Morning Market Review for May 18, 2021

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Slowing planting pace boosts corn prices. (Comments are updated by 7:30 a.m. Central Time.)

A weaker dollar and rally in edible oil markets also prop up grain and oilseed gains this morning

  • Corn up 5-10 cents
  • Soybeans up 8-11 cents, soyoil down $0.97/lb, soymeal up $0.80/ton
  • Wheat up 5-8 cents

*Prices as of 6:50 am CDT.

Corn

Slower than expected corn planting paces in yesterday’s weekly Crop Progress update from USDA contributed to higher prices this morning. A falling dollar and lingering concerns about heat stress to Brazil’s safrinha crop also supported the morning’s gains.

Corn planting in the U.S. is beginning to wind down after a frantic last few weeks propelled planting paces back in line – and even ahead of – the five-year average benchmark. As of Sunday, 80% of anticipated 2021 corn acres in the U.S. had been planted, a 13% increase from the previous week and 12% ahead of the five-year average.

It is truly impressive how fast farmers were able to plant corn this year after battling cool soil temperatures and excessive wetness in the Midwest as well as drought in the Plains. Over the past three weeks, 63% of anticipated 2021 corn acres were planted after the early delays.

Plus, warmer temperatures and scattered showers over the past week helped coax along emergence rates. For the week ending May 16, 41% of 2021 planted corn had emerged. Emergence rates pulled away from the five-year average of 35% for the week after posting a 21% rise over last week’s readings.  The corn crop is showing signs of improving as weather conditions favor crop development, especially considering that two weeks ago, emergence rates lagged behind the five-year average.

Soybeans

Yesterday’s soybean planting progress readings came in above market expectations, though you wouldn’t know it by this morning’s higher prices. Tightening global edible oil stocks and lower Malaysian palm oil production sent U.S. soybean prices rising this morning, offsetting fast sowing rates in the U.S.

With three-fifths of anticipated 2021 soybean acres in the ground, farmers across the Midwest will likely begin to slow planting paces by the end of this week. As of May 16, soybean planting was 61% complete, up 19% from the previous week and 24% higher than the five-year average as the combination of early beans and rapid planting paces propel sowing rates past historical benchmarks.

Warmer weather favored soybean emergence rates. For the week ending Sunday, 20% of the crop had emerged from the soil, up 10% from the previous week and 8% ahead of the five-year average.

More global acres are being allocated to high priced soybeans and not just in the U.S. and Brazil. India is expected to plant at least 10% more soybean acres this year. "Farmers have realized exceptionally good prices this year. There could be 10 to 12% higher area under soybean," Davish Jain, chairman of the Soybean Processors Association of India, told Reuters.

The acreage increase will help offset rising costs for palm, soy, and sunflower imports from other countries. India is the world’s largest importer of edible oils. The acreage increase could not only increase India’s self-reliance on edible oil, but it could potentially open up export opportunities to Indian soy growers to animal feed markets in Southeast Asia, provided Indian rainfall patterns align with crop development to maximize yields.

The National Oilseed Producers Association (NOPA), which accounts for 95% of the nation’s crushed soybeans, released much smaller than expected crush rate estimates for April 2021. For the month, NOPA processors crushed a mere 160.3 million bushels of soybeans – 5% lower than analysts’ average guess. In fact, the April estimate was even lower than the lower end of the trade range of 162.8 million bushels.

In what may be the first look at demand rationing in the soybean complex, processors booked extra downtime in April in response to soaring prices and tightening supplies. Country stocks are becoming more and more scarce after export demand and record-breaking crush rates early in the marketing year snapped up a short 2020 crop.

At any rate, the April 2021 crush volume fell nearly 10% crush rates from the previous month and became the second smallest crush to date for the 2020/21 marketing year. It is likely crush rates will continue to trend lower until the new crop is harvested this fall as soybean feedstock prices remain high and threaten to turn crush margins negative.

“Will high prices cure high prices?”

This is the question that Advance Trading’s Drew Moore and Brian Basting pose to readers in the latest Ag Marketing IQ column. Chinese demand for soybeans and corn is expected to increase in the new marketing year, but Moore and Basting point out that U.S. growers aren’t the only ones responding to the demand shift.

Brazil will likely surpass 5 billion bushels of soybean production next year. Argentina and Ukraine are also expected to increase soybean and corn output to cater to China’s growing hunger for the crops.

“If realized, major corn competitors with the U.S. will have their largest exportable surplus on record, soaring nearly 20% or 738 million bushels in 2021/22 to 4.7 billion bushels (bbu),” Moore and Basting explain. “A similar trend emerged for beans; USDA is projecting production increases of 293 mbu and 184 mbu for Brazil and Argentina, respectively.”

It adds another layer of volatility to corn and soybean prices going into the summer months, Moore and Basting posit. “As a student of the market, you know that price prediction is impossible,” the duo concludes. “One thing we do know for certain is that demand has and will be unrelenting.”

Wheat

Declining winter wheat conditions sent prices in the wheat complex higher this morning. Gains were also supported by a weaker dollar and a rally in the corn market.

A couple days of frost warnings last week send U.S. winter wheat conditions 1% lower from last week, according to yesterday’s Crop Progress report. For the week ending May 16, 48% of winter wheat crops were rated in good to excellent condition. Ratings remain 4% lower than the same time last year, though higher 2021 planted acreage could offset any yield damage incurred this year.

The cooler temperatures slowed heading rates last week, with progress dipping below the five-year average. As of Sunday, 53% of the winter wheat crop had reached the heading phase. It marked a 15% increase from the previous week but was 5% lower than the five-year average for the same reporting period.

In the Northern Plains, showers last week slowed the end of planting but boosted growing conditions for the young crop. As of May 16, 85% of the crop was in the ground, suggesting farmers are likely to finish planting within the next couple weeks.

Warmer temperatures and some extra showers sent emergence rates through the roof. For the week ending last Sunday, 47% of the planted spring wheat crop had emerged from the ground. It was an 18% increase from the previous week and soared 11% over the five-year average.

Weather

Warmer temperatures and showers will continue today, according to NOAA’s short-range forecasts, slowing planting speeds but improving growing conditions for young seedlings. Showers will continue to douse the Southern Plains, where over an inch of accumulation is likely in the next 24 hours. The Upper and Central Mississippi River Valley will join in on the precipitation fun, accruing up to three quarters of an inch in the same time frame.

Rainy weather will continue to batter the Southern and Central Plains as well as the Midwest tomorrow and Thursday, with the Northern Plains receiving some well-deserved rain showers by Thursday.

Financials

Coronavirus cases in the U.S. rose by 53,697 cases from yesterday to 32,994,750 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 1,908 lives to 586,403 deaths as of press time. According to the CDC, nearly 48% of the total U.S. population has received at least one vaccine. Nearly 124 million Americans (37%) are fully vaccinated. Over 1.5 billion vaccine doses have been administered worldwide.

As the new generation steps into more leadership roles on the farm, current leaders can help the younger team discover leadership strengths, Water Street Solutions’ Darren Frye suggests. In the latest Finance First column Frye recommends the older generation emphasize education, previous work experience, and individual life experience to the up and coming leadership team to tap into undiscovered leadership potential.

U.S. stock futures rebounded this morning, as investors shied away from inflation concerns and renewed interest in technology stocks. Brent crude oil briefly rose above $70/barrel for only the second time following the pandemic’s onset as markets bet on pandemic recovery taking off leading up to summer. S&P 500 futures rose 0.22% to $4,166.75 on the optimism.

 

Morning Ag Commodity Prices - 5/18/2021
Contract Units High Low Last Net Change % Change
JUL '21 CORN $ / BSH  6.66 6.535 6.615 0.09 1.38%
SEP '21 CORN $ / BSH  5.775 5.665 5.735 0.07 1.24%
DEC '21 CORN $ / BSH  5.4775 5.3775 5.4375 0.065 1.21%
MAR '22 CORN $ / BSH  5.53 5.43 5.495 0.0675 1.24%
MAY '22 CORN $ / BSH  5.56 5.48 5.5275 0.065 1.19%
JUL '22 CORN $ / BSH  5.545 5.455 5.515 0.06 1.10%
SEP '22 CORN $ / BSH  4.925 4.9025 4.925 0.0475 0.97%
JUL '21 SOYBEANS $ / BSH  16.0475 15.8825 15.9725 0.0975 0.61%
AUG '21 SOYBEANS $ / BSH  15.4025 15.25 15.3375 0.0825 0.54%
SEP '21 SOYBEANS $ / BSH  14.52 14.3925 14.4675 0.07 0.49%
NOV '21 SOYBEANS $ / BSH  14.1075 13.9625 14.0575 0.0875 0.63%
JAN '22 SOYBEANS $ / BSH  14.09 13.9525 14.0475 0.0875 0.63%
MAR '22 SOYBEANS $ / BSH  13.805 13.6725 13.77 0.0975 0.71%
MAY '22 SOYBEANS $ / BSH  13.72 13.645 13.68 0.0825 0.61%
JUL '22 SOYBEANS $ / BSH  13.6925 13.5875 13.6675 0.0825 0.61%
AUG '22 SOYBEANS $ / BSH  13.37 #N/A 13.325 0 0.00%
JUL '21 SOYBEAN OIL  $ / LB 70.37 68.78 69.87 0.9 1.30%
AUG '21 SOYBEAN OIL  $ / LB 66.22 64.41 65.78 0.98 1.51%
JUL '21 SOY MEAL $ / TON 417.5 414.7 415.6 0.7 0.17%
AUG '21 SOY MEAL $ / TON 413.5 410.7 411.9 1.1 0.27%
SEP '21 SOY MEAL $ / TON 408.1 404.9 406.6 1 0.25%
OCT '21 SOY MEAL $ / TON 402 399.7 400.9 1.2 0.30%
DEC '21 SOY MEAL $ / TON 402.6 400 401.3 1.4 0.35%
JUL '21 Chicago SRW $ / BSH  7.0925 7.0225 7.0475 0.05 0.71%
SEP '21 Chicago SRW $ / BSH  7.085 7.0225 7.0375 0.0425 0.61%
DEC '21 Chicago SRW $ / BSH  7.115 7.0525 7.0675 0.04 0.57%
MAR '22 Chicago SRW $ / BSH  7.1525 7.1025 7.1075 0.0375 0.53%
MAY '22 Chicago SRW $ / BSH  7.0675 7.025 7.0325 0.04 0.57%
JUL '21 Kansas City HRW $ / BSH  6.635 6.53 6.595 0.0725 1.11%
SEP '21 Kansas City HRW $ / BSH  6.685 6.5725 6.6375 0.0625 0.95%
DEC '21 Kansas City HRW $ / BSH  6.7575 6.6525 6.715 0.0725 1.09%
MAR '22 Kansas City HRW $ / BSH  6.815 6.7525 6.8 0.09 1.34%
MAY '22 Kansas City HRW $ / BSH  6.82 #N/A 6.7175 0 0.00%
JUL '21 MLPS Spring Wheat $ / BSH  7.25 7.1475 7.2125 0.0625 0.87%
SEP '21 MLPS Spring Wheat $ / BSH  7.3125 7.21 7.285 0.075 1.04%
DEC '21 MLPS Spring Wheat $ / BSH  7.3675 7.2825 7.3325 0.0675 0.93%
MAR '22 MLPS Spring Wheat $ / BSH  7.42 7.35 7.3925 0.0675 0.92%
MAY '22 MLPS Spring Wheat $ / BSH  7.4475 7.38 7.4475 0.0875 1.19%
JUN '21 ICE Dollar Index $ 90.19 89.735 89.81 -0.332 -0.37%
 JU '21 Light Crude $ / BBL  67.01 66.25 66.5 0.23 0.35%
 JU '21 Light Crude $ / BBL  67.02 66.24 66.52 0.24 0.36%
JUN '21 ULS Diesel $ /U GAL 2.0777 2.0569 2.0702 0.0098 0.48%
JUL '21 ULS Diesel $ /U GAL 2.076 2.055 2.0682 0.0096 0.47%
JUN '21 Gasoline $ /U GAL 2.18 2.1588 2.1722 0.0139 0.64%
JUL '21 Gasoline $ /U GAL 2.1753 2.1541 2.1672 0.0136 0.63%
MAY '21 Feeder Cattle $ / CWT 0 #N/A 137.925 0 0.00%
AUG '21 Feeder Cattle $ / CWT 0 #N/A 152.75 0 0.00%
 JU '21 Live Cattle $ / CWT 0 #N/A 115.35 0 0.00%
 AU '21 Live Cattle $ / CWT 0 #N/A 118.425 0 0.00%
JUN '21 Live Hogs $ / CWT 0 #N/A 108.65 0 0.00%
JUL '21 Live Hogs $ / CWT 0 #N/A 108.95 0 0.00%
MAY '21 Class III Milk $ / CWT 18.85 18.85 18.85 0 0.00%
JUN '21 Class III Milk $ / CWT 18.95 18.85 18.85 -0.07 -0.37%
JUL '21 Class III Milk $ / CWT 19.45 19.35 19.35 -0.07 -0.36%
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