Morning Market Review for September 23, 2021

scyther5/Thinkstock Markets-122316-scyther5-ThinkstockPhotos-2000
Wheat rallies on tight global outlook. (Comments are updated by 7:30 a.m. Central Time.)

Corn struggles to fend off biofuel concerns, positive harvest progress

  • Corn down 1-2 cents
  • Soybeans up 3-4 cents; Soymeal down $0.80/ton; Soyoil up $0.56/lb
  • Wheat up 3-5 cents

*Prices as of 6:50 am CDT.

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Corn

A quiet night in the overnight markets left corn prices standing at a $0.01-$0.02/bushel loss this morning as harvest pressure and growing unease over biofuel blending mandates dampened the prospect for price gains overnight. Lower energy prices also weighed on the corn complex.

All eyes will be watching USDA’s weekly Export Sales report today as markets await proof that export terminal facilities in the U.S. are indeed back up and running after suffering wind damage during Hurricane Ida nearly a month ago. In the first two weeks of the 2021/22 marketing year, weekly loading paces for corn were already 73% lower than the five-year average and 69% lower than a year ago.

Monday’s Grains Inspection for Export report from USDA saw early estimates for weekly loading paces pick up as more facilities in the Gulf return to normal operations. Corn shipments inspected for export during the week ending September 16 rose 9.6 million bushels higher than the previous week to 15.9 million bushels.

Market analysts expect steady export sales orders for the September 10-16 reporting period. Trade estimates peg today’s 2021/22 weekly corn export sales between 11.8 million – 31.5 million bushels. So far in the 2021/22 marketing year, China leads all outstanding corn export sales slated to be shipped out of the U.S. with nearly 469 million bushels already on the books.

Markets were atwitter yesterday after a Reuters report suggested that the Biden Administration is contemplating cutting national biofuel blending requirements for 2020, 2021, and 2022. Blending credits, known as RINs, dropped $0.15/credit to $0.92/credit on the news.

Reuters suggests that retroactive 2020 ethanol production would fall by 2.5 billion gallons to 12.5 billion. 2021 production is slated to be cut by 1.5 billion gallons from current Renewable Fuel Standard (RFS) requirements to 13.5 billion gallons. Next year’s production is likely to be 0.9 billion gallons smaller than the 15-billion-gallon RFS standard, falling to 14.1 billion gallons of ethanol output in 2022.

But corn markets ending yesterday’s trading session on a high note. Concerns about lower ethanol output are already priced into the corn market as lackluster fuel demand continues to dampen production outlooks for the corn-based fuel additive.

After an eight-week decline in production volumes, which left national production rates 15% lower than mid-summer peaks, it is apparent that muted fuel demand in the post-pandemic era continues to repress ethanol output – and by derivation, corn prices. Summer 2021 fuel consumption was 3.6% lower than in Summer 2019 as remote work, reduced business travel, and lingering pandemic unease continue to keep U.S. fuel consumers from hitting the roads.

Soybeans

Better than expected soymeal export results released yesterday from Brazil and Argentina weighed U.S. soymeal prices lower this morning. Export optimism continues to propel soybean futures $0.02-$0.03/bushel lower in the morning’s trading session, but gains are capped by advancing harvest rates and lingering uncertainty over repair speeds at export terminals in the U.S. Gulf.

With peak soybean export season just around the corner, today’s Export Sales report from USDA could play a significant role in potential price action during today’s trading session. Export terminals in the U.S. Gulf are slowly returning back to normal shipping capacities following Hurricane Ida damage incurred last month.

Monday’s Grains Inspection for Export report from USDA reported improving shipping paces through the week ending September 16, supporting improvements to shipping facilities. Soy volumes inspected for export rose 42% on the week to 10.1 million bushels.

Market analysts expect today’s export sales volume to range between 18.4 million – 40.4 million bushels for the September 10 – 16 reporting week. After issuing cancellations on 12.1 million bushels worth of new crop soybean shipments, Chinese and unknown buyers ordered 14.6 million bushels of U.S. soybeans to be delivered during the 2021/22 marketing year last week.

Wheat

Wheat prices rose $0.03-$0.05/bushel overnight as the dollar weakened. Tightening global supplies continue to add price support to the wheat complex, especially as trade flows realign following crop shortfalls in the world’s largest exporting countries this summer.

Wheat export volumes are likely to show encouraging signs of returning to seasonal highs in today’s Export Sales report from USDA. Monday’s Grains Inspection for Export report from USDA saw weekly wheat inspection volumes fall slightly from the previous week, down 0.7% to 20.7 million bushels through the week ending September 16.

But that total is more closely aligned with shipping volumes when there are no problems at the U.S. Gulf. Shipping capacity is likely to return to more typical levels by next week’s report as damages from Hurricane Ida are repaired at Gulf exporting facilities.

Market analysts expect weekly export sales volumes to come in between 9.2 million – 22.0 million bushels.

Weather

Showers will finally clear out of the Eastern Corn Belt today, according to NOAA’s short-range forecasts. The last of this week’s rain system will linger in Michigan until this evening, though total accumulation will not likely top more than an inch.

The Heartland should see mostly clear skies tomorrow, with showers expected along the Lake Michigan basin by Saturday morning. Overnight temperatures are beginning to hover close to frost-inducing levels in the Upper Mississippi River Valley, which could limit crop quality in the coming weeks.

Financials

Coronavirus cases in the U.S. rose to 42,547,004 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 681,222 deaths as of press time as the pandemic continues to deal devastating blows to individuals unvaccinated against the virus.

According to the CDC, nearly 77% of U.S. adults have received at least one COVID-19 vaccine as workplace mandates help boost immunity rates. Over 182 million Americans (55%) are fully vaccinated. Over 6.0 billion vaccine doses have been administered worldwide.

Following the conclusion of the Federal Reserve Bank’s Federal Open Market Committee (FOMC) meetings on Tuesday and Wednesday, Fed Chairman Jerome Powell announced the Fed will begin scaling back monthly bond purchases – a key tool in adding to the monetary supply to stabilize the pandemic economy – in November.

The move was not much of a surprise, as positive economic data released last week pointed to progress towards an economic recovery from the pandemic. However, Powell did move up the timeline for raising interest rates amid ongoing supply chain issues and high inflation rates.

Powell now expects the Fed will increase interest rates in 2022 as the central bank’s projections on inflation show it rising slightly above targeted rates for the next four years. The Fed will implement the higher rates slowly, to 1% by 2023 and on to 1.8% in 2024.

Pre-pandemic Fed Funds rates hovered near 3.5% in comparison. Current rates for the overnight lending interest rates range between 0% to 0.25%. The strategy of moving slowly is an effort to keep outside markets stable as the Fed combats rising inflation.

China’s Evergrande Group will not meet its $6-billion bond interest payment today as Chinese officials warned local governments to prepare for the fallout from the Evergrande default. Energy prices followed lower, led by West Texas Intermediate and gasoline futures contracts. S&P 500 futures inched up 0.61% to $4,410.75 as the markets approved the Fed’s gradual tapering plan to scale back monetary support.

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Morning Ag Commodity Prices - 9/23/2021
Contract Units High Low Last Net Change % Change
DEC '21 CORN $ / BSH  5.2525 5.225 5.235 -0.02 -0.38%
MAR '22 CORN $ / BSH  5.325 5.3 5.31 -0.02 -0.38%
MAY '22 CORN $ / BSH  5.3675 5.3425 5.3575 -0.0175 -0.33%
JUL '22 CORN $ / BSH  5.355 5.3325 5.345 -0.02 -0.37%
SEP '22 CORN $ / BSH  5.0625 5.0425 5.0525 -0.01 -0.20%
DEC '22 CORN $ / BSH  5.0175 4.995 5.0075 -0.0025 -0.05%
MAR '23 CORN $ / BSH  5.085 5.0725 5.08 0 0.00%
NOV '21 SOYBEANS $ / BSH  12.9025 12.78 12.86 0.0325 0.25%
JAN '22 SOYBEANS $ / BSH  12.9975 12.87 12.955 0.0375 0.29%
MAR '22 SOYBEANS $ / BSH  13.0225 12.9 12.985 0.0325 0.25%
MAY '22 SOYBEANS $ / BSH  13.0725 12.9525 13.035 0.025 0.19%
JUL '22 SOYBEANS $ / BSH  13.09 12.98 13.07 0.03 0.23%
AUG '22 SOYBEANS $ / BSH  12.9925 #N/A 12.9475 0 0.00%
SEP '22 SOYBEANS $ / BSH  12.7125 #N/A 12.67 0 0.00%
NOV '22 SOYBEANS $ / BSH  12.555 12.445 12.5375 0.0175 0.14%
JAN '23 SOYBEANS $ / BSH  12.5475 #N/A 12.52 0 0.00%
OCT '21 SOYBEAN OIL  $ / LB 57.34 56.2 56.85 0.46 0.82%
DEC '21 SOYBEAN OIL  $ / LB 57.38 56.12 56.84 0.49 0.87%
OCT '21 SOY MEAL $ / TON 338.8 336.4 337.2 -0.7 -0.21%
DEC '21 SOY MEAL $ / TON 342.7 340.3 341.1 -0.7 -0.20%
JAN '22 SOY MEAL $ / TON 345.1 342.9 343.6 -0.9 -0.26%
MAR '22 SOY MEAL $ / TON 347.7 345.7 346.5 -0.7 -0.20%
MAY '22 SOY MEAL $ / TON 351 348.9 349.7 -0.8 -0.23%
DEC '21 Chicago SRW $ / BSH  7.1325 7.04 7.0975 0.04 0.57%
MAR '22 Chicago SRW $ / BSH  7.235 7.15 7.2025 0.0425 0.59%
MAY '22 Chicago SRW $ / BSH  7.265 7.18 7.2325 0.04 0.56%
JUL '22 Chicago SRW $ / BSH  7.1 7.0425 7.0725 0.0325 0.46%
SEP '22 Chicago SRW $ / BSH  7.1175 7.0675 7.08 0.0175 0.25%
DEC '21 Kansas City HRW $ / BSH  7.1475 7.0575 7.105 0.045 0.64%
MAR '22 Kansas City HRW $ / BSH  7.23 7.1475 7.1925 0.045 0.63%
MAY '22 Kansas City HRW $ / BSH  7.2725 7.2 7.23 0.035 0.49%
JUL '22 Kansas City HRW $ / BSH  7.1625 7.1075 7.1275 0.03 0.42%
SEP '22 Kansas City HRW $ / BSH  7.17 7.17 7.17 0.0425 0.60%
DEC '21 MLPS Spring Wheat $ / BSH  9.0975 9.02 9.09 0.055 0.61%
MAR '22 MLPS Spring Wheat $ / BSH  8.965 8.925 8.9525 0.045 0.51%
MAY '22 MLPS Spring Wheat $ / BSH  8.83 8.83 8.83 0.0475 0.54%
JUL '22 MLPS Spring Wheat $ / BSH  8.6775 8.675 8.6775 0.04 0.46%
SEP '22 MLPS Spring Wheat $ / BSH  7.9025 7.88 7.9025 0.015 0.19%
DEC '21 ICE Dollar Index $ 93.53 93.13 93.165 -0.295 -0.32%
 NO '21 Light Crude $ / BBL  72.54 71.61 71.87 -0.36 -0.50%
 DE '21 Light Crude $ / BBL  72.18 71.29 71.54 -0.35 -0.49%
OCT '21 ULS Diesel $ /U GAL 2.2231 2.1965 2.2 -0.0116 -0.52%
NOV '21 ULS Diesel $ /U GAL 2.2207 2.1932 2.1984 -0.0103 -0.47%
OCT '21 Gasoline $ /U GAL 2.1314 2.0967 2.1 -0.0239 -1.13%
NOV '21 Gasoline $ /U GAL 2.0913 2.059 2.063 -0.0207 -0.99%
SEP '21 Feeder Cattle $ / CWT 0 #N/A 154.8 0 0.00%
OCT '21 Feeder Cattle $ / CWT 0 #N/A 157.675 0 0.00%
 OC '21 Live Cattle $ / CWT 0 #N/A 123.275 0 0.00%
 DE '21 Live Cattle $ / CWT 0 #N/A 128.55 0 0.00%
OCT '21 Live Hogs $ / CWT 0 #N/A 83.85 0 0.00%
DEC '21 Live Hogs $ / CWT 0 #N/A 73.375 0 0.00%
SEP '21 Class III Milk $ / CWT 16.52 #N/A 16.6 0 0.00%
OCT '21 Class III Milk $ / CWT 17.35 17.26 17.26 -0.09 -0.52%
NOV '21 Class III Milk $ / CWT 16.93 16.93 16.93 -0.05 -0.29%

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