Ahead of the Open | June 28, 2021
GRAIN CALLS
Corn: unchanged to 6 cents higher.
Soybeans: 10-13 cents higher.
Wheat: 4 to 14 cents higher.
GENERAL COMMENTS:
Grain and soybean futures climbed overnight amid lingering concerns over dry conditions in parts of the U.S. Midwest. WTI crude oil futures were down slightly at around $74 a barrel, while the U.S. dollar index was little-changed.
As expected, rains fell across much the Midwest over the weekend, with the highest accumulation in southern and eastern areas and at least an inch of accumulation in north-central and northeast Iowa, areas of particular concern over lack of moisture.
There are still parts of the Grain Belt that need more rain, and warmer conditions are expected to return in July. “Southeastern Iowa, northwestern Illinois and northeastern Missouri were not as wet as expected, with rainfall of 0.25 to 1.15 inches,” World Weather Inc. said in a report today. “Restricted rainfall and added heat in the northern U.S. Plains, upper Midwest and Canada's Prairies in the coming week will worsen crop stress and raise the potential for greater production cuts in those areas,
The consultancy Strategie Grains now estimates the European Union will likely produce a 17 million metric tons (MT) rapeseed crop in 2021-22, a 180,000-MT increase from its May forecast and a 3.3% year-over-year rise.
News service Caixin recently reported that new, difficult to detect variants of African swine fever (ASF) are still circulating in China, leading to more mass infections on farms and resulting in stopped-up control measures.
China’s NDRC announced today that central and local governments will start buying pork for state reserves to support prices. Producer liquidation of herds due to continued ASF outbreaks this winter weighed on prices, and the resulting price drop also fueled panic selling. Plus, feed costs have soared. The situation has sparked talk smaller producers will stop farming, which could lead to shortages down the road.
In weekend export news, Egypt’s state grain buyer tendered to buy an unspecified amount of wheat from global suppliers. Jordan’s state grains buyer issued a new international tender to buy 120,000 MT of animal feed barley; it made no purchase in a previous barley tender last week. The Taiwan Flour Millers' Association bought an estimated 55,000 MT of milling wheat from the United States.
CORN:
Futures appear poised for a technical bounce from losses at the end of last week as traders watch weather forecasts and await USDA’s next crop condition ratings later today and the June 30 acreage report. USDA rated the U.S. corn crop at 65% “good” to “excellent” condition as of June 20, down from 68% a week ago and 72% a year ago. On Friday, December futures sank 16 3/4 cents to $5.19 1/4 a bushel, down 47 cents on the week.
The next USDA crop condition ratings will be expected to start showing improvement from recent rains in the Midwest. As of June 20, the U.S. soybean crop was rated 60% good-to-excellent, down from 62% the previous week and down from 70% for the same week a year earlier. The soyoil market will remain in focus after prices fell sharply last week in the wake of a Supreme Court ruling in favor of oil refineries attempting to gain exemptions from biofuel blending requirements.
WHEAT:
The spring wheat crop’s sagging condition will be a key driver in wheat markets this week, along with the accelerating winter harvest. USDA slashed its spring wheat rating to 27% good-to-excellent as of June 20, down from 37% a week earlier and far exceeding the 2-percentage point drop expected by analysts. Winter wheat was 17% harvested as of June 20, up from 4% the previous week and lower than the five-year average of 26%.
CATTLE: Steady to firmer
HOGS: Steady to firmer
Futures may find support from Friday’s USDA Cattle on Feed report, which showed May placements down nearly 7% from the same month in 2020 and below the 2.3% drop expected by industry analysts. August cattle on Friday rose $0.175 to $122.80 and December futures added $0.525 to $132.225.
Hog markets may look for follow-through from a firm close to last week, though cash hog prices and pork cutout values continue weaker trends. Carcass values averaged $116.89 on Friday, down from $122.62 a week earlier, according to USDA reports. Carcass cutout values averaged $110.04, down $120.65 for the week.
