TFM Daily Market Summary 5-28-2021

Market Summary 5-28-2021

The soybean meal market maybe duo for a possible move higher. The meal market has been on the back side of the strong soybean oil market. As the oil market has moved higher, the offsetting spread has been the soybean meal market. Recently, the meal market has had a major correction, dropping over $78.00/Ton off the most recent highs, and with soybean oil at or near contract highs, it may be time for the market to reverse those spreads. Feed demand will continue into the summer months, and with soybean in tight supply, soybean meal should see buying support. Price will likely travel back toward the key $400.00/ ton psychological level, but further upside isn’t out of the question over the next few months.


CORN HIGHLIGHTS: Corn futures end the day softer with July closing 7-3/4 cents lower at 6.56-3/4 and December 9-1/2 lower at 5.73-1/4.  For the week July closed 2-3.4 cents. This may be hard to believe when there were 2 daily limit moves. December added lost 1-0 cents to for the week. If just viewing weekly closes, it was a boring week of price consolidation. The range in July corn was a weekly high of 6.72-3/4 and low of 6.02-3/4. After Memorial Day weekend, the rubber hits the road. Weather becomes the dominate factor and will decide price direction. Price direction is a combination of fundamental factors (is the crop getting bigger or smaller or demand expanding or contracting), money flow, and technical signals (chart signals/indicators). If there are concerns this year, it will likely come in from of continued dry conditions that started last summer, especially in the Western Corn-Belt. We cannot make much of an argument during last week of May that the crop made or in peril. Yet, futures are at crossroads. We expect crop ratings next week to be good. Recent moisture and a fast-planting start suggest good emergence and if emerged crop is green in color, it will be rated as good or excellent. Cool temperatures may limit growth, but this will be temporary. Ethanol margins remain in the black with tight inventory and expected strong consumer gas usage this weekend and early summer as covid concerns lessen.


SOYBEAN HIGHLIGHTS: Soybean futures closed with moderate losses of 6-1/2 cents in July at 15.30-1/2 and 5-1/2 lower in November at 13.72-3/4. For the week, July gained 4-1/4 cents and November 12-1/4. November futures have closed 13 consecutive months higher. Historically tight carry out provides underlying support which implies weather conditions will need to be near ideal to provide enough inventory for the year ahead. In the very near term, we are seeing some basis decline which would imply that processors are likely more hand to mouth. This may imply they have enough perceived inventory purchased or that for the moment they are unwilling to pay high prices chasing bean prices higher which also makes sense considering the planting pace is above the five-year average. Soybean oil continues to support the bean complex as tight world vegetable oil supplies are supportive into the summer of 2021. Soybean meal however continues to trade in a consolidation mode near 400 per ton, where it has spent most of this year. There could be some frost concerns yet as of this writing, not likely on a large enough scale to affect futures prices. Markets are closed on Monday in observance of Memorial Day.


WHEAT HIGHLIGHTS:  July Chi down 12 3/4 cents at 6.63 1/2 & Dec down 11 1/2 cents at 6.74 .3/4. July KC wheat down 13 cents at 6.13 1/4 & Dec down 13 cents at 6.32 1/4. For the week, July Chicago wheat & KC both lost 10 3/4 cents for the week.   As we warned yesterday, today we saw traders playing it safe ahead of a 3-day holiday and profit-taking took place in wheat, 2900-3200 contracts were closed today.  Black Sea research firm SovEcon cut its 2021 Russian wheat crop forecast from 81.7 mmt to 80.9 mmt – dry weather once again putting crop production in jeopardy.  Russia’s winter crop has received plenty of moisture, but the spring wheat areas have not.  Combine this with our own spring wheat concerns here in the US – that market should be closely monitored and could ultimately lend support other wheat futures by nothing more than association. Expanding drought & freeze concerns in the northern plains were not traded today but that doesn’t mean they aren’t there.  We will see what Tuesday’s crop progress says, the outlook for the Dakotas is not expected to improve, with 31% of North Dakota crop only rated good/excellent.  Next Wednesday, June 2nd – Russia will implement another higher export tax to continue to try and curb inflation costs.


Bryan Doherty

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