Afternoon Market Recap for June 23, 2021

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Rains returning to the Midwest?

Improved forecasts continue to pressure corn, soybean prices

Another round of rainy weather is moving through the Corn Belt later this week, which kicked off another round of technical selling Wednesday that left corn prices mixed and soybean prices losing almost 1% by the close. Wheat contracts saw plenty of upside today, in contrast, with gains ranging between 1.75% and 3%.

More rain is heading to the central U.S., with large portions of Iowa, Missouri and Illinois set to gather another 3” or more between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. Drier weather is expected to reemerge in the upper Midwest and Northern Plains between June 30 and July 6, per NOAA’s new 8-to-14-day-outlook, with seasonally warm weather also likely in those areas as July rolls in.

On Wall St., the Dow slipped 16 points lower to 33,929, while the S&P 500 moved slightly higher to move just below all-time highs captured earlier this year. Energy futures mostly saw modest gains this afternoon. Crude oil picked up 0.25% to climb just above $73 per barrel. Diesel saw gains of nearly 0.5%, with gasoline jumping almost 1.75% higher today. The U.S. Dollar firmed fractionally.

On Tuesday, commodity funds were net buyers of soyoil (+2,000) contracts but were net sellers of corn (-15,000), soybeans (-12,500), soymeal (-5,000) and CBOT wheat (-5,500).

Corn prices were mixed amid an uneven round of technical maneuvering today. Nearby contracts moved modestly higher on strong demand fundamentals, but September futures dropped 0.9% after favorable forecasts drummed up some technical selling. July futures picked up 2.5 cents to $6.6225, while September futures faded 5 cents lower, to $5.48.

Corn basis bids were mostly steady but showed some variability across a few Midwestern locations, moving as much as 10 cents higher at an Indiana ethanol plant and dropping as much as 12 cents lower at an Illinois processor today.

Ethanol production saw modest improvements for the week ending June 18, moving to a daily average of 1.048 million barrels. That was also slightly above the prior five-week average of 1.034 million barrels per day.

Ahead of Thursday morning’s weekly export report from USDA, analysts expect the agency to show corn sales ranging between 7.9 million and 35.4 million bushels for the week ending June 17, showing fair confidence that totals could rise above the prior week’s tally of 11.6 million bushels.

Grain traveling the nation’s railways added another 19,617 carloads last week. Cumulative totals so far this year have reached 600,129 carloads, a 20.4% increase from a year ago.

Preliminary volume estimates were for 337,117 contracts, falling slightly below Tuesday’s final count of 353,356.

Soybean prices saw moderate losses after a round of technical selling Wednesday. Traders are watching the short-term forecasts, which predict plenty of rain later this week in some key production regions, such as Iowa and Illinois. July futures dropped 12.75 cents to $13.8175, with August futures down 7.75 cents to $13.4425.

Soybean basis bids held steady across the central U.S. on Wednesday. Farmer sales are expected to remain generally slow through the summer until supplies can be replenished at harvest.

Private exporters announced to USDA the sale of 12.1 million bushels of soybeans for delivery to China during the 2021/22 marketing year, which begins September 1.

Meantime, China’s state planner NDRC plans to investigate speculative buying and other activities that have caused a runup in grain prices. “The working groups will learn more about ... bulk commodity spot market transactions and carefully listen to feedback from midstream and downstream companies,” according to a statement. NDRC also plans to write up new rules concerning commodity price indexes to improve transparency.

China’s hog herd continues to improve, climbing 24% higher between January and May, per the country’s agriculture ministry, which asserts the country has nearly recovered from the ill effects of an African swine fever outbreak earlier this year.

Prior to tomorrow morning’s weekly export report from USDA, analysts think the agency will show soybean sales ranging between 3.7 million and 35.8 million bushels for the week ending June 17. Analysts also expect to see soymeal sales ranging between 125,000 and 350,000 metric tons, with soyoil sales reaching as much as 25,000 MT last week.

Preliminary volume estimates were for 184,424 contracts, slipping fractionally below Tuesday’s final count of 184,707.

Wheat prices jumped substantially higher on healthy demand trends and pervasive dry weather in the Northern Plains, which spurred a round of technical buying Wednesday. Spring wheat prices continue to show the most upside for now after quality ratings suffered a ten-point drop this past week. Today, September Chicago SRW futures gained 9.5 cents to $6.6450, September Kansas City HRW futures rose 15.25 cents to $6.2125, and September MGEX spring wheat futures climbed 21.25 cents to $8.04.

Ahead of Thursday morning’s export report from USDA, analysts expect to see wheat sales ranging between 7.3 million and 19.3 million bushels for the week ending June 17. Actuals will need to make it to at least the middle of that range to best the prior week’s tally of 10.6 million bushels.

Russian consultancy Sovecon has once again raised its estimates for the country’s 2021 wheat production by another 2.7% to 3.109 billion bushels, citing increased acreage and generally favorable weather. Russia is the world’s No. 1 wheat exporter.

Ethiopia issued an international tender to purchase 14.7 million bushels of milling wheat from optional origins that expires July 19. The UN is assisting on this tender as the country battles with drought, insect infestations and other problems.

Taiwan issued an international tender to purchase 2.0 million bushels of grade 1 milling wheat from the United States. The deadline for submissions is on Thursday, and the grain is for shipment in August.

Preliminary volume estimates were for 120,502 CBOT contracts, inching slightly ahead of Tuesday’s final count of 119,228.

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