TFM Daily Market Summary 6-10-2021

Market Summary 6-10-2021

The USDA chopped the U.S. corn supply by 150 mb on today’s WASDE report, bringing old crop (2020-21 marketing year) corn to a carryout projection of 1.107 billion bushels. The USDA added 75 mb on demand to ethanol and an additional 75 mb to exports to achieve this tighter carryout projection. This moves stocks-to-use ratio to 7.4%, a 25-year low, reflecting the tight corn supply. The difference the year makes, because last June’s report put stocks-to-use at 22.4%, the highest since the early 1990s. This tight supply carries over into the next marketing year (2021-22) with projected ending stocks at 1.357 billion bushels and a stocks-to-use ratio of 9.2%, the lowest in over a decade. Going into the heart of the growing season, the market will be focused on the weather and acre totals to help ease an extremely tight corn supply.

CORN HIGHLIGHTS: Corn futures finished higher with July gaining 8-1/4 cents to close at 6.99 and December adding 6-3/4 to end the session at 6.16-1/2. Support came from a supportive USDA report and another 6-to-10 day forecast that has the western half of the Midwest above average in temperature and the entire Midwest below average in rainfall. There is rain in the near-term forecasts for parts of the western corn belt tonight and perhaps tomorrow. After that, it looks generally warm and dry. Today’s USDA Supply and Demand report lowered projected carry out for the 2020/21 crop season to 1.107 bb. The pre-report average estimate was 1.205 bb and last month’s 1.257 bb. Increases in ethanol and exports by 75 mb each was reflected in a decrease of 150 mb in carryout. For the year ahead, projected carryout dropped by the same amount (which becomes the carry in for 2021/22). This puts the 2021/22 carryout at a snug 1.357 bb. World carryout dropped to 280.6 mmt from 283.5 in May yet was slightly above expectations at 280.1 mmt. Brazil’s corn crop was reduced to 98.5 mmt from 102 and was above the pre-report estimate of 97mmt. Export sales were a disappointment today at 7.5 mb. This brings the year-to-date total to 2.782 bb and 98.3% of the projected total of 2.775 bb.

SOYBEAN HIGHLIGHTS: Soybean futures ended the session mixed, as bear spreading was a noted feature. Nearby July futures gave back 18-1/2 cents today, while November gained 11.25 closing at 14.59-1/2, a new contract high closing price. Monday’s high of 14.80 still holds as the contract high. Today’s USDA reports indicated increases to carryout both for this and next year as a reduction in the crush by 15 million bushels was the reason. Projected carryout rose from 120 million bushels to 135 million for this season and for next, increased from 140 to 155 million. Both numbers, despite higher today, are still significantly small from a long-term perspective. Weather will be the biggest factor the markets will focus on for the next several weeks. At the end of June, the quarterly stocks and acreage reports will be released. These will be the next two big USDA reports until the July supply and demand figures are released on July 12. The western half of the Midwest will be above normal in temperature and below normal in precipitation on the most recent 6-to-10-day forecast. Export sales at .6 mb were a non-factor. The year-to-date total is 2.262 bb or 99.2% of project annual export sales 2.280 bb.

WHEAT HIGHLIGHTS: Jul Chi up 1 1/2 cents at 6.83 3/4 and Dec down 1/4 cent at 6.97 1/4. Jul KC wheat up 4 1/2 cents at 6.40 1/4 and Dec up 4 3/4 cents at 6.57 1/4. Results of today’s USDA report are as follows: Old crop ending stocks lowered to 852 mb, down from 872 mb from May’s report, and trade guess was 869 mb. New crop ending stocks lowered to 770 mb, down from 774 mb from May’s report, and trade guess was 783 mb. Old crop global ending stocks were lowered to 293.5 mb, down from 294.67 in May, and trade guess was 294.41. New crop global ending stocks were raised to 296.8 mb, up from 294.96 mb in May, and trade guess was 294.49. All US wheat production was raised to 1.898 bb, up from 1.872 bb in May, and higher than trade guess of 1.892. Winter wheat projected at 1.309 bb, HRW wheat projected at 772 mb and SRW projected at 336 mb. Globally – raises in projections for Australia, Canada, Russia, while projection lowered out of Argentina. As expected, the USDA once again project a higher record production of wheat to 794.44 mmt. Exports are still expected to be slim as US wheat still just isn’t competitive on the global tender right now. US wheat remains a concern for wheat in the Plains; however, the trade will likely wait to see what rains develop (or don’t) over the weekend and trade from there.

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Bryan Doherty

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