Market Summary 6-8-2021

Crude oil prices are trading at the highest level in two years and trying to break through the $70 per barrel price level. Since the start of the year, crude oil prices have been supported by strong demand, as global economies are ramping up after the COVID-19 pandemic. On top of the improved demand, overall supply has been tight. Production has been slow to engage and fill the demand void. This has pushed the oil market back through the $60/barrel levels and surging through 2019 price levels. Even with the talk of Iranian oil coming back into the market, the strong recovery in fuel demand may outweigh the supply. The Energy Information Association is forecasting a third straight week of U.S. crude inventory declines. Crude oil prices are looking to work higher and cross the $70/ barrel price levels, leaving the test of the 2018 highs in focus.

CORN HIGHLIGHTS: Corn futures climbed higher again today, finishing 7 higher in September, closing at 6.28, and December 6-3/4 firmer at 6.09-1/2. July gained 0-3/4, finishing the session at 6.80. The most recent 6-to-10 day forecast pretty much has the entire Midwest above normal in temperature and below in precipitation. The bigger picture suggests less than ideal conditions and expectations that next week’s ratings will indicate another decline. Yesterday’s ratings indicated 72% good to excellent, down 4% from last week. If there is a time of year to experience dry conditions, there is some argument late May and early June is best before it is too hot. There is also time for roots to grow deeper. The problem this year is that it has been generally warmer than average the last several weeks and a lack of subsoil for large portions of the Midwest, especially in the west and northwest. Elsewhere support came from strength in soybeans which finished with double digit gains and firmer wheat prices. On Thursday, the USDA will release the monthly supply and demand report. Much attention will be paid to the Brazil corn crop as most expect to see a downgrade. Last month the USDA estimated total Brazil production at 102 mmt. The range of estimates is from near 89 mmt to 102 mmt.

SOYBEAN HIGHLIGHTS: Soybean futures rallied, finishing with gains of 14-1/2 to 19-3.4 cents as July lead today’s gainers, closing at 15.80. New crop November ended 17 higher at 14.57. Meal futures gained 2.00 to 3.00, and oil picked up well over 100 points with most futures closing at new contract highs. The latest 6-to-10-day forecast suggests above normal temperatures and below normal precipitation for the entire central United States. This could stress some of the crop that is already feeling a lack of moisture and above normal heat. Good demand continues to underpin the oil market and, consequently, it is the leading component of the soybean complex. Our bigger picture perspective suggests that weather will dominate the near-term forecast, and with little chance for rain in parched areas, the market should find additional support as the week wears on. Nonetheless, it is that time of year where the market is one forecast or unexpected rain event away from crumbling. Maintain a balanced approach to marketing. Planting is 90% complete verses the 5- year average of 79%. Make sales if behind. Rallies were meant to be sold.

WHEAT HIGHLIGHTS: Jul Chi up 5 cents at 6.85 and Dec down 4 3/4 cents at 6.99 1/4. Jul KC wheat up 2 1/2 cents at 6.32 1/2 and Dec up 1 cent at 6.49 3/4. Sep Minneapolis wheat down 12 1/4 cents at 7.76. There are some isolated storms in North Dakota today and possibly more on Friday, though the forecast remains hot and dry over the next two weeks. With a rating of 32% good to excellent there, the damage may already be done. Spring wheat crop ratings are just 38% good to excellent – the lowest since 1988. Winter wheat conditions improved to 50% good to excellent. European markets continue to see fewer wheat exports than what the USDA is saying. The Texas harvest is picking up, and temperatures are expected to be over 100 degrees in West Texas and the Panhandle on Thursday. From a technical perspective, Chicago wheat is consolidating, and the market is looking for news. Additionally, stochastics have upward momentum but do not offer any definite buy or sell signals at this time.

Author

Bryan Doherty