Morning Market Review for October 19, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Domestic biodiesel production forecasts lift soy prices. (Comments are updated by 7:30 a.m. Central Time.)

Export optimism also sends grain prices higher in overnight trading session

  • Corn up 1 cent
  • Soybeans up 5-8 cents; Soymeal up $3.00/ton; Soyoil up $0.03/lb
  • Wheat up 6-9 cents

*Prices as of 6:50am CDT.

Good Morning! How is harvest progressing on your farm? Tell us all about it! Click here to take our ongoing Feedback from the Field survey on 2021 crop conditions to share your harvest progress (or hunting plans!). Our Google Map, updated daily, provides all past responses for farm readers, from farmers.

Corn

Corn prices edged $0.01/bushel higher this morning on slower than anticipated U.S. harvest paces. Weekly export inspections from USDA released yesterday also pointed to an unseasonal uptick in corn shipments, adding another layer of price support.

Yesterday’s Crop Progress report found virtually all of U.S. corn to be mature as of October 17. At the same time, 2021 corn harvest surpassed the halfway point, coming in at 52% as of Sunday. It marked an 11% increase from the prior week’s crop update from USDA.

Despite showers across the Corn Belt throughout last week, harvesting rates were still able to continue advancing at a steady clip, even pulling a little farther away from the five-year average than the previous week amid some regional slowdowns.

For the week ending October 17, 2021 harvest progress held steady at 11% ahead of the five-year benchmark. That metric widened slightly from last week’s report, when the same margin stood at 10%.

But the weekly reading came in on the low side of analyst expectations, adding price support to the corn futures complex overnight. Analysts had expected yesterday’s report to average 54% completion, with a range of 49%-64%.

Soybeans

Demand optimism overshadowed rapid harvest rates and increasing supplies in the overnight trading session, pushing soybean prices $0.05-$0.08/bushel higher. Despite last Friday’s weaker domestic demand usage reading from the National Oilseed Producers Association (NOPA), nearly a quarter of carry was priced into the market between now and the August 2022 futures contract.

U.S. consultancy AgResource believes that increasing domestic biofuel production plays a big role in that carry figure. AgResource’s president, Dan Basse, spoke at the GrainCom conference in Geneva, Switzerland overnight, noting that more soybean acreage in the U.S. – and abroad – will be necessary to accommodate rising biodiesel production capacity.

Basse estimates that U.S. biodiesel production will double in the next year with the addition of 1 billion gallons expected to enter the pipeline in the next 12 months. With so few soybean imports coming into the U.S., Basse estimates 40 million more acres of soybeans will need to be planted in the U.S. in 2022.

"I don't think there is any way America can shift 40 million acres to soybeans from other crops, but you're going to see some sort of shift," he said, noting that countries in Africa, the Black Sea, and South America will likely need to increase soybean acreages to ensure market supplies.

Weekly soybean inspections accelerated by nearly a third, according to USDA’s Agricultural Marketing Service (AMS) in a report released yesterday. AMS reported 84.4 million bushels of soybeans were inspected at U.S. terminals through the week ending October 14.

While marketing year to date shipments remain about half the size of volumes from the same time last year, yesterday’s reading was encouraging news for soybean prices, which rely heavily on export markets for support. Over 44% of 2021/22 soybean supplies are slated to be exported, with the majority of that volume being shipped out over the next couple months.

The rain delays over the past week did not necessarily hold back soybean harvest progress in the Midwest, but it did not help farmers to work ahead of historical paces either. For the week ending October 17, 60% of anticipated 2021 U.S. soybeans had been harvested, up 11% from the prior week.

But weather setbacks pulled 2021 harvest paces more closely in line with historical rates after the past week. Last week’s Crop Progress report saw weekly harvesting paces at 9% ahead of the five-year average. Yesterday’s reading pulled the five-year average within 5% of the historical benchmark.

Bullish price action was afoot this morning as markets digested the readings. Analysts had pegged yesterday’s figure about 2% higher than USDA’s results, which supported the morning’s upward price movement.

Wheat

Wheat prices traded $0.06-$0.09/bushel higher overnight on continued concerns about tightening global wheat supplies, marking a fourth consecutive day of rising wheat prices. Concerns about the European Union over-exporting its wheat supplies are increasing export optimism for U.S. supplies, especially as Russian stocks remain tight amid high prices and the euro weakens.

A weaker dollar also supported the morning’s gains in the wheat complex despite falling import paces from China in September.

Last week’s scattered showers also slowed winter wheat sowing activities. As of October 17, 70% of anticipated 2022 U.S. winter wheat crops had been planted. While it marked a 10% increase from the previous week, it fell 1% behind the five-year average for the same reporting period after rapid planting progress in the Northern Plains and Pacific Northwest early in the season was offset by slower sowing speeds and rain delays in the Plains and Midwest.

Analysts had pegged yesterday’s winter wheat sowing metric at 73% complete, 2% higher than USDA’s reported progress. The slower rate contributed to strength in the wheat complex during the overnight trading session.

Emergence rates are slightly behind target as well. As of Sunday, 44% of the newly planted winter wheat crop had emerged, up 13% from a week prior. But the slow planting paces left this week’s emergence tally 3% behind the five-yar average for the same reporting period.

Weather

Clear skies and warm temperatures will allow harvest progress to continue in full swing across the Heartland today, according to NOAA’s short-range forecasts.

Yesterday’s winter storm developing along the West Coast has shifted into the Central Rockies in Wyoming today. That system is likely to push rain and a chance of snow into the Northern and Central Plains over the next 24 hours, dropping over an inch of precipitation along the way.

The system will creep into the Upper Midwest by tomorrow afternoon, potentially stalling harvest progress on Wednesday before shifting into the Eastern Corn Belt by Thursday.

Financials

Strong third quarter earnings results lifted U.S. stock indices overnight, offsetting concerns about inflationary pressures if only for a moment. Of note, dairy processor and world’s largest yogurt producer Danone SA hinted at potential price increases amid rising production costs and growing inflationary forecasts.

“The world is watching interest rates more closely than it has for some time -- and rightly so, the moves have been emphatic, especially in the short-term maturities,” Chris Weston, head of research at Pepperstone Financial Pty, told Bloomberg this morning. He also noted how it’s “impressive how resilient and calm markets are in the face of the rates repricing.”

Markets will be impacted today by housing construction data, bank and tech earnings, and more regulatory guidance in China. Several U.S. Federal Reserve officials are also expected to speak throughout the week, which could offer more insights into current economic conditions as perceived by the Fed.

At last glance, S&P 500 futures traded 0.5% higher to $4,500 even this morning.

Also worth a read on our website, FarmFutures.com:

  • Change is hard, but especially in the farm. Darren Frye offers pointers on how to adapt.
  • The dollar is trading 4% above May 2021 lows. Advance Trading’s Drew Moore translates that for farmers, exporters, and inflation watchers in the latest Ag Marketing IQ column.
  • Mike Wilson pencils out ROI and labor savings by using robotic technology around the farm
Morning Ag Commodity Prices - 10/19/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.3475 5.3 5.3475 0.02 0.38%
MAR '22 CORN $ / BSH  5.4275 5.38 5.425 0.02 0.37%
MAY '22 CORN $ / BSH  5.465 5.4225 5.465 0.0225 0.41%
JUL '22 CORN $ / BSH  5.465 5.4175 5.465 0.0225 0.41%
SEP '22 CORN $ / BSH  5.32 5.2825 5.3175 0.01 0.19%
DEC '22 CORN $ / BSH  5.29 5.255 5.2875 0.01 0.19%
MAR '23 CORN $ / BSH  5.34 5.34 5.34 -0.0025 -0.05%
NOV '21 SOYBEANS $ / BSH  12.29 12.1625 12.275 0.06 0.49%
JAN '22 SOYBEANS $ / BSH  12.3825 12.2475 12.365 0.075 0.61%
MAR '22 SOYBEANS $ / BSH  12.465 12.3425 12.4475 0.075 0.61%
MAY '22 SOYBEANS $ / BSH  12.55 12.4275 12.5375 0.0725 0.58%
JUL '22 SOYBEANS $ / BSH  12.6 12.4925 12.5975 0.075 0.60%
AUG '22 SOYBEANS $ / BSH  12.545 12.5125 12.5425 0.0725 0.58%
SEP '22 SOYBEANS $ / BSH  12.3125 12.3075 12.3125 0.005 0.04%
NOV '22 SOYBEANS $ / BSH  12.3 12.2025 12.3 0.055 0.45%
JAN '23 SOYBEANS $ / BSH  12.3075 12.2975 12.3075 0.0525 0.43%
DEC '21 SOYBEAN OIL  $ / LB 62.34 61.69 62.03 0.01 0.02%
JAN '22 SOYBEAN OIL  $ / LB 62.03 61.4 61.78 0.05 0.08%
DEC '21 SOY MEAL $ / TON 321.9 317 321.4 3.5 1.10%
JAN '22 SOY MEAL $ / TON 321.8 317.1 321.2 3.1 0.97%
MAR '22 SOY MEAL $ / TON 323 318.6 322.6 3 0.94%
MAY '22 SOY MEAL $ / TON 325.4 321.2 325.1 2.8 0.87%
JUL '22 SOY MEAL $ / TON 328.9 324.6 328.4 2.6 0.80%
DEC '21 Chicago SRW $ / BSH  7.4525 7.3575 7.4425 0.08 1.09%
MAR '22 Chicago SRW $ / BSH  7.5725 7.485 7.565 0.0775 1.04%
MAY '22 Chicago SRW $ / BSH  7.6075 7.525 7.6025 0.0775 1.03%
JUL '22 Chicago SRW $ / BSH  7.4725 7.4 7.4675 0.0675 0.91%
SEP '22 Chicago SRW $ / BSH  7.495 7.4325 7.49 0.0675 0.91%
DEC '21 Kansas City HRW $ / BSH  7.5725 7.465 7.5625 0.0725 0.97%
MAR '22 Kansas City HRW $ / BSH  7.64 7.55 7.6325 0.0725 0.96%
MAY '22 Kansas City HRW $ / BSH  7.6625 7.5975 7.6625 0.075 0.99%
JUL '22 Kansas City HRW $ / BSH  7.5525 7.4675 7.55 0.05 0.67%
SEP '22 Kansas City HRW $ / BSH  7.5575 7.5 7.555 0.05 0.67%
DEC '21 MLPS Spring Wheat $ / BSH  9.7675 9.655 9.765 0.0875 0.90%
MAR '22 MLPS Spring Wheat $ / BSH  9.6475 9.5275 9.6475 0.0975 1.02%
MAY '22 MLPS Spring Wheat $ / BSH  9.4725 9.4725 9.4725 0.0925 0.99%
JUL '22 MLPS Spring Wheat $ / BSH  9.215 #N/A 9.155 0 0.00%
SEP '22 MLPS Spring Wheat $ / BSH  8.32 8.25 8.32 0.0275 0.33%
DEC '21 ICE Dollar Index $ 93.95 93.49 93.59 -0.355 -0.38%
 NO '21 Light Crude $ / BBL  83.58 82.05 83.32 0.88 1.07%
 DE '21 Light Crude $ / BBL  82.79 81.27 82.52 0.83 1.02%
NOV '21 ULS Diesel $ /U GAL 2.5669 2.5312 2.5555 0.0063 0.25%
DEC '21 ULS Diesel $ /U GAL 2.5593 2.5233 2.5475 0.0067 0.26%
NOV '21 Gasoline $ /U GAL 2.5004 2.4726 2.4851 -0.0015 -0.06%
DEC '21 Gasoline $ /U GAL 2.4365 2.4097 2.4219 -0.0004 -0.02%
OCT '21 Feeder Cattle $ / CWT 0 #N/A 155.75 0 0.00%
NOV '21 Feeder Cattle $ / CWT 0 #N/A 159.35 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 125.45 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 130.425 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 78.75 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 81.775 0 0.00%
OCT '21 Class III Milk $ / CWT 17.91 17.9 17.9 -0.02 -0.11%
NOV '21 Class III Milk $ / CWT 19.16 19.12 19.12 -0.04 -0.21%
DEC '21 Class III Milk $ / CWT 18.78 18.78 18.78 -0.02 -0.11%

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