Morning Market Review for May 11, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Grains mixed ahead of tomorrow’s USDA reports. (Comments are updated by 7:30 a.m. Central Time.)

Rapid planting progress, continued weather woes result in mixed overnight markets

  • Corn mixed
  • Soybeans mixed, soyoil down $0.32/lb, soymeal up $2.60/ton
  • Wheat up 1-5 cents

*Prices as of 6:50 am CDT.

Corn

Old crop corn futures rose overnight as concerns about a potentially smaller Brazilian safrinha corn crop increased demand for nearby corn futures contracts. New crop futures lost ground on rapid planting paces reported in yesterday’s Crop Progress report from USDA. Traders are also awaiting results from tomorrow’s WASDE report before feeding into – or selling out of – another rally.

Over two-thirds of the anticipated 2021 corn crop was in the ground as of Sunday, according to yesterday’s Crop Progress report. As of May 9, 67% of 2021 corn had been planted, up 21% from the previous week as U.S. farmers surged past the five-year average of 52%.

The results were in line with analyst expectations, sending new crop corn futures slightly lower in the overnight trading session on the break-neck planting progress. To put it into perspective, 50% of the U.S. corn crop has been planted over the past two weeks.

Despite a slow and cold start to planting, corn crops are finally emerging at a pace that more closely resembles recent planting speeds. For the week ending May 9, 20% of the 2021 corn crop had emerged, up 12% from the previous week and 1% ahead of the five-year average.

Soybeans

ADM joined the biofuel expansion race yesterday, announcing the construction of a new soybean crush facility in Spiritwood, North Dakota and the expansion of crushing and refining operations at its Quincy, Illinois facility. Old crop soybean futures rose this morning on strong biodiesel prospects, but were mixed for new crop soybean futures as rising global vegetable oil stocks and rapid 2021 planting progress in the U.S. weighed on markets.

China is leading the world-wide charge in adopting renewable fuels and is not likely to slow down any time in the next couple years, according to a report released overnight by the International Energy Agency (IEA) in London.

Despite the pandemic, global renewable energy increased 45% annually in 2020. It was the largest annual increase in renewable energy products since 1999, even amid logistical bottlenecks due to COVID-19. The IEA expects global renewable energy capacity could double over the next year to 550 gigawatts as governments around the world continue to invest in more offshore and onshore wind, solar, and bioenergy facilities.

Favorable government policies addressing climate change encouraged growth in the global renewable fuel sector, a trend that is likely to continue as the impacts of global warming are endured by the citizens of the world.

China claimed half of all global renewable energy capacity growth last year. IEA expects it will account for 45% of this year’s growth and 58% of 2022’s growth as the nation focuses on becoming a more self-sufficient nation.

Over two-fifths of the 2021 soybean crop is in the ground according to the latest Crop Progress report. As of Sunday, 42% of 2021 soybeans had been planted, an 18%-increase from last week and 20% ahead of the five-year average.

As corn planting begins to wind down, growers will increasingly focus on soybean planting. Expect these paces to remain hot over the next two weeks. But also keep an eye on overnight temperatures over the next couple days.

Temperatures could slip below freezing in the Northern Plains and Upper Mississippi River Valley, damaging early planted soybean crops. As new crop soybeans futures prices rise this morning, weather will likely play a significant role in soybean prices over the next couple days.

With markets reaching new levels of volatility, it is easy to be uncertain about when to execute marketing plans. Advance Trading’s JD Schuerman knows price-paralysis can be a real problem for farmers, but advises they do the exact opposite when that uneasiness sets in.

“I like to use a baseball analogy in these situations,” Schuerman explains in the latest Ag Marketing IQ column. “If we can make a profitable sale, switch put options to call options, it feels like hitting a solid double. If all we’re looking for is home runs, we can come up empty and miss out on a solid marketing opportunity.”

Schuerman recommends using call options to place a floor under current price levels to capture upside market potential. “No one knows when the market will decide to keep going higher, so it is vital to reward higher prices with sales and strategically hedging around that sale,” Schuerman advises.

Wheat

Wheat prices recouped some of yesterday’s losses as the dollar weakened overnight. Cooler temperatures in the Northern Plains and Upper Midwest raised frost concerns for newly planted spring wheat crops as well as soft red winter wheat crops currently reaching the heading phase of crop development.

Rains in the Midwest and Southern Plains last week helped winter wheat conditions improve 1% for the week ending May 9 to 49% good to excellent. Heading progress remains 8% behind the five-year average at 38%, despite an 11%-rise from the previous week.

Spring wheat planting is racing to a close, with 70% of anticipated 2021 acreage in the ground as of May 9. The planting progress as of Sunday was a 21%-increase from the previous week and is 19% ahead of the five-year average.

Rains in the Northern Plains over the weekend encouraged emergence rates despite lingering drought conditions in the region. As of Sunday, 29% of planted spring wheat acreage had emerged from the ground, a 15% increase from the previous week and 9 points ahead of the five-year average of 20% for the same reporting period.

Weather

The Central and Southern Plains will see rain today, according to NOAA’s short-range forecasts. Total accumulation is expected to reach around a half inch in key crop-producing areas, with the heaviest showers topping two inches around the Mississippi River delta.

As mentioned earlier, growers in the Northern Plains and Upper Mississippi River Valley should be on the lookout for frost damage tonight as temperatures flirt with the freezing point tonight.

Financials

Coronavirus cases in the U.S. rose by 36,378 cases as of yesterday to 32,744,406 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 407 lives to 582,162 deaths as of press time. According to the CDC, 46% of the total U.S. population has received at least one vaccine. Nearly 116 million Americans (35%) 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.

Every farm handles market volatility differently, especially when it comes to creating and executing a marketing plan. As Water Street Solution’s Darren Frey points out, every farm is different. Amid the differences spanning every operation, in the latest Finance first column, Frye recommends that all farms build flexibility into their plans, stay focused on the overarching goal, and seek help when needed to thrive in these volatile times.

A tech selloff sent U.S. futures lower this morning as inflation concerns remain high on traders’ minds. Energy futures trended lower in overnight trading despite the fact that the Colonial Pipeline continues to remain shut down due to a ransomware cyber-attack. Gasoline imports from Europe are expected to help ease some of the short-term pain consumers in the Southeast scramble to find available fuel supplies. S&P 500 futures shed 44.17 points or 1.04% in overnight trading to settle at $4,188.43 ahead of the opening bell.

Morning Ag Commodity Prices - 5/11/2021
Contract Units High Low Last Net Change % Change
MAY '21 CORN $ / BSH  7.5 7.4725 7.5 0.02 0.27%
JUL '21 CORN $ / BSH  7.175 7.0325 7.1575 0.04 0.56%
SEP '21 CORN $ / BSH  6.3125 6.2 6.295 0.005 0.08%
DEC '21 CORN $ / BSH  6.0975 5.99 6.0775 -0.015 -0.25%
MAR '22 CORN $ / BSH  6.14 6.0425 6.12 -0.02 -0.33%
MAY '22 CORN $ / BSH  6.145 6.0575 6.13 -0.02 -0.33%
JUL '22 CORN $ / BSH  6.1125 6.03 6.105 -0.0125 -0.20%
MAY '21 SOYBEANS $ / BSH  16.2625 16.0825 16.2625 0.0625 0.39%
JUL '21 SOYBEANS $ / BSH  15.9625 15.7325 15.9325 0.0575 0.36%
AUG '21 SOYBEANS $ / BSH  15.345 15.12 15.32 0.0325 0.21%
SEP '21 SOYBEANS $ / BSH  14.5625 14.36 14.53 -0.0025 -0.02%
NOV '21 SOYBEANS $ / BSH  14.1625 13.9725 14.135 -0.0075 -0.05%
JAN '22 SOYBEANS $ / BSH  14.135 13.9625 14.12 -0.005 -0.04%
MAR '22 SOYBEANS $ / BSH  13.84 13.685 13.8225 -0.005 -0.04%
MAY '22 SOYBEANS $ / BSH  13.7425 13.585 13.7175 0 0.00%
JUL '22 SOYBEANS $ / BSH  13.7075 13.6025 13.7025 0.0275 0.20%
MAY '21 SOYBEAN OIL  $ / LB 66.5 #N/A 66.1 0 0.00%
JUL '21 SOYBEAN OIL  $ / LB 63.95 63.11 63.53 -0.31 -0.49%
MAY '21 SOY MEAL $ / TON 0 #N/A 444.4 0 0.00%
JUL '21 SOY MEAL $ / TON 444.8 438.2 444.5 2.2 0.50%
AUG '21 SOY MEAL $ / TON 437.7 431.4 437.6 2 0.46%
SEP '21 SOY MEAL $ / TON 428.9 423.5 428.9 1.5 0.35%
OCT '21 SOY MEAL $ / TON 418.1 413.8 418.1 0.5 0.12%
MAY '21 Chicago SRW $ / BSH  7.445 7.4275 7.445 0.02 0.27%
JUL '21 Chicago SRW $ / BSH  7.3775 7.2275 7.35 0.045 0.62%
SEP '21 Chicago SRW $ / BSH  7.3825 7.24 7.3525 0.0425 0.58%
DEC '21 Chicago SRW $ / BSH  7.415 7.275 7.395 0.0475 0.65%
MAR '22 Chicago SRW $ / BSH  7.45 7.315 7.425 0.04 0.54%
MAY '21 Kansas City HRW $ / BSH  0 #N/A 6.955 0 0.00%
JUL '21 Kansas City HRW $ / BSH  7.08 6.9425 7.0525 0.0175 0.25%
SEP '21 Kansas City HRW $ / BSH  7.12 6.995 7.085 0.01 0.14%
DEC '21 Kansas City HRW $ / BSH  7.18 7.055 7.1475 0.0075 0.11%
MAR '22 Kansas City HRW $ / BSH  7.2375 7.115 7.2075 0.005 0.07%
MAY '21 MLPS Spring Wheat $ / BSH  0 #N/A 7.4575 0 0.00%
JUL '21 MLPS Spring Wheat $ / BSH  7.6075 7.45 7.59 0.0575 0.76%
SEP '21 MLPS Spring Wheat $ / BSH  7.65 7.505 7.6425 0.06 0.79%
DEC '21 MLPS Spring Wheat $ / BSH  7.685 7.555 7.6825 0.07 0.92%
MAR '22 MLPS Spring Wheat $ / BSH  7.725 7.6 7.725 0.075 0.98%
JUN '21 ICE Dollar Index $ 90.335 90.035 90.06 -0.125 -0.14%
 JU '21 Light Crude $ / BBL  65.02 64.09 64.16 -0.76 -1.17%
 JU '21 Light Crude $ / BBL  65.02 64.12 64.19 -0.74 -1.14%
JUN '21 ULS Diesel $ /U GAL 2.0205 1.9992 2.0063 -0.0103 -0.51%
JUL '21 ULS Diesel $ /U GAL 2.0194 1.9987 2.0056 -0.0106 -0.53%
JUN '21 Gasoline $ /U GAL 2.1341 2.1117 2.1213 -0.0121 -0.57%
JUL '21 Gasoline $ /U GAL 2.1256 2.1062 2.1179 -0.0094 -0.44%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 135.45 0 0.00%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 148.7 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 118.225 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 120.35 0 0.00%
MAY '21 Live Hogs $ / CWT 0 #N/A 111.9 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 112.1 0 0.00%
MAY '21 Class III Milk $ / CWT 18.79 #N/A 18.86 0 0.00%
JUN '21 Class III Milk $ / CWT 19.02 18.82 18.97 0.15 0.80%
JUL '21 Class III Milk $ / CWT 19.21 #N/A 19.2 0 0.00%
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