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Morning Market Review for April 6, 2021 | Gannon

Wallaces Farmer

Jacqueline Holland | Apr 06, 2021

https://www.farmprogress.com/morning-market-review/morning-market-review-april-6-2021

First crop progress report of 2021 shows favorable winter wheat conditions

  • Corn up 2-7 cents
  • Soybeans up 8-14 cents, soyoil up $0.74/lb, soymeal up $4.70/ton
  • Wheat up 2-5 cents

*Prices as of 6:50 am CDT.

Corn

Old crop corn futures rose $0.04-$0.07/bushel overnight while new crop corn futures clawed out a $0.02/bushel gain. Planting delays for Brazil’s second corn crop weighed heavy on nearby futures contracts. Deferred contracts saw a slight price increase as 2021 corn acres fought to remain competitive with gains in the soy complex this morning.

USDA released its first weekly Crop Progress report of the 2021 growing season last night. Early estimates peg national corn planting progress at 2% complete, in line with the same time last year as well as the five-year average

Planting progress in Texas is 55% complete, 2% higher than the five-year average. Cool and wet weather across the Corn Belt has prevented farmers in the region from getting an early start on this year’s planting season. But after showers clear out of the area today and tomorrow, expect planting equipment to roll ahead at full steam.

Did anyone else spend the weekend icing their necks after the whiplash from last week’s USDA reports? Advance Trading’s Dave Fogel offers some insights to manage a new level of higher prices in the latest Ag Marketing IQ report.

As markets continue to jockey for more acres, there is a good chance prices could continue higher. Fogel’s team wants farmers to be aware of opportunities to take advantage of higher prices through options strategies, so operations who have already sold grain can still cash in on the higher profits.

“At meetings I have asked the room if they could tell me one-on-one what they will do on pricing bushels if we move higher?” Fogel points out. “Then I ask if they could tell me what is the plan if they move lower? You should always know the answer to these questions and not just for the 2021 crop, but deferred months as well.”

Soybeans

Markets are keeping an eye on African swine fever in Asia. A report surfaced overnight that found a pig positive for the deadly swine virus has washed ashore in Taiwan, just off China’s southeastern coast. The Asian island will now begin testing hog herds to detect and prevent the virus from decimating its hog herd, as it did in China when the outbreak began in 2018.

But the main story driving markets this morning was the ongoing Brazilian harvest delays and short-term supply crunch, which sent soybean futures $0.08-$0.14/bushel higher overnight. Soyoil and soymeal prices continued on an upward trajectory, though cash soymeal markets are reporting signs of demand weakness as high prices deter many livestock buyers from booking excess supplies.

Brazilian farmers have harvested 78% of the soybean crop as of Thursday, April 1. Harvest was 83% complete the same time a year ago, according to the Brazilian ag consultancy, AgRural. Harvest is virtually finished in Mato Grosso, Brazil’s leading soybean-producing state in the country’s center west region.

Rain delays, largely in Mato Grosso, have slowed harvest progress during the last leg of the growing season. But AgRural did not report any significant quality issues with the crop amidst the excess moisture and humidity during combining. This is critical because with the delayed harvest and drought concerns earlier in the season, many market watchers feared the Brazilian soybean crop would fall short this year, at a time when dwindling global soybean stocks leaves little room for production error.

Brazil’s Rio Grande do Sul state in the country’s southern region is currently behind historical harvesting rates due to rains last week. However, the region is likely to produce a high-quality crop. Brazil is the world’s largest soybean producer and exporter.

USDA’s revisions to soybean and wheat stocks in last week’s Quarterly Grain Stocks report were largely a results of delayed responses from off-farm and commercial storage facilities. USDA has made stock revisions to the previous quarter in the past three Quarterly Grain Stocks reports, a move that has largely left many market watchers scratching their heads.

And with good reason. As the world attempts to recover from the pandemic, global supply chains are being pushed to the limit to accommodate to new and sudden changes to consumer demand, fears, and purchasing behaviors that quite frankly did not exist a year ago. The food and ag supply chain, which largely functions in a “just-in-time” method, could be seeing some fundamental changes.

The increase to off-farm soybean storage, strong basis offerings, and inverted futures prices suggest suppliers may be shifting to a less lean “just-in-case” production strategy to ensure consistent output in the post-pandemic era. It may be too soon to determine if this is the case, but as I outline in my latest E-corn-omics column, in a world of tight supplies, increasing demand, and ever-present uncertainty, farmers may benefit from this production shift.

Wheat

USDA’s first weekly Crop Progress report found winter wheat conditions largely in good shape. The forecast met market expectations and had little impact on prices in the wheat complex in early morning trading. Minneapolis futures saw the largest gains this morning as planting progress picks up in the Northern Plains. Improving crop conditions in the Southern Plains and potential rainfall tomorrow provided Kansas City futures prices with slight gains. Chicago futures benefited from a weakening dollar.

High wheat costs have sent Ukrainian wheat exports to a 10-year low as of March 2021. Ukraine’s local millers’ union reported overnight that 4,016 tonnes of wheat flour were exported from the Black Sea country in March 2021, the lowest volume since January 2011. But it’s likely to be short-lived – export prices have fallen in recent weeks on slimming demand, which will likely drive volumes back up.

USDA’s first Crop Progress report largely featured long-awaited updates on winter wheat conditions. The crop faced concerns about winterkill after the frigid February cold snap that enveloped the country. But USDA’s numbers yesterday seemed to relieve those concerns.

As of April 4, 53% of U.S. winter wheat was in good to excellent condition. While that total is 9% lower than the five-year average for the same time period, it was slightly higher than some analysts (such as myself) would have expected given the ongoing drought across the Plains.

Crop development continues to progress at a normal pace, despite a cooler start to the spring season. As of Sunday, USDA found 4% of the nation’s winter wheat crop had headed, up 1% from a year ago and also from the five-year average.

Spring wheat planting kicked off in the Pacific Northwest and Northern Plains last week, with 3% of anticipated acreage planted as of Sunday. The total was in line with last year’s progress for the week, though drier soils in the Dakotas have given spring wheat growers in the region a jump on last year’s planting paces.

A year ago, neither state had measurable spring wheat planting progress to report. But on Sunday, South Dakota’s crop was 14% planted while North Dakota had 1% in the ground. The dry weather will favor planting paces in the Northern Plains, but only to a point. More moisture will be needed in the forecast to ensure healthy crop development.

Despite high wheat and corn export loading volumes last week, soybean shipping rates continue to decline as global demand flocks to Brazil for a cheaper source of soy. Yesterday’s weekly Grains Inspection for Export report from USDA saw weekly wheat export loading volumes rise to 21.8 million bushels, which would be among the 10 largest weekly wheat export volumes in the 2020/21 marketing year. Chinese demand continues to propel wheat exports to their highest level since 2016/17.

Weather

Temperatures in the Northern Plains will cool down compared to yesterday, while warm temperatures extend across the Corn Belt today, according to NOAA’s short-range forecasts. A snow system developing in the Northern Rockies will push rain into the Northern Plains today.

The showers will extend South into the Southern Plains tomorrow morning and will continue to move east across the Mississippi River by tomorrow afternoon. The Northern Plains and Upper Mississippi River Valley will likely see over an inch of accumulation over the next 24 hours.

Weather metrics from yesterday’s Crop Progress report point to an increase in drought-related issues compared to last year. As of Sunday, 65% of U.S. cropland acreage reported adequate to surplus soil moisture. A year ago, that total was 92%.

Similarly, subsoil moisture as of April 4 amounted to 64% adequate to excellent, compared to 91% for the same reporting period last year. While last year’s readings were at the high end of the moisture spectrum, it is glaringly apparent that the pendulum has swung to the other side this year.

Rains are likely in the Upper Midwest early this week, but long-term forecasts indicate a dry planting season. It favors farmers to a degree – it certainly reduces the amount of planting delays possible by lingering spring showers. But it could be harmful to crop development if enough rain does not fall in the coming weeks.

Financials

Coronavirus cases in the U.S. rose by 79,605 from yesterday to 30,785,734 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 618 lives to 555,619 deaths as of press time.

Farming is a business, but is your operation ran like one? Water Street Solutions’ Darren Frye outlines some key characteristics of “professional farms” in the latest Finance First column, showcasing the benefits of strategic management to farming operations. Frye recommends improving operational efficiencies, relying heavily on data-driven insights, and taking a high-level approach to creating and executing your farm’s strategy to improve the professionalism of your operation.

U.S. stock futures edged lower this morning on a round of profit-taking after optimism about the pandemic recovery powered the S&P 500 and Dow Joan Industrial Average indices to record highs by the close of yesterday’s trading session. The optimism is likely capped by rising coronavirus cases and inflation and interest rate concerns. S&P 500 futures edged 0.18% lower at last glance to $4,060.25.

Morning Ag Commodity Prices – 4/6/2021
Contract Units High Low Last Net Change % Change
MAY ’21 CORN $ / BSH 5.605 5.5225 5.6025 0.07 1.27%
JUL ’21 CORN $ / BSH 5.465 5.39 5.4625 0.07 1.30%
SEP ’21 CORN $ / BSH 5.0475 5.01 5.045 0.02 0.40%
DEC ’21 CORN $ / BSH 4.9075 4.87 4.9075 0.0225 0.46%
MAR ’22 CORN $ / BSH 4.98 4.9475 4.98 0.02 0.40%
MAY ’22 CORN $ / BSH 5.0175 4.995 5.0175 0.0125 0.25%
JUL ’22 CORN $ / BSH 5.0425 5.015 5.0425 0.015 0.30%
MAY ’21 SOYBEANS $ / BSH 14.2725 14.125 14.27 0.1425 1.01%
JUL ’21 SOYBEANS $ / BSH 14.1975 14.0525 14.1975 0.1425 1.01%
AUG ’21 SOYBEANS $ / BSH 13.8425 13.7225 13.8425 0.12 0.87%
SEP ’21 SOYBEANS $ / BSH 13.12 13.0425 13.12 0.095 0.73%
NOV ’21 SOYBEANS $ / BSH 12.77 12.6925 12.77 0.08 0.63%
JAN ’22 SOYBEANS $ / BSH 12.745 12.675 12.745 0.075 0.59%
MAR ’22 SOYBEANS $ / BSH 12.475 12.3975 12.475 0.08 0.65%
MAY ’22 SOYBEANS $ / BSH 12.42 12.34 12.415 0.0775 0.63%
JUL ’22 SOYBEANS $ / BSH 12.3475 12.325 12.3475 0.0275 0.22%
MAY ’21 SOYBEAN OIL $ / LB 53.62 52.83 53.56 0.75 1.42%
JUL ’21 SOYBEAN OIL $ / LB 51.95 51.2 51.9 0.73 1.43%
MAY ’21 SOY MEAL $ / TON 411 405.4 411 4.7 1.16%
JUL ’21 SOY MEAL $ / TON 412.6 407.3 412.5 4.4 1.08%
AUG ’21 SOY MEAL $ / TON 408.6 403.1 408.6 4 0.99%
SEP ’21 SOY MEAL $ / TON 403.4 400.4 403.4 3 0.75%
OCT ’21 SOY MEAL $ / TON 396.4 394.9 396.1 1.5 0.38%
MAY ’21 Chicago SRW $ / BSH 6.2225 6.155 6.205 0.025 0.40%
JUL ’21 Chicago SRW $ / BSH 6.18 6.1175 6.1625 0.0275 0.45%
SEP ’21 Chicago SRW $ / BSH 6.195 6.135 6.175 0.0225 0.37%
DEC ’21 Chicago SRW $ / BSH 6.26 6.2025 6.235 0.0175 0.28%
MAR ’22 Chicago SRW $ / BSH 6.305 6.26 6.2825 0.01 0.16%
MAY ’21 Kansas City HRW $ / BSH 5.67 5.605 5.6475 0.0175 0.31%
JUL ’21 Kansas City HRW $ / BSH 5.735 5.6725 5.7125 0.015 0.26%
SEP ’21 Kansas City HRW $ / BSH 5.7975 5.74 5.78 0.0175 0.30%
DEC ’21 Kansas City HRW $ / BSH 5.89 5.845 5.87 0.0025 0.04%
MAR ’22 Kansas City HRW $ / BSH 5.9825 5.955 5.96 -0.0025 -0.04%
MAY ’21 MLPS Spring Wheat $ / BSH 6.1175 6.065 6.1175 0.0425 0.70%
JUL ’21 MLPS Spring Wheat $ / BSH 6.205 6.1525 6.205 0.0375 0.61%
SEP ’21 MLPS Spring Wheat $ / BSH 6.275 6.245 6.275 0.03 0.48%
DEC ’21 MLPS Spring Wheat $ / BSH 6.38 6.365 6.365 0.0125 0.20%
MAR ’22 MLPS Spring Wheat $ / BSH 6.4675 #N/A 6.4425 0 0.00%
JUN ’21 ICE Dollar Index $ 92.8 92.54 92.76 -0.291 -0.31%
 MA ’21 Light Crude $ / BBL 60.34 58.62 59.49 0.84 1.43%
 JU ’21 Light Crude $ / BBL 60.34 58.66 59.49 0.81 1.38%
MAY ’21 ULS Diesel $ /U GAL 1.8126 1.7722 1.7884 0.016 0.90%
JUN ’21 ULS Diesel $ /U GAL 1.8144 1.7785 1.7913 0.0165 0.93%
MAY ’21 Gasoline $ /U GAL 2.0023 1.9667 1.986 0.0249 1.27%
JUN ’21 Gasoline $ /U GAL 1.9951 1.9606 1.98 0.0244 1.25%
APR ’21 Feeder Cattle $ / CWT 0 #N/A 146.45 0 0.00%
MAY ’21 Feeder Cattle $ / CWT 0 #N/A 151.775 0 0.00%
 AP ’21 Live Cattle $ / CWT 0 #N/A 121.375 0 0.00%
 JU ’21 Live Cattle $ / CWT 0 #N/A 124.425 0 0.00%
APR ’21 Live Hogs $ / CWT 0 #N/A 102.4 0 0.00%
MAY ’21 Live Hogs $ / CWT 0 #N/A 102.55 0 0.00%
APR ’21 Class III Milk $ / CWT 17.55 #N/A 17.6 0 0.00%
MAY ’21 Class III Milk $ / CWT 18.5 #N/A 18.57 0 0.00%
JUN ’21 Class III Milk $ / CWT 18.7 18.7 18.7 0 0.00%