MARKET SUMMARY 8-9-2021
The corn market is looking forward to Thursday’s WASDE report to see if the corn supply will stay historically low. The USDA will release its next round of supply/demand and crop production number on Thursday, August 12. Currently, forecasts are for a stock-to-use ratio to hold under 10% at 9.65%, which has kept corn prices supported over the past few weeks, but traders in the market will be watching many different moving parts in this report. The first is the next yield. Expectations are for the yield forecast to drop to 177.4 bushel/acre from the current forecast of 179.5. With the given planted acres, the lower yield will tighten the supply picture. A large concern will be how the marketing year ends on the demand front. There is still a large amount export bushels that are sold but need to be shipped. Where those bushels end up on the reports can have a big influence on final supply numbers. Globally, the market will be closely watching the changes made to Brazil’s corn stockpile, as difficult weather has severely hurt the second crop harvest. Those bushels of demand that Brazil will lose will need to be balanced into this and upcoming reports. Thursday will be extremely volatile, as this market has been looking for some direction for the end of summer.
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CORN HIGHLIGHTS: Corn futures traded softer throughout much of the session, ending 4-3/4 cents weaker in September closing at 5.50-1/4. Futures were 2-3/4 lower in December, finishing the day at 5.53-3/4. Export inspections at 26.3 mb were termed light, bringing the year-to-date total to 2.50 bb or 87.7% of the sales estimate of 2.85 bb. Supply availability may be keeping inspections tight for grain sold for this marketing year. This could imply that not all corn sold may be delivered before September first but will still be inspected for the marketing your 2020/2021 in October. Rain was welcomed in parts of the Midwest in recent days. In some cases, too much. On the other hand, parts remain dry. Corn futures remain in a tight rangebound pattern, likely waiting for further news to provide direction. This may come in the form of supply and demand changes on Thursday’s WASDE report due for release at 11:00 central. Although there is concern that this year’s crop could be tight, especially in the western corn belt, the central and eastern regions will likely have record yield. Because harvest is quickly approaching, especially in the South, end users are adopting a more hand to mouth buying mentality. The average pre-trade yield estimate is 177.6 bushels/acre according to Reuters news. Basis remains strong indicating farmers are mostly sold out of old crop. Corn ratings increased 2% in this afternoon’s crop ratings, now at 62%.
SOYBEAN HIGHLIGHTS: Soybean futures finished the session mixed. August gained11.5 cents, closing at 14.33-3/4 and November closed down 7-0 at 13.29-3/4. Export inspections came in at 4.2 mb, bringing the year-to-date total to 2.145 bb or 94.5% of the forecasted 2.270 bb. Like the corn market, tight price consolidation continues with both bulls and bears arguing fundamental reasons why prices should break in one direction or the other. New news will come on Thursday when the USDA estimates this year’s crop size as well demand. Our bias is the market will find that world and US inventories remained critically tight, and this year’s crop is not far enough along for the USDA to make a definitive change in yield. Last month’s yield estimate was 50.8 bushels an acre. It continues to be a somewhat odd summer. Rain did fall in areas where it was needed and were greatly helped this weekend. However, areas that have been generally dry remain as such. The jury will be out on this year’s bean crop for several weeks depending on weather moving forward. The western regions of the corn belt remain in a pattern of above normal temperatures and below normal precipitation. This was again echoed on the most recent 6-to-10-day forecast. Projected world carryout on Thursday WASDE report for soybeans is 91.5 million metric tons, and that is expected to be in line with the July figure. Crop ratings at 60% good to excellent is unchanged.
WHEAT HIGHLIGHTS: Sept Chi down 7 3/4 cents at 7.11 1/4 and Dec down 8 cents at 7.25 1/4. Sept KC wheat down 4 1/4 cents at 7.01 1/2 and Dec down 4 cents, closing at 7.13 1/2. Wheat ended up having another negative close, the fourth one in a row. However, all things considered, Chicago wheat is still only roughly 20 cents from contract highs. Paris milling futures were up today, challenging its contract high. Black Sea prices continue to rise on delayed French harvest. Russian wheat values continue to climb on both weather and production concerns. Global demand stays strong, and we’ll see if anything shows up this Thursday for US exports. Although it is expected that exports stay weak for the US due to being overpriced from a global outlook, today’s grain inspections were positive at 605,700 mt. USDA’s crop condition reported winter wheat harvest virtually completely at 95% and spring wheat harvest off to a nice pace, fueled by drier weather at 38% (well ahead the 5-year average of 21%). Spring wheat condition rated at 11% good to excellent (1% better than last week) and 61% poor to very poor (only 3% change from last week). Unfortunately, it appears as many feared; whatever rains hit the key spring wheat areas last week were hardly enough to actually change the condition of the standing crop.
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Author
Bryan Doherty