TFM Daily Market Summary 8-12-2021


The USDA Crop Production report surprised the market by shaving 4.9 bushels/acre off the corn yield for the 2021 crop. The traders in the corn market were looking for some adjustment lower, as drought conditions plague the Northwest and heavy rain stresses crops in other regions. The expectations were for yield to drop to 177.5 bushels/acre, but the results of the producer survey, providing the USDA the information had a more negative tone overall. As expected, the biggest losses occurred in the northern Plains, as those state saw the largest percentage drops year over year. Minnesota lost 13.5%, South Dakota was down 17.9% and North Dakota was 23.7% under last year’s totals. In terms of the corn belt, Illinois was up 11.5% over last year, as the crop has improved in that state over the recent weeks and is forecasted to reach a record high. The eastern corn belt has seen overall favorable growing conditions as states of Indiana, Ohio, Michigan, Pennsylvania and New York are projected to post record yields as well. It is still August, and there is still a lot a variability that can change in the corn crop, but initial indications are the crop has been lowered off the trend line yields as weather has had its impact this growing season.

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CORN HIGHLIGHTS: Corn futures finish 10-3/4 cents higher in September at 5.67 and 14 firmer in December, closing at 5.73-1/4. Sharp gains occurred shortly after the USDA report was released with December gaining 35 cents, reaching a high of 5.94-1/4. Yield expectations were significantly different from the actual with today’s figure at 174.6 bushels an acre versus last month 179.5 and the pre-report average estimate of 177. This is a farmer surveyed report so next month will be what is termed in objective report in which there will be actual field surveys. Between now and then the Pro Farmer tour will also occur providing more information for the market to digest. Projected carry out for the 2021-22 season is forecasted at 1.242 billion bushels as compared to last month’s estimate of 1.432 billion. Other notable changes were an increase to beginning stocks by 35 million bushels and a reduction in feed and residual use by 100 million bushels. Exports for the year ahead are now forecasted at 2.4 bb, down 100 bb from last month. Projected world carryout was reduced 6.5 million metric tons at 284.63 mmt with notable changes in the Brazilian corn crop due to drought stress. Weekly export sales at 14.9 mb were neutral, bringing the year-to-date total to 2.760 bb. Today the USDA dropped forecasted sales for the 2021-2022 marketing year by 75 mb to 2.775, which brings year to date sales to 99.4% of expected sales.

SOYBEAN HIGHLIGHTS: Soybean futures closed uneventfully, with September unchanged at 13.47-1/2 and November gaining 1 cent to finish the session at 13.47. Despite a relatively quiet close, market volatility was again high with November futures reaching 13.69 -1/2 before giving up 28 cents by the end of the session. On the surface, today’s USDA report aligned itself with corn in that yield was lower than anticipated at 50 bushels per acre versus last month’s 50.8 bushels. Adjustments to line items raise the 2020-21 carryout to 160 mb and unchanged at 155 mb for the year ahead. Projected world carryout for the year ahead came in at 92.8 million metric tons, above the July estimate of 91.5 million and above the average estimate of 91.5 million. As we look ahead, weather will continue to play a dominant factor. The most recent forecasts suggest the western corn belt to receive above normal precipitation, a welcomed outlook for those who remain moisture deficit. Both bulls and bears have their arguments, and both may be legitimate. Regardless of today’s trade, stocks remain tight and leave little room for error when it comes to production. Yet, recent weeks have exemplified that high price curbs demand.

WHEAT HIGHLIGHTS: Sept Chi up 26-1/2 cents closing at 7.53 1/2 and Dec up 25 1/2 cents closing 7.64 3/4. Sept KC wheat up 28 1/2 cents at 7.38 3/4 and Dec up 28 3/4 cents closing at 7.50 3/4. Today’s report was friendly fire for all grains, but friendlier than expected for wheat. US wheat production numbers were cut by 49 mb to 1.697 bb, mostly with production losses in red winter and white wheat. Yield was lower by 1.8 bpa from July’s estimate at 51.8 bpa. US ending stocks came in at 627 mb. Although we expected world wheat numbers to be trimmed, no one saw the USDA making slashes like they did. Canada fell to 24 mmt, and Russia dropped to 72.5 mmt from the 85 mmt in July. Most analysts projected a cut to 80 mmt, but certainly no one saw them slicing production that much today. Australia was boosted by 1.5 mmt and Ukraine by 3 mmt – but not enough to offset the decreases for Russia & Canada. World ending stocks are projected at 279 mmt – lowest in five years.

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Amberlee Bratcher

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