John Wesley Willson

Jul 28, 2021

Highlights

Equity markets were mixed on Wednesday, as the trade was anxiously awaiting comments by Federal Reserve Chairman Powell. An overall quiet day in the Ag markets as well as, with a continuation of two-sided rangebound trade. Energy markets are slowly recovering from the sharp sell-off last week that was sparked by growing COVID concerns.

  • Federal Reserve Chairman Powell announced today that the benchmark rate would be held near zero as the economy continues to improve.
  • President Biden’s American Families Plan has proposed a new transfer-tax that would have major implications on the transition of farms and ranches across the country.
  • A bipartisan agreement has been reached in determining what major issues need to be addressed in an infrastructure bill that could be put to a vote as early as tonight.
  • Outside markets as of 3:12 PM Central: Sep crude oil at $72.26 up $0.61; U.S. Dollar index at 92.2610 down 0.1710; Gold at $1807.10 up $7.30; Dow at 34,940.93 down 127.59 points. 

 

Corn

It was a relatively quiet day in the corn market, resulting in an inside session. December futures tested resistance at the $5.52 level but were unable to settle above the mark. When and if that occurs, it will resume the recent uptrend. The market is closely monitoring any weather issues, including reports of a potential derecho. The market is clearly in a wait and see mode and if cool and wet weather verifies into early August, prices will likely trend lower into harvest, barring a sizeable increase in export business between now and then.

  • Closes: Sep at $5.49’2 up 0’4; Dec at $5.49’0 up 2’6; Mar at $5.56’6 up 3’0.
  • There were rumors that china stepped in and bought a sizeable amount of corn. We will look for this to be confirmed in tomorrow’s report.
  • Weekly ethanol stocks rose 215,000 BBLS to 22.73 MLN BBLS.
  • Tomorrows weekly export report is expected to show -100-300 tmt for old crop and 100-300 tmt for new crop.
  • Spreads: U21/Z21 0’4 inverse, Z21/H22 7’6 carry, Z21/K22 11’6 carry.

 

Oilseeds

 Soybean futures are trading in clearly defined range of $13.71-$13.50. These two levels mark resistance and support and will help determine future direction when either level is broken. There continues to be concern about potential adverse weather as we enter what is typically the most important month in determining the soybean yield. Overall, the market has a softer tone as managed money continues to head to the sideline as we enter a seasonally weaker market. Soybean oil was unable to climb back above the key 65.00 level that would open the upper limits of the price range and support soybean futures in what would be a counter seasonal move at this point in the year. Until threatening weather forecasts emerge, expect rallies to be sold.  

 

  • Closes: Aug at $14.32’0 up 13’6; Sep at $13.70’2 up 3’2; Nov at $13.61’0 up 1’4.
  • The weekly export report will be released tomorrow, and the trade expects -100-100 tmt for old crop and 200-400 tmt.
  • Spreads: Q21/X21 70’0 inverse, U21/X21 8’4 inverse, X21/F22 4’6 carry.

 

Wheat

The wheat complex built upon its strength yesterday as the Minneapolis contract led Chicago and KC higher. The results of the spring wheat tour are causing the market to add back in some risk premium as the poor conditions are verified and the yields are substantially less than the five-year average. There will still be some seasonal pressure on the wheat complex, especially if corn trends lower in the coming months. All three contracts appeared to be oversold in the short term and this bounce was needed to establish some balance in the market. Look for a higher bias to wheat prices as the comments coming out of the spring wheat tour remain on the bullish side.

  • Sep closes: Chicago at $6.88’6 up 14’2; Kansas City at $6.59’4 up 18’0; Minneapolis at $9.03’6 up 25’4.
  • The spring wheat tour came up with a calculated average for spring wheat yield at 29.5 bpa on the first day. Throughout today, reports have surfaced of yields from 18 bpa to 50 bpa.
  •  The weekly export sales will be reported tomorrow, and the trade is looking for 350-600tmt in new crop sales.
  • Spreads: Chicago U21/Z21 9’0 carry, Kansas City U21/Z21 11’2 carry, Minneapolis U21/Z21 13’0 inverse.