Morning Market Review for September 130, 2021 – Farm Progress

This post was originally published on this site

Plus – a recap from Friday’s USDA reports

  • Corn down 2-7 cents
  • Soybeans down 4-7 cents; Soymeal down $2.00/ton; Soyoil up $0.05/lb
  • Wheat down 6-8 cents

*Prices as of 6:50 am CDT.

Good Morning! Today is my last day staying at my parents’ dairy farm in Northwest Illinois before departing for Husker Harvest Days in Grand Island, Nebraska. Ben Potter and I will be there providing market commentary every morning at 10 am CDT at the Hospitality Building. I can’t wait to meet our readers from the Plains so if you are in the area, stop by and say hi!

My dad and I took a crop tour around the county yesterday. Corn crops are quickly drying down while soybeans have lost a lot of their leaves over the past week. Earlier planted fields in the area will likely be ready for combines by late this week, especially after a hot and muggy weekend.

Showers are forecast for this morning and late tonight, but mostly sunny skies are forecasted for the next week. More moderate temperatures this week will pave the way for early harvest activity – and allow the Holland Dairy Farm to finish up some high-moisture ear corn that will put an end to our 2021 corn crop!

And some of you have asked – my husband’s first week of his big horn sheep hunt in Southern Colorado did not yield any rams. But he did see sheep every day except one during the week he was there. He got within 50 yards of a good shot a couple times but could not determine the age of the rams with enough certainty to pull the trigger.

He will try again, headed back down for another week at the end of September. Keeping my fingers crossed for that stunning shoulder mount to eventually take up residence in my living room!

Have you started combining – or chopping – on your farm yet? 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. Check out our latest Feedback from the Field analysis to see the most recent farmer comments from around the country.

Crop Progress report out today: Both corn and soybean crops are quickly maturing, so expect ending crop cycle development readings to continue to trend above five-year average paces in today’s Crop Progress report. With warm and dry weather blanketing much of the Heartland over the weekend, maturation rates are sure to continue accelerating forward at a rapid pace today.

The most significant price action will likely result not from conditions – declines are not unusual as the crops reach peak maturation. But rather, measurable harvest pressure will start to creep into market prices.

USDA will provide its first metrics of the season on 2021 corn harvest progress in today’s report. While progress is still in its earliest phases and will likely skew in favor of Southern states (I see you, Texas!), the early readings could begin to pull prices lower as more supplies flow into the demand pipeline, which is not unusual market activity for this time of year.

Corn and soybean conditions both took a 1% downgrade in last week’s report, falling to 59% and 47% good to excellent, respectively. Spring wheat harvest is finished across the Northern Plains, though a few durum acres still need to be finished. Winter wheat sowing activities have just begun, with 5% of anticipated 2022 acreage in the ground as of last Sunday, September 5.

Corn: Corn prices drifted lower overnight as global buyers evaluated larger supply conditions in the U.S. following Friday’s WASDE and Crop Production reports from USDA. New crop prices fell $0.05-$0.07/bushel on the prospect of rising supplies and looming harvest activity while 2022 prices shed a penny and hovered dangerously near the $5/bushel benchmark.

But the lower prices are not as bad as many expected. “Corn and soybeans are being weakened by the USDA’s forecasts of larger U.S. crops on Friday but the falls are moderate,” Matt Ammermann, a commodity risk manager for StoneX, told Reuters this morning. “Some had been expecting even more bearish USDA numbers, so the fall in markets is relatively modest today.”

Lower pig prices in China amid an ongoing supply glut has led the country’s agricultural ministry to scale back new crop corn usage estimates. The Ministry of Agriculture and Rural Affairs cut 118 million bushels from its 2021/22 feed usage estimate, which now lies at 7.4 billion bushels.

But despite the lower consumption rates, China expects to remain reliant on U.S. corn exports in the coming year. The agricultural ministry raised its corn import forecast by 157 million bushels to 1.0 billion bushels. USDA’s forecast for Chinese corn imports in 2021/22 also sits at 1.0 billion bushels.

Friday’s WASDE report saw corn prices waver in response to a larger supply outlook, but later rose after markets reevaluated new crop demand prospects. USDA found an additional 600,000 acres of corn planted across the country in the latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports released last Friday.

Corn yield estimates jumped up 1.7 bushels per acre (bpa) on improving crop prospects, sending new crop ending stocks to 1.41 billion bushels and triggering minor bearish price movement in the corn complex. December 2022 futures held steady above the $5/bushel benchmark, suggesting that Friday’s report was not as bearish as the trade had originally been expecting.

Corn supplies did in fact loosen slightly in Friday’s report, with the larger crop opening the door to more feed and export opportunities in 2021/22 and decreases to old crop usage rates from ethanol and slow late season exports boosting beginning 2021/22 supplies.

But with a stocks-to-use ratio of 9.5%, corn supplies will remain less tight than those of soybeans. It is an economic reality that currently makes 2022 input pricing and corn acreage a less attractive option as growers begin looking towards next year.

Soybeans: Soybean prices fell $0.04-$0.07/bushel lower overnight as slightly larger soybean supplies added some bearish sentiment to Chicago markets. Gains were prevented by continued closures at export terminal facilities in the U.S. Gulf of Mexico from damages due to Hurricane Ida.

But losses were capped by steady export sale demand from China. Chinese buyers booked three large daily flash sales of soybeans to be delivered during the 2021/22 marketing year last week according to USDA, totaling 13.6 million bushels.

“Soybean markets continue to focus on the demand side. China has been regularly buying soybeans from the U.S., but the market wants to see evidence of even larger Chinese purchases,” Ammerman shared.

Soybean prices experienced a 1.4% rally on 300,000 fewer soybean acres planted this year as announced in Friday’s USDA reports, despite a 0.6 bpa increase in yields to 50.6 bpa from USDA’s August estimate of 50.0 bpa. That will result in a slightly larger 2021 U.S. soybean crop and supplies will remain at record-tight levels through the better part of the 2021/22 marketing year on strong demand.

The higher soybean yields added about 35 million bushels to the 2021/22 pipeline. Those bushels will likely go directly into the export market.

USDA also trimmed old crop crush rates as scarce countryside supplies have limited domestic production processes. USDA likely expects another aggressive export season in 2021/22 will take precedence over domestic soy crush volumes, cutting 25 million bushels of new crop crush volumes while simultaneously adding 35 million bushels to 2021/22 soy export targets.

The surprise soy rally was triggered in large part by a 2% increase to China’s old crop soybean imports. Markets have been cautiously optimistic about recent Chinese soy buying paces, especially as government guidance has steered livestock and poultry producers away from high priced soybeans in favor of more affordable corn and wheat rations.

Despite adding slightly more volume to tight U.S. soybean stocks, the aggressive 2021/22 export prospects seemed to fuel the soy complex’s latest surge. The new crop stocks-to-use ratio rose to 4.2% in this morning’s report, up from 3.6% last month.

Supplies will continue to remain tight in the soy complex for another year as more biodiesel production capacity comes online. The demand pull will likely keep prices at profitable levels for the months to come and could potentially shift acreage allocations towards soybeans as farmers begin to make pricing decisions on 2022 crop rotations.

Wheat: Higher Russian wheat export taxes and a bit of easing to global supplies sent wheat prices lower overnight. A stronger dollar due to ongoing economic uncertainty due to the global COVID-19 pandemic and discussions over the debt ceiling.

An increase in Australia’s spring wheat crop thanks to plentiful rains offset smaller Canadian and Argentine crops, both of which have fallen victim to La Niña-induced droughts. But global stocks actually increased as high prices shifted about 23 million bushels of 2020/21 livestock wheat consumption back to corn rations.

Despite this year’s 2021/22 yield shortfalls in the Northern Hemisphere sending wheat prices across the globe higher, global livestock wheat consumption will increase 68 million bushels next year. That will likely tighten wheat supplies through the current marketing year, providing a solid foundation for prices over the next couple months.

One thing to keep in mind about wheat prices and supplies – when wheat has a problem, everyone has a problem. It is a more widely traded commodity across the globe, whereas soybean trade dynamics largely influence only the U.S., China, and South America.

Wheat’s large global presence in both human and animal diets makes it slightly more price sensitive (inelastic) to supply changes. As demand continues to rise and export capacities in the world’s largest producers are continuously evaluated, don’t expect those prices to go down substantially any time soon.

Weather: Keep an eye on energy prices this week. Tropical Storm Nicholas is headed straight for the Texas coast on the Gulf of Mexico. Potential damages could result in alterations to production schedules at refinery plants, impacting fuel prices right as harvest activity begins to ramp up.

A chance of showers will blanket much of the Upper Midwest today, according to NOAA’s short-range forecasts. Total precipitation will not likely top more than an inch in the region over the next 24 hours.

By Wednesday, the shower system will move into the Southern Plains and Eastern Corn Belt, encouraged by Tropical Storm Nicholas and providing one last good shower before combines begin rolling.

Financials: Coronavirus cases in the U.S. rose to 40,956,297 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 659,975 deaths as of press time as the pandemic continues to deal devastating blows to individuals unvaccinated against the virus.

According to the CDC, nearly 76% of U.S. adults have received at least one COVID-19 vaccine as workplace mandates help boost immunity rates. Nearly 179 million Americans (54%) are fully vaccinated. Over 5.6 billion vaccine doses have been administered worldwide.

Energy prices are, in fact, higher this morning on stock gains in the European market. The dollar crept up overnight as markets await inflation data to be released tomorrow morning. The U.S. debt ceiling debate will likely continue to add a layer of uncertainty to the economy over the coming weeks, which does not bode well for a lower dollar.

OPEC will release its monthly oil market report today. China will release data on retail sales and manufacturing on Wednesday, which could provide more clues about demand prospects for the world’s second largest economy. S&P 500 futures bounced back after Friday’s lows, up 0.54% to $4,472.00.

Morning Ag Commodity Prices – 9/13/2021
Contract Units High Low Last Net Change % Change
SEP ’21 CORN $ / BSH  5.035 5.025 5.03 0.0025 0.05%
DEC ’21 CORN $ / BSH  5.1975 5.11 5.1125 -0.0625 -1.21%
MAR ’22 CORN $ / BSH  5.2875 5.2025 5.205 -0.06 -1.14%
MAY ’22 CORN $ / BSH  5.3275 5.2575 5.2575 -0.0575 -1.08%
JUL ’22 CORN $ / BSH  5.3225 5.2525 5.2625 -0.0475 -0.89%
SEP ’22 CORN $ / BSH  5.0525 5.0125 5.0175 -0.0125 -0.25%
DEC ’22 CORN $ / BSH  5.0325 4.995 5 -0.0125 -0.25%
SEP ’21 SOYBEANS $ / BSH  0 #N/A 12.7525 0 0.00%
NOV ’21 SOYBEANS $ / BSH  12.9425 12.7875 12.7975 -0.0675 -0.52%
JAN ’22 SOYBEANS $ / BSH  13.025 12.8725 12.885 -0.0625 -0.48%
MAR ’22 SOYBEANS $ / BSH  13.065 12.92 12.935 -0.0575 -0.44%
MAY ’22 SOYBEANS $ / BSH  13.1175 12.9875 12.9875 -0.0675 -0.52%
JUL ’22 SOYBEANS $ / BSH  13.15 13.035 13.0425 -0.0525 -0.40%
AUG ’22 SOYBEANS $ / BSH  13.035 12.9525 12.9525 -0.0525 -0.40%
SEP ’22 SOYBEANS $ / BSH  12.7025 12.6825 12.685 -0.0425 -0.33%
NOV ’22 SOYBEANS $ / BSH  12.625 12.535 12.535 -0.04 -0.32%
SEP ’21 SOYBEAN OIL  $ / LB 56.04 #N/A 55.74 0 0.00%
OCT ’21 SOYBEAN OIL  $ / LB 56.24 55.53 55.87 0.09 0.16%
SEP ’21 SOY MEAL $ / TON 342 342 342 0 0.00%
OCT ’21 SOY MEAL $ / TON 340.5 336.7 337.2 -2.3 -0.68%
DEC ’21 SOY MEAL $ / TON 343.8 339.7 340.2 -2.3 -0.67%
JAN ’22 SOY MEAL $ / TON 346 342.2 342.6 -2.2 -0.64%
MAR ’22 SOY MEAL $ / TON 349.6 346 346 -2.3 -0.66%
SEP ’21 Chicago SRW $ / BSH  0 #N/A 6.75 0 0.00%
DEC ’21 Chicago SRW $ / BSH  6.9 6.82 6.8275 -0.0575 -0.84%
MAR ’22 Chicago SRW $ / BSH  7.0025 6.9225 6.9325 -0.06 -0.86%
MAY ’22 Chicago SRW $ / BSH  7.06 6.9825 6.99 -0.0625 -0.89%
JUL ’22 Chicago SRW $ / BSH  6.9025 6.8375 6.85 -0.0475 -0.69%
SEP ’21 Kansas City HRW $ / BSH  0 #N/A 6.7625 0 0.00%
DEC ’21 Kansas City HRW $ / BSH  6.8475 6.77 6.7725 -0.0525 -0.77%
MAR ’22 Kansas City HRW $ / BSH  6.9275 6.8625 6.8675 -0.05 -0.72%
MAY ’22 Kansas City HRW $ / BSH  6.9775 6.9175 6.9275 -0.045 -0.65%
JUL ’22 Kansas City HRW $ / BSH  6.89 6.8325 6.8325 -0.055 -0.80%
SEP ’21 MLPS Spring Wheat $ / BSH  0 #N/A 8.8325 0 0.00%
DEC ’21 MLPS Spring Wheat $ / BSH  8.775 8.71 8.7175 -0.07 -0.80%
MAR ’22 MLPS Spring Wheat $ / BSH  8.66 8.615 8.625 -0.0625 -0.72%
MAY ’22 MLPS Spring Wheat $ / BSH  8.53 8.5275 8.5275 -0.07 -0.81%
JUL ’22 MLPS Spring Wheat $ / BSH  8.44 8.405 8.405 -0.0175 -0.21%
SEP ’21 ICE Dollar Index $ 92.88 92.64 92.845 0.255 0.28%
 OC ’21 Light Crude $ / BBL  70.78 69.51 70.14 0.42 0.60%
 NO ’21 Light Crude $ / BBL  70.49 69.26 69.87 0.4 0.58%
OCT ’21 ULS Diesel $ /U GAL 2.1703 2.138 2.1548 0.0088 0.41%
NOV ’21 ULS Diesel $ /U GAL 2.1673 2.136 2.1522 0.0086 0.40%
OCT ’21 Gasoline $ /U GAL 2.1822 2.147 2.1648 0.0108 0.50%
NOV ’21 Gasoline $ /U GAL 2.1176 2.089 2.1017 0.009 0.43%
SEP ’21 Feeder Cattle $ / CWT 0 #N/A 154.25 0 0.00%
OCT ’21 Feeder Cattle $ / CWT 0 #N/A 157.725 0 0.00%
 OC ’21 Live Cattle $ / CWT 0 #N/A 123.425 0 0.00%
 DE ’21 Live Cattle $ / CWT 0 #N/A 128.225 0 0.00%
OCT ’21 Live Hogs $ / CWT 0 #N/A 82.45 0 0.00%
DEC ’21 Live Hogs $ / CWT 0 #N/A 76.1 0 0.00%
SEP ’21 Class III Milk $ / CWT 16.58 16.58 16.58 -0.01 -0.06%
OCT ’21 Class III Milk $ / CWT 17.4 17.38 17.4 0.06 0.35%
NOV ’21 Class III Milk $ / CWT 17.4 #N/A 17.3 0 0.00%

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