, up 21% from the previous week and 17% higher than the five-year average. As of last Sunday, 14% of the crop had emerged, up 7% from the previous week and 4% higher than the five-year average. Of course, final yields will not be determined until combines roll later this summer, but early progress appears to be reward resiliency to the young crop.

Meanwhile in the Southern Plains, frost damage from late April continues to be evaluated as the winter wheat crop enters into its heading phase. Winter wheat quality ratings fell 1% from the previous week to 48% good to excellent for the week ending May 2.

The crop was rated in 55% good to excellent condition at that time last year. Only 27% of 2021 winter wheat acreage had headed as of May 2, down 7% from the five-year average and 3% lower than jointing progress recorded at the same time last year.

Are you trying to find the top of the current market rallies? So is Total Farm Marketing’s Naomi Blohm. Blohm expects price volatility to continue to grow, citing weather concerns, fund buying, and looming USDA reports as the next major opportunities for market movement.

“Continue to manage both the opportunities and risks ahead,” Blohm advises farmers in the latest Ag Marketing IQ column. “Remember the daily trading price limits for grains has expanded. Start thinking and planning how you will manage protecting unpriced new crop bushels.”

Weather

Mostly clear skies across the Midwest and Plains today will give way to mostly clear skies across the Heartland for much of the week, according to NOAA’s short-range forecasts. Drought-plagued areas of the Central Plains will see more rain – and even a chance of snow – early in the week.

Financials

Coronavirus cases in the U.S. rose to 32,708,028 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 581,755 deaths as of press time. Around 260 million doses of COVID-19 vaccinations have been administered across the U.S. Of that total, 114 million Americans are fully vaccinated.

Farm financial guru and Idaho rancher Dick Wittman will join the prestigious list of speakers at this year’s Farm Futures Business Summit, to be held June 16-17 at the Coralville Marriott Hotel and Conference Center just outside Iowa City. If you are interested in Wittman’s insights on professionalizing the family farm, check out the Farm Futures Business Summit website for speaker and registration information.

Colonial Pipeline Co., which services the 5,500-mile pipeline supplying fuel from the U.S. Gulf to the East Coast, shut down its flagship pipeline on Friday evening after a cyber-attack forced the company to take “certain systems offline to contain the threat,” the company said in a statement. The attack used ransomware to infiltrate the system, which is being investigated by the FBI and the Cybersecurity and Infrastructure Security Agency.

The pipeline transports over 100 million gallons of fuel a day to recipients across the Southeast up to New York. In the short term, it is not likely the disruption will significantly impact domestic gasoline supplies. Gasoline inventories are replenished every five to six days and remain at plentiful levels as the summer travel season approaches, according to a Wall Street Journal analysis.

But if it takes longer than several days to return the pipeline back to normal operations, fuel shortages in the Southeast could raise prices. “If you were looking at the top 20 public targets that you could really wreak havoc with by screwing with the software, the Colonial Pipeline is in that group,” Tom Kloza, the global head of energy analysis for Oil Price Information Services told the WSJ over the weekend. “It’s a big deal.”

U.S. stock futures rose slightly overnight, though losses in the technology sector threatened early morning gains. The prospect of more stimulus spending as well as Federal Reserve officials recanting statements about increasing interest rates sent the Dow and S&P 500 indices to record heights last week.

Friday’s monthly jobs report was weaker than expected and rising inflation rates continue to weigh heavily on investors’ minds. Rising manufacturing costs and commodity prices, paired with massive supply chain issues, are also playing a key role in rising consumer prices and could potentially limit economic recovery as the country moves into a post-pandemic era.

S&P 500 futures only moved 0.05% higher to $4,227.25 in the overnight trading session on the overarching sentiments.

Morning Ag Commodity Prices - 5/10/2021
Contract Units High Low Last Net Change % Change
MAY '21 CORN $ / BSH  7.6675 7.6 7.62 -0.1075 -1.39%
JUL '21 CORN $ / BSH  7.3075 7.2125 7.255 -0.0675 -0.92%
SEP '21 CORN $ / BSH  6.5025 6.42 6.43 -0.1175 -1.79%
DEC '21 CORN $ / BSH  6.3125 6.21 6.215 -0.15 -2.36%
MAR '22 CORN $ / BSH  6.345 6.2525 6.2575 -0.1425 -2.23%
MAY '22 CORN $ / BSH  6.3425 6.25 6.2675 -0.13 -2.03%
JUL '22 CORN $ / BSH  6.31 6.2225 6.2325 -0.13 -2.04%
MAY '21 SOYBEANS $ / BSH  16.21 16.1325 16.1375 -0.0725 -0.45%
JUL '21 SOYBEANS $ / BSH  15.8875 15.7525 15.8575 -0.04 -0.25%
AUG '21 SOYBEANS $ / BSH  15.35 15.235 15.33 -0.045 -0.29%
SEP '21 SOYBEANS $ / BSH  14.64 14.55 14.635 -0.05 -0.34%
NOV '21 SOYBEANS $ / BSH  14.2725 14.165 14.2275 -0.1075 -0.75%
JAN '22 SOYBEANS $ / BSH  14.2325 14.1425 14.1975 -0.1075 -0.75%
MAR '22 SOYBEANS $ / BSH  13.875 13.7725 13.8225 -0.105 -0.75%
MAY '22 SOYBEANS $ / BSH  13.745 13.665 13.68 -0.1225 -0.89%
JUL '22 SOYBEANS $ / BSH  13.68 13.6 13.63 -0.115 -0.84%
MAY '21 SOYBEAN OIL  $ / LB 66.81 66.2 66.36 -0.02 -0.03%
JUL '21 SOYBEAN OIL  $ / LB 64.51 63.25 64.19 -0.29 -0.45%
MAY '21 SOY MEAL $ / TON 443.2 439 440 -2.5 -0.56%
JUL '21 SOY MEAL $ / TON 441.8 436 439.2 -2.6 -0.59%
AUG '21 SOY MEAL $ / TON 435.4 430.3 433.4 -2.4 -0.55%
SEP '21 SOY MEAL $ / TON 428.1 423.5 426.9 -2.1 -0.49%
OCT '21 SOY MEAL $ / TON 419.7 415.9 418.5 -2.1 -0.50%
MAY '21 Chicago SRW $ / BSH  7.69 7.675 7.675 -0.06 -0.78%
JUL '21 Chicago SRW $ / BSH  7.6075 7.42 7.4375 -0.18 -2.36%
SEP '21 Chicago SRW $ / BSH  7.6025 7.4275 7.44 -0.1825 -2.39%
DEC '21 Chicago SRW $ / BSH  7.635 7.4575 7.47 -0.1825 -2.38%
MAR '22 Chicago SRW $ / BSH  7.655 7.4975 7.5125 -0.1775 -2.31%
MAY '21 Kansas City HRW $ / BSH  0 #N/A 7.2775 0 0.00%
JUL '21 Kansas City HRW $ / BSH  7.36 7.1925 7.2075 -0.16 -2.17%
SEP '21 Kansas City HRW $ / BSH  7.3925 7.235 7.2525 -0.1525 -2.06%
DEC '21 Kansas City HRW $ / BSH  7.4425 7.2975 7.315 -0.1525 -2.04%
MAR '22 Kansas City HRW $ / BSH  7.4775 7.37 7.3825 -0.145 -1.93%
MAY '21 MLPS Spring Wheat $ / BSH  7.765 #N/A 7.89 0 0.00%
JUL '21 MLPS Spring Wheat $ / BSH  7.965 7.8 7.8 -0.175 -2.19%
SEP '21 MLPS Spring Wheat $ / BSH  8.0125 7.85 7.8575 -0.17 -2.12%
DEC '21 MLPS Spring Wheat $ / BSH  8.01 7.8625 7.89 -0.1525 -1.90%
MAR '22 MLPS Spring Wheat $ / BSH  8.01 7.89 7.89 -0.16 -1.99%
JUN '21 ICE Dollar Index $ 90.325 90.08 90.13 -0.086 -0.10%
 JU '21 Light Crude $ / BBL  65.75 65.03 65.47 0.57 0.88%
 JU '21 Light Crude $ / BBL  66 65.03 65.46 0.58 0.89%
JUN '21 ULS Diesel $ /U GAL 2.0776 2.0211 2.0374 0.0268 1.33%
JUL '21 ULS Diesel $ /U GAL 2.0772 2.0208 2.037 0.0252 1.25%
JUN '21 Gasoline $ /U GAL 2.217 2.1467 2.1627 0.0358 1.68%
JUL '21 Gasoline $ /U GAL 2.2045 2.1364 2.1509 0.0285 1.34%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 131.725 0 0.00%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 144.275 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 116.025 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 118.85 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 111.975 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 112.85 0 0.00%
MAY '21 Class III Milk $ / CWT 18.78 #N/A 18.82 0 0.00%
JUN '21 Class III Milk $ / CWT 18.9 18.9 18.9 0.01 0.05%
JUL '21 Class III Milk $ / CWT 19.2 19.2 19.2 0.01 0.05%
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