Market Summary 6-16-2021

The soybean oil market has experienced massive price swings recently and finished the day trading $3.50 limit lower on all front-end contracts. Since peaking at $73.74/pound on June 10, soybean oil has lost over $11.00/ pounds. General weakness in the edible oil markets has triggered a round of strong profit taking in the soybean oil complex as well. In addition, a recent announcement by President Biden on the possibility of cuts to the regulations on the use of biofuels in blending has added to the selling pressure. The use of soybean oil for biodiesel was a possible source of demand beyond the food and industrial use of the product. The combination has sent soybean oils prices on the verge of a strong reversal lower, and topping signal on the charts. The soybean market is acting on the defensive with soybean oil, as a large part of the support in soybean prices has come from the historic move in soybean oil.

CORN HIGHLIGHTS: Corn futures finished mixed in a day where both bulls and bears were in charge, yet by the close, prices were not much different than yesterday. July futures gained 5-1/2 cents to end the session at 6.73 but finished well off the high of 6.87-3.4 and the low of 6.63-3/4. There was a sale of over 100 mt to unknown destinations for the 2021/2022 marketing year. December ended 1-1/4 lower after a 19-3/4 cent trading range with a high of 5.85-3/4 and low of 5.66. Volatility continues to remain high, and the market seems to change nearly hourly as forecasts change. Most weather models are suggesting moisture early next week over the majority of the eastern 2/3 of the Midwest. However, the European model continues to look drier. The western regions of the corn belt continue to look as though rainfall totals could be light or nonexistent. We are at a time of year where prices have difficulty moving higher unless conditions are either brutally dry or wet. Many would argue they are suffering from brutally dry conditions as high temperatures and somewhat breezy conditions continue to take its toll. A rally in the US dollar and another huge loss for soybean oil were also contributors to today’s uncertainty.

SOYBEAN HIGHLIGHTS: Soybean futures plunged again today on a limit lower move in soybean oil, higher dollar, and lack of positive news. Despite another day of high heat and lack of rain, the market is seemingly not concerned with crop conditions. Most weather models put a cooler and wetter outlook in the forecast for next week. Declining world vegetable oil demand and spread traders exiting long oil and short meal were features in today’s markets. November futures closed 30-1/4 cents lower at 13.43-1/4 and nearby July at 17-1/4. Like the corn market, soybean futures tend to move lower the last half of June and into early July after a price rally. Obviously, there is no guarantee that trend must hold true this year, but a recovery in the US dollar and continued liquidation of long positions by managed money, coupled with a favorable weather forecast for next week continues to pressure prices. More importantly, there has been a lack of old crop demand, and China seems content remaining on the sideline for new crop purchases.

WHEAT HIGHLIGHTS: Jul Chi up 1 1/4 cents at 6.62 3/4 and Dec down 1/4 cent at 6.72. Jul KC wheat down 2 cents at 6.10 3/4 & Dec down 1 1/4 cents at 6.28 1/2. Wheat futures were a mixed bag today, as volatile weather trade in corn flowed over into the wheat sector. Rains across the US SRW areas could slow harvest, but conditions are favorable for above average yields. Hard red wheat could be above USDA latest guess. Domestic feeding is thought to be record high. Current drought could lower US HRS crop ratings even further and final crop size. Exports will be out tomorrow; current trade guess is 200-350K mt versus 325K mt last week. Hot temps continue to threaten the current crop. Kansas is expected to see 100 degree-plus weather for the next five days. Not much rain is projected for spring wheat areas; Montana is still a very key area of distress, with temps expected to be as high as 106. Spring wheat areas in Russia remain dry and are expected to be hot over the 6-10 day outlook.

Author

Bryan Doherty