MARKET SUMMARY 06-25-2021

The ongoing demise of the soybean oil market has weighed heavily on soybean futures prices. Soybean oil futures hit an all-time high on June 7th but took a sudden turn lower when Reuters reported that U.S. senators were asking the Biden administration to reduce biofuel blending mandates to help oil refiners in their states. The lack of confirmation and clarity from the Biden administration regarding biofuel mandates kept the selling pressure on. Prices were trying to recover, but today, the Supreme Court ruled in favor of the small refineries requesting waivers from biofuel blending mandates. This opened the door for selling in the soybean oil and carried over into the soybean and corn markets. Charts posted a technically poor close with the reversal of session highs, opening the door for further follow-through selling next week and a possible test of the recent lows or lower.

CORN HIGHLIGHTS: Corn futures again saw overnight gains give way to selling as prices weakened throughout the session. Continuous rain on the radar and more in the forecast continues to suggest the central regions of the Midwest could have a bumper crop. By day’s end, Jul futures lost 16-3/4 cents closing at 6.35-1/2. For the week, Jul corn lost 18-3/4 cents. Dec corn ended the session at 5.19-1/4, down 16-3/4 cents, and for the week down 47 cents. This was a very poor close with the only saving grace that it did close just above the 100-day moving average. The two big stories this week are copious rainfall and a Supreme Court’s decision ruling in favor of small refineries requesting waivers from biofuel blending mandates. When the ruling was announced futures wasted little time dropping to near yesterday’s lows. The dry areas are shrinking and the crop in the northwest Midwest is in a difficult place due to lack of moisture. Without rain soon, it will be a challenge to expect trendline yields to be reached. Yet, this week the market ignored this region. Next week are two major reports, acreage, and stocks. According to Bloomberg, the average pre-pre-report estimate for acres is 93.8 million. The March acreage report was 91.1 million. Quarterly stocks are forecast at 4.13 bb, down 837 mb from a year ago.

SOYBEAN HIGHLIGHTS: Soybean futures once again plunged, continuing their sell-off with Jul leading today’s drop closing at 13.29-3/4, down 41-1/2 cents. For the week, Jul lost 66-1/4 cents. Nov lost 22 cents today closing at 12.69-3/4. For the week, Nov lost 43-1/4 cents. The good news is that Nov futures still closed above the most recent close of last week Thursday, 12.52-3/4. Like the corn market, a weak Friday close does not look supportive. Soybean oil crashed today closing 299 points lower on news of the Supreme Court’s decision ruling in favor of small refineries requesting waivers from biofuel blending mandates. This along with rain on the radar sent prices on the defensive. There are some who believe Nov soybeans have little to no weather premium factored in, especially if you consider how dry parts of the northwest Corn Belt are. We tend to agree, assuming similar demand in the year ahead. Yet, momentum is a factor in the marketplace and downward momentum describes soybean prices this week. Soymeal continues to slide with this week’s softer tone pushing prices to their lowest level since mid-fall.

WHEAT HIGHLIGHTS: Chi and KC wheat settled lower today, though Minneapolis wheat ended the day marginally higher. The Jul Chi contract lost 14-1/4 cents at 6.37 and Dec lost 10-1/2 cents at 6.48. Jul KC wheat lost 5-3/4 cents at 6.00-1/4 and Dec was down 5-1/4 cents at 6.18-3/4. Minneapolis wheat’s Jul contract closed up 13-1/2 cents at 8.22-1/2. For the week, Chi Jul contract lost 25-3/4 cents, KC Jul was down 6-1/4, but Jul spring wheat surged 60 cents higher. Weather will be an important factor going forward. Spring wheat areas in Canada look to be in better shape with recent rains but have a dry forecast over the next 7 days and into the longer-term range. Recent rains are welcome, but the area is starved for moisture and stress will likely continue. Russian wheat conditions ahead of harvest are mostly favorable, despite some temperatures on the rise in the Black Sea region. Central and eastern parts of the Midwest have received heavy rains today which could delay harvest. This has helped keep some support under the KC wheat contract despite harvest pressure. Overall, it’s all about global supply in terms of wheat. The International Grain Council estimated world wheat production at 789 MMT, down slightly from last month’s forecasts, but is realized will still be a record high. The wheat market may have its isolated stories for strength, but overall the supply picture looks burdensome.

Author

Bryan Doherty