Jacqueline Holland | Apr 26, 2021
Chinese demand and weather woes continue to fuel rallies
- Corn up 7-15 cents
- Soybeans up 4-8 cents, soyoil up $0.81/lb, soymeal up $0.80/ton
- Wheat up 14-18 cents
*Prices as of 6:50 am CDT.
Corn prices are on a tear again this week, with dry weather in Brazil and planting delays in the U.S. raising concerns about global supplies in the overnight trading session. Old crop prices rose $0.13-$0.15/bushel on steady demand from China, while new crop futures are trading $0.07-$0.09/bushel higher on the narrowing supply outlook. The nearby May 2021 contract notched its highest price since June 2013 on the underlying sentiments.
Cool temperatures and scattered rain and snow showers across the Heartland could put a damper on weekly corn planting progress in today’s Crop Progress report. Behind the Fencerows columnist and Indiana farmer Kyle Stackhouse echoed the sentiment, noting that planting operations remained in a holding pattern while waiting for acceptable planting conditions. But in areas where the weather allowed planting activity – even if soil temperatures edged on the low side – planters rolled at a rapid pace.
Last week’s report saw corn planting progress for the week ending April 18 at 8% complete. Progress was accelerated in the Southern states, especially Texas and North Carolina, where 51% and 13% of the crop, respectively, was already emerged as of last week.
Slow export paces from Argentina and concerns about an increase in export taxes for the key South American grain exporter. Soybean futures prices rose $0.04-$0.08/bushel on the news, with additional support added by a slow start to planting in the U.S. The nearby May 2021 contract last traded at $15.46/bushel, matching an eight-year high.
Soybean planting progress is likely to replicate corn’s paces this week, as cool and wet weather continued to stall early planting progress across the Heartland. Last week, USDA found that 3% of expected soybean acres had been planted as of last Sunday, confirming analyst expectations and kicking off the reporting season 1% ahead of the five-year average.
Argentina is contemplating increasing its export taxes on grains to ease inflation concerns. The rumor was met by farmers with distaste, as the South American country already taxes its top exports, soy productions and soybeans, at 31% and 33%, respectively. Argentine corn and wheat exports are also taxed at 12%.
Argentina’s current inflation rate over the past year reached 42.6% as of the end of March. Over that same time period, the inflation rate in the U.S. was only 2.6%.
Argentina’s grain flows off the farm have already suffered slower paces due to the export taxes, as farmers use grain stocks as a hedge against inflation and a depreciating currency. Rising COVID-19 cases in the South American country and a looming congressional election this October increased the instability of Argentina’s current economic environment, thereby decreasing farmer incentives to sell grain and generate revenue.
Argentina is the world’s largest exporter of soy products and the third largest exporter of soybeans and corn.
Wheat prices are banking on strong feed demand from China in the short run. The prospect, paired with lackluster weather conditions for the U.S. crop, sent futures prices in the wheat complex soaring $0.14-$18/bushel over Friday’s closing prices. A slightly stronger dollar limited overnight gains.
As China’s wheat harvest looms in the near future, Chinese buyers are slowing purchasing paces in state-sponsored wheat auctions. In the latest weekly state wheat auction, the Chinese government only sold 11.5 million bushels of wheat to local users, amounting to barely 8% of total wheat reserves offered by the government each week.
Higher commodity prices also helped limit demand after the Chinese government raised the auction’s floor price. However, many livestock feeders and flour mills have already stockpiled enough wheat supplies to weather the latest run-up in commodity prices, which also contributed into the low buying interest in last week’s auction.
Last week, China issued new guidelines recommending livestock and poultry feeders limit the use of corn and soymeal in rations amid soaring corn and soybean prices. The Chinese Agriculture Ministry suggested the use of cheaper grain alternatives, including wheat and sorghum, in favor of corn and soy products.
All eyes will be on winter wheat conditions in today’s Crop Progress report from USDA. Frost damage reported last week across the Southern Plains could lower condition ratings for the winter wheat crop, which is rapidly moving into its heading stage.
As of a week ago, the winter wheat crop stood unwavering at 53% good to excellent for the third week in a row. But only 10% of the crop had reached the jointing phase of crop development, down 4% from the previous five-year average and 3% lower than the same reporting period a year ago.
Spring wheat planting could see slower weekly paces in the Dakotas, which were dusted with snow this time last week. But expect overall planting progress to remain at fast paces.
Last week’s report saw spring wheat planting progress surging ahead 8% over the past week to 19% complete as of April 18. The five-year average for spring wheat planting completion for the same reporting week stands at 12% and was only 7% complete a year ago.
After a rainy weekend, most of the Central Midwest and Plains states should see clear skies today, according to NOAA’s short-range forecasts. Warm temperatures will accelerate planting speeds in the region.
A strong chance of showers will linger in the Northern Plains and Northern Great Lakes region today, providing the Dakotas with some much-needed moisture. Accumulation is likely to be light, but temperatures in the 40s and 50s will likely slow drying paces and ultimately lead to another round of planting delays.
Coronavirus cases in the U.S. rose to 32,077,569 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased to 572,200 deaths as of press time.
Happy Monday! Last week was a crazy week for the grain markets. Corn topped $6/bushel on Tuesday, soybeans moved past $15/bushel on Wednesday, and Chicago and Minneapolis wheat topped $7/bushel on Friday, all pressured higher by lackluster planting conditions.
With grains soaring to new heights, its worth noting that Class III milk prices have held their own over the past month. Total Farm Marketing’s Naomi Blohm credits milk’s recent price strength to restaurant re-openings across the country as vaccination rates rise.
And calcium. Obviously.
Summer can be a more volatile time for milk prices, especially with summer school holidays limiting student consumption. But Blohm points out that robust global demand for cheese, butter, and dairy powders are also adding another layer of price support to milk prices in addition to rising domestic demand.
“U.S. dairy exports were up over 12% more than February of last year,” Blohm analyzes in the latest Ag Marketing IQ column. “Butter exports jumped 110% versus last year, which helps to show why the US market has been pushing steadily higher.”
Whey prices are also at a six-and-a-half-year high. U.S. milk production continues to increase despite rising feed prices. But the higher corn and soy prices could shift supply forecasts through the rest of 2021, Blohm hints. “The longer the feed prices stay up at these elevated levels, the better likelihood there could be lower milk production throughout the rest of the year,” Blohm muses. “For now milk futures remain in a range where $18 per hundredweight is supported and $20 per hundredweight is resistance.”
U.S. stock markets are jittery this morning as rising global COVID-19 cases, particularly in Japan and India, raise concerns about the sustainability of a global economic recovery. Investor concerns about potentially higher taxes and an updated outlook from the Federal Reserve expected later this week provided markets with little upside potential in the overnight trading session. S&P 500 futures shed 0.07% to $4,168.50 at last glance while Dow futures added 0.11% to $33,979.
|Morning Ag Commodity Prices – 4/26/2021|
|Contract||Units||High||Low||Last||Net Change||% Change|
|MAY ’21 CORN||$ / BSH||6.735||6.61||6.7125||0.1575||2.40%|
|JUL ’21 CORN||$ / BSH||6.485||6.375||6.465||0.14||2.21%|
|SEP ’21 CORN||$ / BSH||5.87||5.7775||5.8525||0.095||1.65%|
|DEC ’21 CORN||$ / BSH||5.62||5.51||5.605||0.0975||1.77%|
|MAR ’22 CORN||$ / BSH||5.665||5.56||5.655||0.095||1.71%|
|MAY ’22 CORN||$ / BSH||5.69||5.5925||5.69||0.0975||1.74%|
|JUL ’22 CORN||$ / BSH||5.695||5.6||5.6925||0.095||1.70%|
|MAY ’21 SOYBEANS||$ / BSH||15.6425||15.405||15.48||0.0825||0.54%|
|JUL ’21 SOYBEANS||$ / BSH||15.395||15.15||15.225||0.065||0.43%|
|AUG ’21 SOYBEANS||$ / BSH||14.865||14.6425||14.7275||0.0525||0.36%|
|SEP ’21 SOYBEANS||$ / BSH||13.97||13.7975||13.87||0.0475||0.34%|
|NOV ’21 SOYBEANS||$ / BSH||13.56||13.385||13.4675||0.0525||0.39%|
|JAN ’22 SOYBEANS||$ / BSH||13.53||13.3725||13.455||0.065||0.49%|
|MAR ’22 SOYBEANS||$ / BSH||13.235||13.1075||13.19||0.0725||0.55%|
|MAY ’22 SOYBEANS||$ / BSH||13.135||13||13.0975||0.0575||0.44%|
|JUL ’22 SOYBEANS||$ / BSH||13.1||13.01||13.065||0.0575||0.44%|
|MAY ’21 SOYBEAN OIL||$ / LB||64||63.12||63.53||0.82||1.31%|
|JUL ’21 SOYBEAN OIL||$ / LB||59.98||59.08||59.37||0.59||1.00%|
|MAY ’21 SOY MEAL||$ / TON||427||421.1||423.6||1.2||0.28%|
|JUL ’21 SOY MEAL||$ / TON||430.6||424.3||426.4||0.6||0.14%|
|AUG ’21 SOY MEAL||$ / TON||426.7||421.2||423.6||1||0.24%|
|SEP ’21 SOY MEAL||$ / TON||420.2||416||417.6||0.8||0.19%|
|OCT ’21 SOY MEAL||$ / TON||411.5||404.9||410.2||1.5||0.37%|
|MAY ’21 Chicago SRW||$ / BSH||7.3025||7.1275||7.2725||0.17||2.39%|
|JUL ’21 Chicago SRW||$ / BSH||7.315||7.1475||7.285||0.1625||2.28%|
|SEP ’21 Chicago SRW||$ / BSH||7.3025||7.1625||7.275||0.1475||2.07%|
|DEC ’21 Chicago SRW||$ / BSH||7.325||7.1725||7.3025||0.1425||1.99%|
|MAR ’22 Chicago SRW||$ / BSH||7.3425||7.2025||7.33||0.1375||1.91%|
|MAY ’21 Kansas City HRW||$ / BSH||6.925||6.74||6.92||0.1875||2.78%|
|JUL ’21 Kansas City HRW||$ / BSH||7||6.815||6.9925||0.1875||2.76%|
|SEP ’21 Kansas City HRW||$ / BSH||7.05||6.87||7.05||0.1875||2.73%|
|DEC ’21 Kansas City HRW||$ / BSH||7.1075||6.95||7.1||0.16||2.31%|
|MAR ’22 Kansas City HRW||$ / BSH||7.13||7.015||7.1075||0.0925||1.32%|
|MAY ’21 MLPS Spring Wheat||$ / BSH||7.3475||7.2||7.34||0.155||2.16%|
|JUL ’21 MLPS Spring Wheat||$ / BSH||7.4225||7.26||7.41||0.155||2.14%|
|SEP ’21 MLPS Spring Wheat||$ / BSH||7.4725||7.315||7.4575||0.1475||2.02%|
|DEC ’21 MLPS Spring Wheat||$ / BSH||7.5||7.35||7.46||0.1125||1.53%|
|MAR ’22 MLPS Spring Wheat||$ / BSH||7.5225||7.38||7.5225||0.145||1.97%|
|JUN ’21 ICE Dollar Index||$||90.87||90.655||90.805||-0.034||-0.04%|
|JU ’21 Light Crude||$ / BBL||62.31||60.86||61.33||-0.81||-1.30%|
|JU ’21 Light Crude||$ / BBL||62.18||60.77||61.22||-0.8||-1.29%|
|MAY ’21 ULS Diesel||$ /U GAL||1.8775||1.8423||1.8487||-0.0248||-1.32%|
|JUN ’21 ULS Diesel||$ /U GAL||1.8803||1.8443||1.8513||-0.0244||-1.30%|
|MAY ’21 Gasoline||$ /U GAL||1.9987||1.953||1.9591||-0.0366||-1.83%|
|JUN ’21 Gasoline||$ /U GAL||2.008||1.964||1.9734||-0.0317||-1.58%|
|APR ’21 Feeder Cattle||$ / CWT||0||#N/A||133.85||0||0.00%|
|MAY ’21 Feeder Cattle||$ / CWT||0||#N/A||137.675||0||0.00%|
|AP ’21 Live Cattle||$ / CWT||0||#N/A||117.85||0||0.00%|
|JU ’21 Live Cattle||$ / CWT||0||#N/A||115.725||0||0.00%|
|MAY ’21 Live Hogs||$ / CWT||0||#N/A||109.35||0||0.00%|
|JUN ’21 Live Hogs||$ / CWT||0||#N/A||105.725||0||0.00%|
|APR ’21 Class III Milk||$ / CWT||17.64||#N/A||17.64||0||0.00%|
|MAY ’21 Class III Milk||$ / CWT||19.1||18.87||19.08||0.08||0.42%|
|JUN ’21 Class III Milk||$ / CWT||19.05||18.95||19.05||0.01||0.05%|