Afternoon market overview for June 10, 2021

Soybean prices sour on Thursday, wheat prices mostly higher

This morning the USDA released its report on Agriculture Supply and Demand Estimates for June (WASDE). (Click here for our full coverage and analysis.) The report showed historically strained corn stocks, which helped spark enough technical buying to push prices up about 1% by the close of trading. Wheat prices also saw modest gains today, but soybean, soy flour and soybean oil futures fell after some technical sales.

Much of the corn belt should have between 0.25 inches and 0.75 inches of additional rainfall between Friday and Monday, according to NOAA’s latest 72-hour cumulative rainfall map. Warmer-than-normal conditions are expected to continue in the Midwest and Plains between June 17 and 23, according to NOAA’s latest 8-14 day outlook. Seasonal dry weather is also expected for most of the country during this time.

On Wall Street, investors’ fear of inflation eased somewhat despite new evidence of rising costs from the consumer price index, which was up 5% yoy. The Dow gained 105 points in afternoon trading to hit 34,552 points and the S&P 500 hit a new record high today. Energy futures were slightly higher, with crude oil up about 0.5% this afternoon, back above $ 70 a barrel. Diesel and gasoline achieved similar percentage increases. The US dollar fell slightly.

On Wednesday, commodity funds were net buyers of corn contracts (+9,500) but net sellers of soybeans (-11,000), soybean meal (-3,000), soybean oil (-3,500) and CBOT wheat (-3,000).

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Corn prices surged around 1% on Thursday on a round of technical buying sparked by historically strained domestic stocks and more hot, dry weather for the central US later this month. The July futures gained 8 cents to $ 6.9875 and the September futures rose 5.5 cents to $ 6.3750.

Corn-based bids were stable in most of the Midwest locations on Wednesday, but they gave a dime higher at a river terminal in Illinois today.

The USDA cut ending corn stocks by 150 million bushels in 2021/22 after seeing a 75 million bushel increase in ethanol demand and a 75 million bushel increase in export estimates. That was more bullish demand than analysts expected, leaving closing stocks at 1.357 billion bushels versus the average trade estimate of 1.423 billion bushels. Inventories have fallen to their tightest levels since 1995/96.

Export sales of corn for the week ended June 3 saw sales of old grain decrease 64% from the week, which amounted to 7.5 million bushels. Sales of new crops only brought another million bushels for a total of 8.5 million bushels. That was below the full range of trade estimates, which ranged from 11.8 million to 43.3 million bushels. At 2.083 billion bushels, the cumulative sums for the 2020/21 financial year are still well above the previous year’s rate.

Corn export shipments fell 15% below the previous four-week average to 64.8 million bushels. China was the number one destination at 21.4 million bushels.

Brazil’s Conab now estimates the country’s total corn production for the 2020-21 season at 3.795 billion bushels, down 9.4% from its May estimate after much drought-related stress in recent weeks. That balance would also represent a 6% year-over-year decrease if realized.

The European consulting firm Strategy Grains has slightly raised its forecast for EU corn production in 2021 and now stands at 2.571 billion bushels.

US weather forecasters predict that ENSO-neutral conditions will persist through at least the summer, with a low probability that an El Niño or La Niña pattern will develop in the next few months.

Preliminary volume estimates were 570,643 contracts, increasing moderately ahead of Wednesday’s final count of 480,515.

Soybean prices faded Thursday, closing today’s session on double-digit losses after a round of technical selling, partly triggered by unexpectedly high stock prices. The July futures fell 19.25 cents to $ 15.4325 while the August futures fell 13.25 cents to $ 15.0975.

Soybean-based bids were largely stable Thursday in the central US, but were 5 cents lower at a river terminal in Illinois and 6 cents lower for an elevator in Ohio today.

Closing soybean stocks for 2021/22 rose faster than expected, rising to 155 million bushels versus the average trade estimate of 146 million bushels. However, these are still historically scarce stocks. Ending world stocks for 2021/22 were also above analyst estimates, rising from 3.347 billion bushels in May to 3.400 billion bushels this month.

Soybean exports recorded 4.4 million bushels of old and new crop sales last week, which was on the lower end of the trade estimates, which were between zero and 22.0 million bushels. The cumulative sums for the 2020/21 fiscal year, at 2.123 billion bushels, are still almost 800 million bushels ahead of the previous year’s pace.

Soybean export shipments fell 2% below the previous four-week average to 10.2 million bushels. Indonesia was the number one destination with 3.1 million bushels.

Brazil’s Conab modestly increased its latest estimates for the country’s soybean production in 2020-21 to 4.992 billion bushels now. If realized, this would be an increase of 8.8% compared to the previous year. Exports for this marketing year are expected to exceed 3.257 billion bushels.

Preliminary volume estimates were 305,068 contracts, a moderate move ahead of the final count of 242,091 on Wednesday.

Wheat prices trended higher for the most part today despite a mixed mix of USDA supply and demand data this morning. Spring wheat contracts benefited from some bargain purchases after falling significantly in the previous three sessions. Today, the Chicago SRW futures fell 0.75 cents to $ 6.8825 in September, the Kansas City HRW futures fell 4.5 cents to $ 6.4775 in September, and the MGEX summer wheat futures fell 12.25 in September Cents to $ 7.82.

The USDA’s wheat outlook in today’s WASDE report suggests “bigger supply, higher domestic consumption, unchanged exports and slightly lower inventory levels.” Closing stocks for 2021/22 decreased to 770 million bushels from 774 million bushels in May, as opposed to the average trade estimate of 783 million bushels.

Additionally, the USDA predicts total wheat production this year will reach 1.898 billion bushels, an upward revision of 26 million bushels after the agency saw an increase in HRW and SRW production. All wheat yield estimates are 50.7 bushels per acre, 0.7 bpa higher than May’s estimates.

Wheat exports reached nearly 12.0 million bushels at the beginning of the 2021/22 marketing year, which began on June 1. Another 30.8 million bushels were carried over from last season. Total exports for the recently concluded 2020/21 marketing year were 911.5 million bushels. Wheat exports totaled 5.0 million bushels in the first three days of June, with Japan, the Dominican Republic and Thailand being the top three destinations.

Russian consultancy ICAR has raised its estimates for the country’s wheat production by more than 73 million bushels in 2021, bringing the total to 3.013 billion bushels, but did not address this upward revision. Russia is the world’s largest wheat exporter.

The European consultancy Strategy Grains has raised its estimates for EU common wheat production in 2021 compared to the previous month by 1.2% to 4.817 billion bushels. The export estimates for the 2021/22 marketing year also rose to 1.051 billion bushels.

Japan bought 6.7 million bushels of food-grade wheat from the United States, Canada and Australia in a regular tender that closed earlier today. Of the total, 52% was obtained from the USA. The grain is shipped in August.

Filipino importers bought 1.8 million bushels of feed wheat, likely from Australia, in a tender that closed today. The grain is dispatched in August.

Tunisia also purchased 1.8 million bushels of optional sourced common wheat in an international tender that closed today. The grain will be shipped in July.

Preliminary volume estimates were 199,108 CBOT contracts, trending moderately higher than Wednesday’s final count of 162,699.

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