MARKET SUMMARY 8-17-2021
The lack of demand for U.S. corn is keeping a lid on market prices. Even with the USDA crop production report last week and the 4.9 bushel cut in yield projections, a lid has been on top of the futures market. The biggest concern is demand and the overall lack of export business. The soybean market has seen nine consecutive days of export sales announcement, the corn market has been quiet. In comparing the U.S. to our South American competitor, Argentina is still the cheapest corn on the export market, and they have been absorbing the global export business. This puts the U.S. market stuck in place. Fundamentals are pointing to a higher market, but until the demand starts to show up, prices are unlikely to rally. This keeps the corn market in a more potential sideways trading range, like was experienced in July into August, but just at a higher level, due to the tighter supply. At this time, until there is some news to push this market one way or another, sideways seems to be the direction.
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CORN HIGHLIGHTS: Corn futures tried to rally on the overnight, but gave up gains early in the session. September futures lost 6-1/2 cents to close at 5.58-1/4 and December down 5-1/4 to end the session at 6.63-1/2. The Pro Farmer Tour found a 185-corn yield in Ohio vs the USDA’s 193 (last year was 171) and South Dakota 151 corn yield vs the USDA’s 133 (last year was 162). This drops the Ohio number by 30 million bushels, but would increase South Dakota by 100 million bushels. A stronger US dollar was not helpful for bullish traders. US wheat prices were also sharply lower today. China has been a noted buyer in soybeans, but absent from the corn market. It is expected they could need copious amounts of corn in the year ahead, but like most end users, are waiting to see what this year’s crop looks like for the northern hemisphere. Most likely there will be some harvest pressure on prices, but unless yield numbers substantially increase, perhaps not a lot. The Pro Farmer did find a better-than-expected yield in South Dakota, yet one could make the argument that in areas they surveyed timely rains were a factor. We stick with our bias that the market is likely rangebound and that farmer selling will pick up on rallies, yet we don’t believe farmers are able to aggressively sell as they have already sold a substantial portion of the upcoming crop. Prices offered significant opportunity and most took advantage. A carrying charge is beginning to develop in the market for the first time in many multiple months. View this as an opportunity to get paid for storing corn and if behind on sales you use deferred months to contract.
SOYBEAN HIGHLIGHTS: Soybean futures found support from another round of export sales announced, as well as reduction in crop ratings. September futures lost 7-0 cents, closing at 13.69 and November down 6-3/4 to 13.61-1/2 after trading 11-1/2 higher to 13.79-3/4. Weekly crop ratings saw a decline of 3% in the good and excellent category, now at 57%. Announcements of export sales of 198,000 metric tons of soybeans for delivery to China during the 2021/2022 marketing year; and sales of 132,000 metric tons of soybeans for delivery to unknown destinations, also for the 2021/2022 marketing year were viewed as supportive and continue to suggest that importers are now turning to the US for their needs. Nonetheless, prices still struggled today in a continued problematic fashion of being unable to spur much follow-though buying. The most recent NOPA crush at 155.105 mb was a disappointment, yet also could underscore just how much buyers are waiting to purchase new crop as efforts this year to secure inventory, since May, have resulted in paying higher prices. We believe that farmer selling remains light. Small gains in soymeal were noted with soybean oil losing 75 plus points to act as an anchor on soybean futures. Weaker palm oil prices were a drag on soybean oil futures today, yet from a big picture perspective are toying with new contracts highs.
WHEAT HIGHLIGHTS: Sept Chi down 26 cents, closing at 7.34 1/2 & Dec down 26 1/2 cents, closing at 7.48 1/2. Sept KC wheat down 19 3/4 cents at 7.16 3/4 & Dec down 20 cents, closing at 7.29 1/4. Today is one of those days, you ask yourself, “What is happening in the wheat market?” The honest answer is not much, and likely just profit taking with little “new” bullish news to push things higher, as corn & soybeans are also in a lackluster trade pattern since last week. Some pressure could be attributed to the northern Plains set to get some rains later this week, but spring wheat harvest at least 58% as of yesterday’s Crop Progress report, and that rain isn’t going to help the crop at this point. Paris & Black Sea cash values are still rallying following USDA’s report last week, combined with crop conditions in France being too wet and quality is falling.
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Author
Bryan Doherty