MARKET SUMMARY 7-20-2021

As investors have been looking for some safety in assets, the U.S dollar index has been supported and trending higher. This week, the U.S. dollar is working above trendline resistance and trading over the 93.00 basis point level, the highest value of the dollar in three months. Concerns regarding the Delta variant of COVID and its growth have helped bring the money flow into the index. As bond yields have been strengthening, the backside of this trade has been buying the U.S. dollar. Technically, trading above the 93.00 basis point level opens the upside in the dollar for a further climb higher. The close on the end of the week could be the key, whether prices stay firm or possibly reverse lower. Regardless, the impact of the dollar index could begin to see some impact if the index maintains its climb higher.

CORN HIGHLIGHTS: Corn futures shook off yesterday’s outside market selling pressure and finished higher on Tuesday. September corn gained 15 3/4 to 5.71 3/4 and December corn finished 13 1/2 to 565 3/4. Prices continue to work in the price gap established on July 6, with the top of that gap at 5.73 1/2. Price actions was more encouraging on Tuesday as weather turned back into focus after the outside market saw some price stability today. Weekly corn crop ratings remained unchanged at 65% good/excellent. Within the numbers, the key state of Illinois gained 5% in the G/E category, but that was likely offsets by a 4% drop in North Dakota and 1% drop in South Dakota as these states are 29% to 30% G/E respectively. Add in longer range forecasts calling for a round of extreme heat and ongoing dryness in this area of the corn belt, the buyers returned to the corn market. The Brazilian corn crop was exposed to another round of frost this week, which should stay supportive in price. The market will be watching for improved demand from a prospects of limited Brazilian corn on the export market. Currently, U.S. corn is at a premium to Argentina and Ukrainian corn values, so new purchases have stayed limited in the near-term. Technically, prices are looking to go higher, supported by a strong wheat market, as the trend line over highs is up near the $6.00 level on top of December. Demand will still be the key going forward, and with the market anticipating this demand, if that is unrealized, the market may quickly get over-valued.

SOYBEAN HIGHLIGHTS: Soybean futures traded up in the overnight and early morning but still held strong gains for the day, as financial markets rebounded from yesterday, lending support to futures. August soybean futures gained 15 1/2 cents, closing at 14.43 1/2. November gained 15 3/4 cents, closing the session at 13.88 1/2. With the outside markets stabilizing today, soybeans were able to refocus on dry weather concerns for the next two weeks for the bulk of the US soybean crop. Yesterday, USDA reported 60% of the soybeans were rated good to excellent. Although that is 2% points better than last week, it’s still the third lowest rating in 12 years. Outside of the known stressed areas of the northwestern Plains, Missouri and Illinois have been too wet, hurting crop conditions in their areas. USDA also reported that 63% of soybeans are blooming and 23% are setting pods, for the forecast to turn hot and dry now is beyond not optimal. Drought in Canada continues to threaten Canola production and keeps soybean oil prices supported. China continues to turn to Brazil for exports; however, US soybeans are almost neck and neck with Brazil. It is expected they will become discount to Brazil beans, at which point China will likely return to the US for future needs. China’s imports are not expected to dwindle, as their internal price is still well over $18.00 per bushel.

WHEAT HIGHLIGHTS: Sept Chi up 2 3/4 cents at 7.00 1/2 and Dec up 2 1/2 cents at 7.08 3/4. Sept KC wheat up 8 cents at 6.60 1/4 and Dec up 8 ¼, cents closing at 6.71 1/4. USDA reported 73% of the winter wheat crop was harvested, near it the 5-year average of 74% for this time of year. Drought and wildfires have erupted over the northwestern Plains and parts of Canada this summer with little to zero moisture expected for the next 2 weeks. Regarding spring wheat, as expected, USDA reported US spring wheat at 11% good/excellent and for the state of Washington 0% was rated good/excellent – 93% of the overall crop is headed. Today MNPLS wheat was down, likely just on some minor profit taking as that market certainly is not improving nor expected to anytime soon.

Author

Bryan Doherty