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Morning Market Review for May 17, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Improving weather conditions send spring wheat $0.20/bushel lower. (Comments are updated by 7:30 a.m. Central Time.)

Grains start off week slightly lower as the hangover from last week’s WASDE report continues

  • Corn mixed
  • Soybeans mixed, soyoil down $0. 06/lb, soymeal up $5.10/ton
  • Wheat down 6-21 cents

*Prices as of 6:50 am CDT.

Corn

New crop corn prices rose slightly overnight on lingering concerns about Brazilian corn crop shortfalls expected later this summer. New crop futures fell $0.02-$0.03/bushel as planting season winds down and favorable spring showers are forecast across the Heartland this week. Fund selling was also at play as markets continue correcting following last week’s WASDE update which featured higher than expected new crop ending stocks.

Today’s crop progress report is likely to show another week of rapid corn planting across the Midwest, while farmers dodged showers to finish up sowing activities across the Heartland. Over two-thirds of the anticipated 2021 corn crop was in the ground as of last Sunday, according to last week’s Crop Progress report. As of May 9, 67% of 2021 corn had been planted, with 50% of the U.S. corn crop has been planted over the previous 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. Warmer temperatures over the past week will likely spur corn emergence rates past historical benchmarks in today’s report, though a couple days of frost warnings last week could alter today’s corn emergence readings.

Managed money has played a key role in grain price volatility over the past year, and last week was no exception. For the week ending May 11, CFTC Commitment of Trader data released on Friday found money managers shedding 51,693 long positions from their net buying position to end the week at 316,336 long contracts.

It was the largest single-week corn selloff by the funds since 2019. Corn remains a lucrative option for outside investors as inflation rises to the highest level since 2008. Friday’s Commitment of Traders data found last week’s net long position for money managers to be the highest on record for the reporting week.

But it did mark the fourth straight week of hedge fund managers trimming net buying positions on corn. Inflation will likely keep grain commodities as an attractive investment option in the near future, but last week’s selloff and rapid corn planting paces are likely to cool outside buying interest in corn in next week’s report.

USDA’s monthly WASDE update left markets jolted last week with expectations of smaller 2021 supplies limiting demand potential for the upcoming marketing year. AgMarket.Net’s Matt Bennett notes that any time a bullish report is expected, any potential downside risk from the report seems to be more impactful.

But despite last week’s market volatility, Bennett remains positive about profitability outlooks for grain farmers. “My best advice for producers is to look at what these prices mean to your operation on a profitability standpoint,” Bennett recommends in the latest Ag Marketing IQ column.

“If this corn market would go down this coming week just like it did this past week, it would be tough to stomach for those thinking these prices aren’t good enough,” Bennett concludes. “The name of the game is profit -- not just price, so be sure to manage your profit margins wisely.”

Soybeans

Old crop soybean futures traded $0.02-$0.06/bushel higher this morning on tight global ending stocks for the 2020/21 marketing year. But a rainy forecast this week and record-setting 2021/22 Brazilian crop sent new crop futures $0.03-$0.11/bushel lower overnight

Tight soybean supplies in the U.S. are leading the world’s second largest soybean exporter to import more soybeans from Brazil, according to shipping data from Reuters. The U.S. has bought the most Brazilian soybeans since 2014 due to the shortages, with 7.6 million bushels already shipped or expected to ship soon from Brazilian export terminals in the coming days.

Livestock buyers are predominantly leading the soybean import charge. Perdue Farms has already chartered three vessels expected to feed poultry operations in the U.S. southeast. Cargill, Bunge, and Glencore are among other U.S. buyers of Brazilian soybeans.

Soybean planting paces will likely power forward in today’s Crop Progress report, due in large part to improved weather conditions and corn planting activities wrapping up. Over two-fifths of the 2021 soybean crop was in the ground according to last week’s Crop Progress report.

The National Oilseed Producers Association (NOPA) releases updated monthly soybean crush data for April 2021 this morning. Trade estimates peg the April 2021 crush between 162.8 million and 172.0 million bushels with an average guess of 168.7 million bushels. If realized, it would be the second largest April crush on record, following the April 2020 crush of 171.8 million bushels.

The April 2021 crush is likely to be 5% lower than March 2021 crush volumes as processors scramble to find readily available soybean supplies for feedstock. Much of the 2020/21 soybean crop has already been shipped into international export channels or already processed early in the 2020/21 marketing year. Several plants also took downtime during April, helping to reduce expensive soybean purchases amid soaring commodity prices.

The lead-up to last week’s WASDE report also led money managers to regain interest in long positions for soybean futures and options. For the week ending May 11, managed money buyers added another 1,741 long positions to raise their net buying position on soybean futures and options to 177,822 contracts.

Tightening global supplies to close out the current marketing year and expectations of lower than desired U.S. soybean production in the 2021/22 crop year continue to support soybean prices. Rising inflation is also a driving incentive behind outside investor’s renewed interest in soybean futures and options over the past week.

Wheat

Ukraine is expected to produce over 1.0 billion bushels of wheat this year, a new production high for the world’s sixth largest wheat exporter. Favorable weather has supported planting and early crop development this spring, which bodes well for Ukraine’s export prospects in the upcoming 2021/22 marketing year.

The sentiment weighed prices in the Chicago soft winter wheat complex lower overnight. Rains are forecasted to blanked the Southern Plains for the first half of this week, encouraging news for drought-plagued regions of the region. Chicago and Kanas City wheat futures fell $0.06-$0.08/bushel overnight on the sentiments.

Markets are anticipating favorable Crop Progress results for spring wheat planting progress and growing conditions this afternoon, sending Minneapolis futures nearly 3% lower in overnight trading. Temperatures are likely to reach the 80s today in the Northern Plains, encouraging crop development for the newly planted spring wheat crop.

Rain showers across the Plains over the past week will hopefully offset a brief cold spell in the middle of last week, providing a boost to crop conditions in today’s Crop Progress report. Spring wheat planting progress will likely continue racing to a close in today’s report. About 70% of anticipated 2021 spring wheat acreage was in the ground in last week’s Crop Progress report, with many farmers likely finishing up over the weekend.

Winter wheat conditions in the Southern Plains and Midwest could see a second straight week of improvement after last week’s rains and some warmer weekend weather. About 49% of winter wheat acreage was in good to excellent condition as of a week ago, a 1% improvement from the previous week.

Weather

Rains will blanket the Central and Southern Plains over the next few days, according to NOAA’s short-range forecasts. At least an inch of accumulation is expected in the region over the next 24 hours, with the system moving east into the Upper Mississippi River Valley and Eastern Corn Belt by this afternoon.

Financials

Coronavirus cases in the U.S. rose to 32,941,053 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased 584,495 deaths as of press time. According to the CDC, 47% of the total U.S. population has received at least one vaccine. Over 123 million Americans (37%) are fully vaccinated.

Happy Monday! After grain markets saw massive price shifts over the second half of last week due to favorable weather, inflation concerns, and updated demand and supply data from USDA, farmers are anxiously awaiting weekly planting data to be updated later today. For a recap of last week’s volatile market events, check out our weekly Ag Markets roundup. Plus – a few more stories that made headlines in the agricultural world last week.

The U.S. Coast Guard allowed Mississippi River barge traffic to resume normal flows on Friday following a bridge closure in Memphis, Tennessee that led river movement to a halt as a result. The bridge was closed for inspection on Tuesday, May 11.

By the time the bridge reopened on Friday, 1,058 barges were stalled, both north- and southbound.

The Colonial Pipeline resumed operations last week, though fuel shortages in the Southeast are likely to continue as gas stations replenish supplies and panic buying slows. Oil prices started the week lower this morning, with U.S. stock futures following close behind on concerns about rising inflation and global economic recovery outlooks. The S&P 500 dropped 0.35% to $4,154.50.

Morning Ag Commodity Prices - 5/17/2021
Contract Units High Low Last Net Change % Change
JUL '21 CORN $ / BSH  6.4925 6.33 6.4775 0.04 0.62%
SEP '21 CORN $ / BSH  5.6375 5.4925 5.6275 -0.0025 -0.04%
DEC '21 CORN $ / BSH  5.4175 5.27 5.4 -0.0275 -0.51%
MAR '22 CORN $ / BSH  5.47 5.325 5.4575 -0.0225 -0.41%
MAY '22 CORN $ / BSH  5.4925 5.3475 5.48 -0.0225 -0.41%
JUL '22 CORN $ / BSH  5.475 5.35 5.4575 -0.0325 -0.59%
SEP '22 CORN $ / BSH  4.8475 4.7625 4.8475 -0.015 -0.31%
JUL '21 SOYBEANS $ / BSH  15.985 15.755 15.92 0.0575 0.36%
AUG '21 SOYBEANS $ / BSH  15.3175 15.125 15.2875 0.0125 0.08%
SEP '21 SOYBEANS $ / BSH  14.495 14.3125 14.455 0.0075 0.05%
NOV '21 SOYBEANS $ / BSH  14.045 13.8525 13.995 -0.0125 -0.09%
JAN '22 SOYBEANS $ / BSH  14.03 13.865 13.8875 -0.11 -0.79%
MAR '22 SOYBEANS $ / BSH  13.73 13.565 13.6925 -0.025 -0.18%
MAY '22 SOYBEANS $ / BSH  13.65 13.5 13.605 -0.035 -0.26%
JUL '22 SOYBEANS $ / BSH  13.5925 13.47 13.5775 -0.0375 -0.28%
AUG '22 SOYBEANS $ / BSH  13.37 13.27 13.3075 -0.055 -0.41%
JUL '21 SOYBEAN OIL  $ / LB 68.3 67.05 67.42 -0.16 -0.24%
AUG '21 SOYBEAN OIL  $ / LB 64.55 63.19 63.6 -0.5 -0.78%
JUL '21 SOY MEAL $ / TON 424.1 417.2 423 4.5 1.08%
AUG '21 SOY MEAL $ / TON 419.3 412.6 418.3 4.3 1.04%
SEP '21 SOY MEAL $ / TON 412.9 406 411.8 3.3 0.81%
OCT '21 SOY MEAL $ / TON 403.8 398.9 403.5 2.2 0.55%
DEC '21 SOY MEAL $ / TON 404.3 397.9 403.3 2.5 0.62%
JUL '21 Chicago SRW $ / BSH  7.06 6.92 6.9975 -0.075 -1.06%
SEP '21 Chicago SRW $ / BSH  7.04 6.91 7 -0.065 -0.92%
DEC '21 Chicago SRW $ / BSH  7.08 6.945 7.0225 -0.075 -1.06%
MAR '22 Chicago SRW $ / BSH  7.105 6.9925 7.0725 -0.0675 -0.95%
MAY '22 Chicago SRW $ / BSH  7.0125 6.92 6.9925 -0.07 -0.99%
JUL '21 Kansas City HRW $ / BSH  6.59 6.4325 6.5125 -0.065 -0.99%
SEP '21 Kansas City HRW $ / BSH  6.6425 6.485 6.565 -0.065 -0.98%
DEC '21 Kansas City HRW $ / BSH  6.71 6.56 6.6275 -0.0775 -1.16%
MAR '22 Kansas City HRW $ / BSH  6.7775 6.63 6.6925 -0.0825 -1.22%
MAY '22 Kansas City HRW $ / BSH  6.75 6.75 6.75 -0.035 -0.52%
JUL '21 MLPS Spring Wheat $ / BSH  7.365 7.035 7.1925 -0.215 -2.90%
SEP '21 MLPS Spring Wheat $ / BSH  7.395 7.0925 7.265 -0.2 -2.68%
DEC '21 MLPS Spring Wheat $ / BSH  7.46 7.16 7.295 -0.2075 -2.77%
MAR '22 MLPS Spring Wheat $ / BSH  7.4025 7.235 7.3675 -0.1625 -2.16%
MAY '22 MLPS Spring Wheat $ / BSH  7.2625 7.245 7.25 -0.29 -3.85%
JUN '21 ICE Dollar Index $ 90.415 90.165 90.25 -0.068 -0.08%
 JU '21 Light Crude $ / BBL  65.74 65.12 65.21 -0.16 -0.24%
 JU '21 Light Crude $ / BBL  65.72 65.11 65.21 -0.15 -0.23%
JUN '21 ULS Diesel $ /U GAL 2.0538 2.0301 2.0373 0.0011 0.05%
JUL '21 ULS Diesel $ /U GAL 2.0525 2.0284 2.0356 0.0011 0.05%
JUN '21 Gasoline $ /U GAL 2.1412 2.1214 2.1316 0.005 0.24%
JUL '21 Gasoline $ /U GAL 2.1357 2.1176 2.1243 0.0019 0.09%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 137.55 0 0.00%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 151.15 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 115.3 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 118.825 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 108.725 0 0.00%
JUL '21 Live Hogs $ / CWT 0 #N/A 109 0 0.00%
MAY '21 Class III Milk $ / CWT 18.87 18.86 18.86 -0.02 -0.11%
JUN '21 Class III Milk $ / CWT 19.46 19.05 19.2 -0.16 -0.83%
JUL '21 Class III Milk $ / CWT 19.66 19.42 19.53 -0.11 -0.56%
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