MARKET SUMMARY 6-30-2021

The USDA Planted Acres report held some surprises today, as planted acreage totals fell short of market expectation, sending grain prices strongly higher. In soybean acres, the market was looking for 88.9 million acres, and totals came in at 87.55 million. In a market dealing with a tight supply picture and good demand, the lack of growth in planted acreage from the March estimate was an extremely bullish report. This low acreage total will keep supply projections very tight well into next year. In addition, when breaking down the acreage totals, the states with gains in soybean acres were strongest in North Dakota, South Dakota, and Minnesota. These states are dealing with weather issues, which could put a portion of these soybean acres in jeopardy regarding production. With the strong close today and the bullish energy in the market with the fundamentals, the soybean market may be poised for another strong rally into the summer months.

CORN HIGHLIGHTS: Corn futures finished 25-1/2 higher in July at 7.20 with a high of 7.43-1/4 posted, which took out the previous contract high of 7.35-1/4. September closed limit higher (40 cents) at 5.99-1/4 and December up 40 cents at 5.88-1/2, its highest close since June 14. Bullish reports and bullish reactions to favorable stocks and acreage sent the markets sharply higher from double digit losses prior to the report release. Short covering and new buying to the reports was noted. Today’s reports also indicate that supply numbers will likely continue to tighten and that there is little to no room for error with this year’s crop. Considering most of the acreage increases occurred in South and North Dakota, states that remain critically dry, it is likely that the market may have more upside potential. North Dakota struggled with prevent plant last year but this year increased corn acreage 84.6% to 3.6 million. South Dakota added 21.2% at 6,000,000 acres. The most recent 6-to-10-day forecast suggest this region of the country remains above normal in temperature and below normal in precipitation. Freeze conditions in Brazil were again noted overnight with some arguing anywhere from 100 to 200 million bushels may have been jeopardized.

SOYBEAN HIGHLIGHTS: Soybean futures rocketed higher, renewing bullish enthusiasm on the heels of friendly stocks and acres from today’s USDA reports. Soybeans stocks came in at 767 mb, compared to the average estimate of 795 mb. Acreage came in at 87.60, the same as last month but below the pre-report estimate of 89.15. At day’s end, July futures finished at 14.50, up 90-1/4 cents with November gaining 86-1/2 to 13.99. Sharp gains in soymeal, oil, corn, and wheat likely added additional support for prices. Bottom line, the reports were unexpectedly friendly, turning double digits losses prior to the report to massive gains. The trading range for November soybeans was 1.16-1/2. Less than ideal weather conditions and warm and dry forecast for the northwestern regions of the Midwest, coupled with some areas of too much rain in the center and southern Midwest, suggest that prices may be on the verge of extending even higher. Today’s report indicated that acreage increases were noted in South and North Dakota. North Dakota picked up 25.2% with a total acreage estimate of 7.2 million and South Dakota picked up 11.1% at 5.50 million acres. In total, 36.3 million acres between the two states, which remain in generally dry to very dry conditions. Nebraska added 3.8%, while Minnesota tacked on 4.1%, Iowa 5.3%, and Wisconsin 10%. Last year saw a total of 83.08 million acres. While acres are up from last year, stocks and acres on this report are lower than expected. Today again sheds light on tight inventory and continues to suggest no room for error producing this year’s crop.

WHEAT HIGHLIGHTS: Sept Chi up 33 1/4 cents at 6.79 1/2 and Dec up 31 3/4 cents at 6.85. Sept KC wheat up 32 at 6.59 and Dec up 31 cents, closing at 6.67. Wheat followed corn’s up limit lead today, posting sharp gains amidst a friendly viewed USDA report. The USDA reported US wheat acres for 2021 will be 46.7 million, with a carryout for 21/22 near 760 million – this is up 10 million from June 1 estimates. Lower stocks suggest higher demand and offset the higher acres. Weather maps added rains for dry US northern Plains after July 7; noon maps removed the rains. Tomorrow and this week will be key to see if funds increase buying after today’s report and weather forecast on the horizon.

Author

Bryan Doherty