Weekly Market Update 6/10/2021

Here is your weekly market update from the Garden City Co-op Grain Origination Team.

Trivia

1. Approximately how many kernels are in one bushel of wheat?

2. ​ What country music artist holds the record for the largest indoor concert in North America?

Answers at the bottom.

Market News

• Goldman roll ending today and corn spreads are feeling the pressure. 

• U.S. Dollar still flirting with lows around 90.00. DJIA still trading historical highs, though the DOW has seen some weaking from the top recently. NASDAQ did well today, reaching over 14,000 for the first time since May. 

• ​S&P 500 trading record highs today in spite of inflation data as consumer prices rose faster than expected as demand skyrocketed during the recovery. According to Yahoo! News, "Headline consumer prices were up by 5.0% over last year, topping Wall Street's estimates for 4.7% and accelerating from April's 4.2% rise...This also marked the fastest increase in the CPI since 2008."

• ​Today was the June WASDE report. More below in the commodities section and the snapshot, but it was mostly a snoozer and didn't hold any big surprises. The next big USDA report will be June 30th when they release the Quarterly Stocks and Acreage Report.

Weather

Hot, mostly dry weather dominates the forecast for the next week, although Sunday does have a chance for some thunderstorms across GCC country. Daytime highs are forecasted in the mid-90s with nighttime lows in the 60s.

Temperature 6-10 Day	Precipitation 6-10 Day

Corn

Hot, dry weather across the Corn Belt is pushing corn higher. Extended forecasts remain dry and above normal temperatures are expected throughout the northwestern half of the belt in the 6-10 day. June WASDE was about as expected, 2020/2021 carryout was decreased by 150 million bushels on increased ethanol and export demand. With no use changes for 2021/2022, ending stocks were also lowered by 150 million bushels by the decreased carry-in. World carryout for 2020/2021 was in line with trade estimates at 280.60 MMT and 2021/2022 was lowered to 289.41 MMT. The Brazilian corn crop was reduced on lower yield expectations for second-crop corn.  Monday’s Crop Progress report pulled corn conditions down more than the trade was expecting, to 72% good-to-excellent compared with last week’s 76%. The biggest reductions were seen in the north where rains have been missed: South Dakota, North Dakota, and Minnesota. Export inspections were lower this week, at 55.6 million bushels. China halved their shipments from the previous week, taking 21.4 million bushels. Export Sales this morning were disappointing at 7.5 million bushels of old crop and 1.0 million bushels of new crop – well below trade estimates. CFTC report on Friday indicated that managed money added 21,845 contracts to bring their net long position up to just shy of 290,000 contracts. Locally, basis is steady and attractive. Expect the market to continue to closely follow forecasts across the Belt.

Wheat

Volatile, choppy trade this week for HRW. Broken record in this week’s update, but weather is the primary headline in the wheat complex. Hot, dry weather in the Northern Plains is putting pressure on the spring wheat crop, with conditions falling 5% this week to put the spring wheat crop at only 38% good-to-excellent. On the flip side, we saw winter wheat conditions up 2% this week to 50% good-to-excellent. Rains further south have slowed harvest, but we should see harvest start to ramp up as Texas and Oklahoma dry out and hot weather matures the Kansas crop. June WASDE is mostly a snoozer for wheat, with old crop US carryout decreased to 852 million bushels on an increase in exports. New crop carryout decreased very slightly to 770 million bushels with higher yields offset by an increase in feed and residual use. Global old crop carryout was decreased to 293.48 MMT, but 2021/2022 global carryout increased on higher global production. Export inspections for HRW were slightly lower than the previous week at 2.1 million bushels, while export sales were okay at 3.9 million bushels of old crop. Friday’s CFTC report indicated that managed money decreased their net long position by 4,415 contracts to bring them to 19,086 contracts long. Basis remains historically strong across our region.

Soybeans

Like corn and wheat, weather is in the driver’s seat of the soybean market. There is some rain in the forecast for bean growing areas in the northwestern Corn Belt, which would be welcome as the area is in desperate need of moisture and heat relief. Time will tell if those rains do come. Tight carryout and strong demand outlook really puts the pressure on this year’s crop. Today’s WASDE report saw old crop carryout increased by 15 million bushels based on a lower crush forecast. With no changes to 2021/2022 use, new crop carryout was also increased 15 million bushels. Old-crop carryout was increased to 88.00 MMT, on an increase in the Brazilian crop size. 2021/2022 carryout was also increased by 92.55 MMT. This week brought our first round of crop condition scores, which while good, were not as good as expected, coming in at 67% good-to-excellent. USDA pegs the crop at 90% planted and 76% emerged. Export inspections were ahead of last week at 8.7 million bushels. Export sales were within the range of estimates, albeit on the low side, at 0.6 million bushels of old crop and 3.9 million bushels of new crop.

Milo 

Milo is higher on the week, following the rally in corn futures driven by weather. USDA estimated the U.S. milo crop at 52% planted on Monday, a slower pace than last year’s 62% planted at this time and the 5-year average of 59%. However, crop conditions came in at 74% good-to-excellent, blowing last year and the 5-year average out of the water. Export inspections disappointing, with no bushels shipped. Export sales this morning were also a letdown, with a net cancellation of 0.2 million bushels of old cro and no new crop bushels sold. Local basis is steady.

Trivia Answers

1. According to the National Association of Wheat Growers, there are about one million individual kernels in a bushel of wheat.

2. George Strait. On June 7, 2014 his "final show on his final tour" at AT&T Stadium in Arlington, TX drew 104,793 concert goers.