Morning Market Review for October 27, 2021

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Another round of profit-taking stalls grain gains. (Comments are updated by 7:30 a.m. Central Time.)

Soy takes the biggest hit overnight, with lower soyoil prices and U.S.-China tensions triggering losses

  • Corn down 2-4 cents
  • Soybeans 6-8 cents; Soymeal down $1.20/ton; Soyoil down $0.41/lb
  • Chicago & Kansas City wheat down 2-4 cents; Minneapolis wheat down 2-7 cents

 

*Prices as of 7:00am 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 futures fell back by $0.02-$0.04/bushel in the overnight trading session after profit-takers took advantage of yesterday’s three-week price high. Weaker wheat prices also weighed the grain complex lower this morning.

Rising energy prices have increased demand for ethanol over the past few weeks. With readily available supplies fresh out of the fields, ethanol production from corn is quickly reestablishing itself as cheap fuel alternative in an era of high gasoline prices.

That sentiment is likely to play out in this morning’s weekly Petroleum Inventory Status report from the U.S. Energy Information Administration (EIA), which showcases weekly ethanol output across the country.

Last week’s report saw ethanol output rise 20% over the past four weeks to 1.1 million barrels produced per day – tying the third largest weekly production reading on record for the ethanol industry. Gasoline consumption has slowly climbed back to pre-COVID volumes, though its weekly inconsistencies suggest that the overall rally in the energy market is the likely driver of higher ethanol volumes over het past month.

Soybeans

Soyoil led losses in the soybean complex this morning. An uptick in COVID-19 cases in China led to increasing restrictions in the region to curb transmission, reducing demand forecasts for edible oils. Cheaper available alternatives also weighed on soyoil prices, sending December 2022 futures down $0.48/lb at last glance to $61.83/lb.

Soybean futures prices fell $0.06-$0.08/bushel on a round of profit-taking as well as rising concerns about diplomatic relations between the U.S. and China as well as advancing harvest rates across the U.S. Heartland.

Rains are falling in Brazil’s Center-Southern regions, helping to reverse some of the drought damage incurred over the past year due to a La Niña weather pattern. Rainfall the past month has accumulated at above average levels, which bodes well for soybean production as well as replenishing water levels for the Parana River.

The Parana River, which flows through Brazil, Paraguay, and Argentina, is a critical source of transport for inland grain operations through South America. But this year’s drought has slowed the river to a trickle, sending it to its lowest level since the all-time low recorded in 1944.

The river now flows at half the volume of its normal capacity at several points. In some areas where cargo ships used to pass freely, the river’s flow has been reduced to a muddy trickle. Rainfall in Brazil’s center-south states over the past year is the lowest on record since the early 1990s, with rising climate concerns suggesting that this trend may become more common in the near future.

Cargo ships on the Parana River are now only filled to 80% capacity due to the lower river levels and topped off at seaside ports in Buenos Aires, Argentina. Lower river levels also mean that ships need to travel slower, in some cases tripling the length of the trip. While this remains a feasible solution operationally, it is not without excess transport costs.

The Rosario Grains Exchange estimates Argentine farmers have lost $620 million in additional transport fees this year on soybean meal and soyoil exports. Argentina is the world’s largest exporter of processed soy products.

Lower Parana River levels are expected to persist for the next year, especially with another La Niña weather pattern expected to develop this fall. That means that grain shipments in South America will continue to incur high shipping costs, which could help U.S. farmers compete with a bumper soybean crop anticipated from Brazil in the next few months.

Wheat

A weaker dollar could not stop profit-takers from eroding recent gains in the wheat complex overnight. Chicago and Kansas City futures fell $0.02-$0.04/bushel while Minneapolis futures edged $0.02-$0.07/bushel lower.

But tight supplies and strong international demand for high protein wheat capped the morning’s losses.

"Here we see the flow on from less Russian wheat being available," Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia, told Reuters this morning. "And that flows on to likely making room for more U.S. wheat exports to flow eastward as season 2021 progresses."

Weather

It’s going to be a rainy day for growers to the West of the Mississippi River today, according to NOAA’s short-range forecasts. Heavy showers will hover over the Eastern Plains, stretching from Minnesota to Eastern Texas and easing just to the east of the Mississippi River.

At least an inch of accumulation is expecting in the region over the next 24 hours, with Missouri, Kansas, and Oklahoma likely to see up to an inch and a half of accumulation during the same time frame.

The showers are likely to hover over the region for the next 24 hours, eventually shifting east into the Eastern Corn Belt and Great Lakes States late tomorrow evening, likely causing another round of harvest delays along the way.

Financials

Stocks were mixed this morning as markets digested various earnings reports yesterday that were met with mixed sentiments. Food and tech companies (McDonalds, Coca-Cola, Microsoft, and Twitter) all reported favorable third quarter earnings results following the closing bell yesterday while lower commodity prices drug mining and energy companies’ valuations through the mud this morning.

The European Union’s largest economy, Germany, issued lower growth forecasts overnight, sending stocks in the European market lower overnight.

“While some prominent earnings misses have clouded the picture, the reality is that on aggregate, the reporting season so far has been very solid,” Max Kettner, a multi-assets strategist at HCBC Holdings Plc, told Bloomberg this morning. “Everyone, literally everyone, in the market right now is worried about supply-chain constraints, higher input costs and the like, so headwinds from this side are now very well reflected in near-term earnings expectations.”

A potential flare-up in diplomatic relations between the U.S. and China simmered overnight. The U.S. has blocked China’s Telecom expansion plans in the U.S. China retaliated overnight by performing a training exercise on its hypersonic weapons system.

Energy futures traded lower as short global energy supplies threatens to stall economic progress in the aftermath of the COVID-19 pandemic.

S&P 500 futures edged 0.5 points higher (+0.01%) to $4,565.75 at last glance.

Also worth a read on our website, FarmFutures.com

  • How do you navigate the era of high input prices? Farm Futures contributing analyst Bryce Knorr offers guidance in the latest Ag Marketing IQ column.
  • Virginia Tech ag economist Dave Kohl examines China and changing consumer habits as key drivers of change in the ag industry in the latest Road Warrior column.
  • Measuring soil fertility could have favorable tax benefits, writes NextGenAg’s Mike Downey.
  • The U.S. dairy herd is shrinking on high feed costs. But it’s sending butter prices higher. More background on the supply chain issues with implications for ag production.
  • Will 2022 be a boom or bust year? Advance Trading’s Brady Huck predicts.
  • Regardless of profit margins, Darren Frye encourages farmers to start making 2022 plans – and marketing sales – sooner rather than later.
Morning Ag Commodity Prices - 10/27/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.4275 5.395 5.415 -0.02 -0.37%
MAR '22 CORN $ / BSH  5.5125 5.4825 5.5 -0.0225 -0.41%
MAY '22 CORN $ / BSH  5.5525 5.5225 5.535 -0.0275 -0.49%
JUL '22 CORN $ / BSH  5.5575 5.53 5.54 -0.03 -0.54%
SEP '22 CORN $ / BSH  5.3875 5.36 5.3675 -0.0275 -0.51%
DEC '22 CORN $ / BSH  5.36 5.325 5.33 -0.0375 -0.70%
MAR '23 CORN $ / BSH  5.425 5.3975 5.4025 -0.0275 -0.51%
NOV '21 SOYBEANS $ / BSH  12.3925 12.27 12.315 -0.065 -0.53%
JAN '22 SOYBEANS $ / BSH  12.485 12.36 12.41 -0.065 -0.52%
MAR '22 SOYBEANS $ / BSH  12.5825 12.455 12.5 -0.0675 -0.54%
MAY '22 SOYBEANS $ / BSH  12.6675 12.5475 12.5875 -0.0725 -0.57%
JUL '22 SOYBEANS $ / BSH  12.7125 12.595 12.63 -0.075 -0.59%
AUG '22 SOYBEANS $ / BSH  12.61 12.545 12.58 -0.065 -0.51%
SEP '22 SOYBEANS $ / BSH  12.3875 12.3725 12.38 -0.06 -0.48%
NOV '22 SOYBEANS $ / BSH  12.345 12.26 12.3075 -0.0375 -0.30%
JAN '23 SOYBEANS $ / BSH  12.355 #N/A 12.36 0 0.00%
DEC '21 SOYBEAN OIL  $ / LB 62.37 61.6 61.87 -0.44 -0.71%
JAN '22 SOYBEAN OIL  $ / LB 62.05 61.31 61.55 -0.44 -0.71%
DEC '21 SOY MEAL $ / TON 327.9 324.5 325.6 -1.3 -0.40%
JAN '22 SOY MEAL $ / TON 326.1 323 324.1 -1.5 -0.46%
MAR '22 SOY MEAL $ / TON 327 323.9 325.2 -1.3 -0.40%
MAY '22 SOY MEAL $ / TON 329.7 326.8 328.3 -1.2 -0.36%
JUL '22 SOY MEAL $ / TON 333.5 330.6 331.9 -1.2 -0.36%
DEC '21 Chicago SRW $ / BSH  7.5125 7.45 7.5 -0.0225 -0.30%
MAR '22 Chicago SRW $ / BSH  7.645 7.58 7.6275 -0.025 -0.33%
MAY '22 Chicago SRW $ / BSH  7.6775 7.62 7.665 -0.0225 -0.29%
JUL '22 Chicago SRW $ / BSH  7.5825 7.535 7.5675 -0.0275 -0.36%
SEP '22 Chicago SRW $ / BSH  7.59 7.55 7.5775 -0.0375 -0.49%
DEC '21 Kansas City HRW $ / BSH  7.76 7.715 7.75 -0.0225 -0.29%
MAR '22 Kansas City HRW $ / BSH  7.79 7.7425 7.7675 -0.035 -0.45%
MAY '22 Kansas City HRW $ / BSH  7.785 7.7525 7.7675 -0.035 -0.45%
JUL '22 Kansas City HRW $ / BSH  7.6575 7.61 7.6275 -0.04 -0.52%
SEP '22 Kansas City HRW $ / BSH  7.6325 7.625 7.6275 -0.04 -0.52%
DEC '21 MLPS Spring Wheat $ / BSH  10.2025 10.1075 10.175 -0.04 -0.39%
MAR '22 MLPS Spring Wheat $ / BSH  10.01 9.9175 10.005 -0.0175 -0.17%
MAY '22 MLPS Spring Wheat $ / BSH  9.6675 9.6675 9.6675 -0.0775 -0.80%
JUL '22 MLPS Spring Wheat $ / BSH  9.3525 9.35 9.3525 -0.0275 -0.29%
SEP '22 MLPS Spring Wheat $ / BSH  8.44 8.435 8.44 0 0.00%
DEC '21 ICE Dollar Index $ 94.005 93.805 93.885 -0.056 -0.06%
 DE '21 Light Crude $ / BBL  84.51 83.11 83.54 -1.11 -1.31%
 JA '21 Light Crude $ / BBL  83.21 81.98 82.3 -1.06 -1.27%
NOV '21 ULS Diesel $ /U GAL 2.5688 2.5367 2.5419 -0.0354 -1.37%
DEC '21 ULS Diesel $ /U GAL 2.561 2.5278 2.534 -0.0345 -1.34%
NOV '21 Gasoline $ /U GAL 2.5077 2.4739 2.4779 -0.0389 -1.55%
DEC '21 Gasoline $ /U GAL 2.4412 2.4052 2.4108 -0.0364 -1.49%
OCT '21 Feeder Cattle $ / CWT 0 #N/A 155.975 0 0.00%
NOV '21 Feeder Cattle $ / CWT 0 #N/A 159.775 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 126.825 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 131.45 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 72.575 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 75.15 0 0.00%
OCT '21 Class III Milk $ / CWT 17.86 #N/A 17.86 0 0.00%
NOV '21 Class III Milk $ / CWT 18.79 18.74 18.79 0.05 0.27%
DEC '21 Class III Milk $ / CWT 18.61 18.61 18.61 0.01 0.05%

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