Morning Market Review for October 28, 2021

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Falling energy prices limit corn, soy. (Comments are updated by 7:30 a.m. Central Time.)

Plus – is ethanol making a comeback?!

  • Corn down 1-3 cents
  • Soybeans mixed; Soymeal down $1.20/ton; Soyoil down $0.30/lb
  • Chicago & Kansas City wheat down 2-4 cents; Minneapolis wheat up 4-6 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

After notching a two-month high yesterday, corn prices edged $0.01-$0.02/bushel lower overnight, largely on another round of profit taking and lower energy prices. Yesterday’s rally was spurred by rising ethanol production and harvest delays, which helped to cap the morning’s losses.

If USDA’s weekly Export Sales report comes in this morning with better-than-expected weekly corn shipments, as suggested in Monday’s Grain Inspections for Export report from USDA, corn prices could find more solid footing by the end of the morning.

Over the last two weeks, ethanol production recorded the second and third largest weekly output volumes of all time. It doesn’t just mark a return to pre-COVID production levels – it is threatening to surpass it.

Yesterday’s weekly Petroleum Inventory Status report from the U.S. Energy Information Administration found weekly ethanol output rising nearly 1% on the week to 1.106 million barrels/day – the second highest weekly volume on record.

In the last five weeks, weekly ethanol production has risen a staggering 21% as high energy costs make ethanol additives a cheap and plentiful source of fuel, especially as more supplies continue to roll in as harvest reaches peak activity across the Midwest. Ethanol blending volumes have not yet recovered to Summer 2021 highs, but blending rates remain high relative to the amount of gasoline demanded by U.S. consumers.

102821Ethanol.png

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

Corn producers have had many of cash opportunities this fall on the ethanol expansion. And there may be more to come. Corn consumption for ethanol is expected to rise over 3% in 2021/22 from the previous year as global energy demand rebounds.

Energy shortages in Europe and Asia could further increase demand for the fuel additive and cars that support flex-fuels. Calendar year to date U.S. ethanol exports are 10% lower than the same time last year, so the sudden prospect of international interest in the more cheaply produced fuel additive could be a real opportunity for the ethanol industry.

Natural gas is the primary fuel ingredient for ethanol plants. Current stockpiles are 5% below the five-year average and usage rates are not likely to slow any time soon. Winter weather will largely dictate how much tighter inventories will be further depleted.

If energy supplies are hindered this winter – akin to the February 2021 cold snap in the South that halted factory production across the country – then ethanol production could face a ceiling. But so long as energy supplies remain stable in the U.S. and tight elsewhere, expect ethanol to continue to return to pre-pandemic volumes.

Soybeans

Export sales data to be released this morning by USDA could help reverse some of the new crop price weakness plaguing the soybean futures market this morning. Old crop soybean prices traded $0.01-$0.03/bushel higher while new crop futures edged $0.01-$0.02/bushel lower.

Falling crude oil prices limited gains for soyoil and biodiesel production prospects. Despite steady cash demand for soymeal at U.S. rail and export terminals, soymeal futures shed $1.20/ton to $329.60/ton. Since mid-May of this year, soymeal futures have fallen $121.3/ton, largely on smaller U.S. hog inventories.

Wheat

Saudi Arabia issued an international tender to purchase 24.1 million bushels of hard wheat overnight, with a deadline of Friday for interested suppliers to submit their bids. The tender specified protein content of 12.5%. This added international demand signal for high protein content wheat sent Minneapolis futures rising $0.04-$0.05/bushel in the early morning trading session.

Despite China doubling its soft wheat purchases from the U.S. so far this year, Chicago and Kansas City futures fell $0.02-$0.04/bushel on lackluster international demand for U.S. wheat. A stronger dollar also limited U.S. wheat’s attractiveness on the global market this morning. Losses were capped by concerns about production in the Black Sea.

Russia’s agricultural ministry released updated 2021 production figures overnight. While the agriculture minister, Dmitry Patrushev, did not indicate the size of the 2021 wheat crop, Patrushev did project that 123 million tonnes of grain had been cleaned and dried this fall, down from previous government estimates of 127.4 million tonnes on dry weather during the growing season.

Russian agricultural consultancy, IKAR, did offer an estimate, however. IKAR projects 2021 Russian wheat production at 2.76 billion – 2.78 billion bushels. USDA’s estimate is more conservative at 2.66 billion bushels, which suggests that as we move farther into the 2021/22 wheat export season, USDA may find more data to support raising – or maintaining – the Russian wheat value.

However, IKAR’s estimate holds new gravitas in the market after USDA attachés in Russia were expelled from the country in August on larger geopolitical disputes.

Russian farmers plan to plant 48.2 million acres of winter wheat this fall to be harvested next summer. That figure is lower than previous expectations due to dry weather delays. So far, Russian farmers have planted 43.5 million acres of winter wheat, or 90% of anticipated acreage. Sowing rates are slightly behind last year’s paces as many farmers held off planting activities in hope for rains that never came.

Russia is the world’s largest exporter of wheat.

Weather

It’s going to be a soggy day in the Upper Midwest and Eastern Corn Belt today, according to NOAA’s short-range forecasts. Heavy showers will linger over the region until Saturday morning, dropping up to an inch of rain over the next 24 hours and likely delaying harvest progress for several days.

Financials

Corporate earnings results from top manufacturers Ford and Caterpillar helped propel stock market gains in the U.S. overnight. Energy prices continued their skid overnight after Russia suggested it may increase gas shipments to energy-strapped Europe.

S&P 500 futures inched up by 13.5 points (+0.30%) to $4,558 on the sentiments.

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

  • Want to take advantage of basis contracts? Roger Wright explains how.
  • Grain prices have rallied in recent days. So are harvest lows in? Matthew Kruse predicts.
  • How do you navigate the era of high input prices? Farm Futures contributing analyst Bryce Knorr offers guidance in a recent 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.
Morning Ag Commodity Prices - 10/28/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.57 5.54 5.5575 -0.015 -0.27%
MAR '22 CORN $ / BSH  5.6575 5.6275 5.6475 -0.0125 -0.22%
MAY '22 CORN $ / BSH  5.695 5.6675 5.685 -0.0125 -0.22%
JUL '22 CORN $ / BSH  5.6925 5.665 5.68 -0.015 -0.26%
SEP '22 CORN $ / BSH  5.5 5.4875 5.5 -0.005 -0.09%
DEC '22 CORN $ / BSH  5.4675 5.445 5.46 -0.0075 -0.14%
MAR '23 CORN $ / BSH  5.53 5.515 5.5175 -0.015 -0.27%
NOV '21 SOYBEANS $ / BSH  12.43 12.325 12.4025 0.01 0.08%
JAN '22 SOYBEANS $ / BSH  12.5375 12.43 12.5075 0.01 0.08%
MAR '22 SOYBEANS $ / BSH  12.6275 12.5275 12.6 0.01 0.08%
MAY '22 SOYBEANS $ / BSH  12.715 12.625 12.69 0.01 0.08%
JUL '22 SOYBEANS $ / BSH  12.755 12.6775 12.7525 0.025 0.20%
AUG '22 SOYBEANS $ / BSH  12.695 12.6675 12.695 0.0175 0.14%
SEP '22 SOYBEANS $ / BSH  12.4875 12.47 12.47 -0.0175 -0.14%
NOV '22 SOYBEANS $ / BSH  12.395 12.335 12.375 -0.005 -0.04%
JAN '23 SOYBEANS $ / BSH  12.4025 12.36 12.39 -0.005 -0.04%
DEC '21 SOYBEAN OIL  $ / LB 61.54 60.61 60.97 -0.45 -0.73%
JAN '22 SOYBEAN OIL  $ / LB 61.45 60.5 60.83 -0.43 -0.70%
DEC '21 SOY MEAL $ / TON 331.6 328.5 331 0.1 0.03%
JAN '22 SOY MEAL $ / TON 329.6 326.4 328.9 -0.3 -0.09%
MAR '22 SOY MEAL $ / TON 330.6 327.5 330.2 0.3 0.09%
MAY '22 SOY MEAL $ / TON 333.7 330.8 333.7 0.7 0.21%
JUL '22 SOY MEAL $ / TON 337.4 334.5 337.4 0.8 0.24%
DEC '21 Chicago SRW $ / BSH  7.605 7.515 7.5825 -0.015 -0.20%
MAR '22 Chicago SRW $ / BSH  7.735 7.645 7.7125 -0.0175 -0.23%
MAY '22 Chicago SRW $ / BSH  7.7675 7.6825 7.75 -0.015 -0.19%
JUL '22 Chicago SRW $ / BSH  7.6925 7.6075 7.67 -0.0225 -0.29%
SEP '22 Chicago SRW $ / BSH  7.71 7.635 7.695 -0.0175 -0.23%
DEC '21 Kansas City HRW $ / BSH  7.825 7.76 7.8 -0.0275 -0.35%
MAR '22 Kansas City HRW $ / BSH  7.855 7.8 7.825 -0.0325 -0.41%
MAY '22 Kansas City HRW $ / BSH  7.85 7.805 7.825 -0.03 -0.38%
JUL '22 Kansas City HRW $ / BSH  7.73 7.68 7.7025 -0.0425 -0.55%
SEP '22 Kansas City HRW $ / BSH  7.7125 7.6875 7.695 -0.05 -0.65%
DEC '21 MLPS Spring Wheat $ / BSH  10.2875 10.205 10.2725 0.0525 0.51%
MAR '22 MLPS Spring Wheat $ / BSH  10.1125 10.0375 10.1125 0.0575 0.57%
MAY '22 MLPS Spring Wheat $ / BSH  9.85 9.8075 9.85 0.0475 0.48%
JUL '22 MLPS Spring Wheat $ / BSH  9.4425 #N/A 9.4225 0 0.00%
SEP '22 MLPS Spring Wheat $ / BSH  8.545 8.5 8.5 -0.0225 -0.26%
DEC '21 ICE Dollar Index $ 93.97 93.75 93.815 0.017 0.02%
 DE '21 Light Crude $ / BBL  82.43 80.58 80.92 -1.74 -2.11%
 JA '21 Light Crude $ / BBL  81.21 79.37 79.73 -1.75 -2.15%
NOV '21 ULS Diesel $ /U GAL 2.5093 2.4528 2.4542 -0.0606 -2.41%
DEC '21 ULS Diesel $ /U GAL 2.5008 2.4449 2.4455 -0.0607 -2.42%
NOV '21 Gasoline $ /U GAL 2.448 2.3925 2.3967 -0.053 -2.16%
DEC '21 Gasoline $ /U GAL 2.3776 2.3178 2.3246 -0.0546 -2.29%
OCT '21 Feeder Cattle $ / CWT 0 #N/A 156.5 0 0.00%
NOV '21 Feeder Cattle $ / CWT 0 #N/A 158.475 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 127.225 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 131.575 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 71.975 0 0.00%
FEB '22 Live Hogs $ / CWT 0 #N/A 74.325 0 0.00%
OCT '21 Class III Milk $ / CWT 17.85 17.85 17.85 -0.02 -0.11%
NOV '21 Class III Milk $ / CWT 18.85 18.79 18.79 -0.05 -0.27%
DEC '21 Class III Milk $ / CWT 18.67 #N/A 18.71 0 0.00%

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