Don McGugan

Associate Portfolio Manager, Wealth Advisor, Investment Advisor and Financial Planner

Tel: 519-354-7060
Tel: 519-627-8782
Tel: 519-344-8181
Fax: 519-354-5522
Toll Free: 866-575-0255

Address

BMO Nesbitt Burns
100 Ouellette Avenue
Suite 1100
Windsor, ON
N9A 6T3
Map

BMO Nesbitt Burns
819 St Clair Street
Chatham, Ontario
N7M 5J7

BMO Nesbitt Burns
770 James Street
Wallaceburg, Ontario
N8A 2P5

BMO Nesbitt Burns
429 Exmouth Street
Sarnia, Ontario
N7T 5P1

Contact Me

Review of Agriculture Commodity Prices - June 2021

Review of Agriculture Commodity Prices – June 2021


Corn

The cash price of corn fell 3.4% in the month of June and us up 116% since May 31, 2020

The largest issues in the corn market in June were weather and production.

In weather, Frost is seen as hurting the Brazilian corn sector.  Unseasonably cool weather in the state of Parana (the 2nd largest grain productizing state in Brazil) in the last week of June could have a significant impact on the corn development there.[1]  This area was already impacted by low rainfall and the average corn loss will be 50 to 60%.[2]

In production, the international Grains Council, raised the global corn production by 7 million tonnes to a record of 1.201 billion tonnes.[3]  The reason given was increased production in China.  In the annual Acreage report, the United States Department of Agriculture updated its US corn planted area for 2021-22 at 92.69 million acreas – this is 1.6 milllion acreas higher than the March Planting Intentions report, but lower than the average market expectations of 93.8 million acres. [4]

The safrinha corn harvest in Brazil is also behind compared to last year – corn was planted late and is also being harvested late.[5]  Also Brazil’s 2020.21 corn crop forecast is expected to be 94 million tonnes, a decrease of 8.5% compared to last year due to drought.[6]  Alternatively, Argentine is enjoying higher than expected corn yields – the Buenos Aires Grains Exchange increased its 2020/21 harvest estimate to 48 million tonnes from 46 million tonnes.[7]

Result: the outlook for corn is strong.

Soybeans

The price of soybeans fell 11.98% in June and is up 98% since May 31, 2020.

The largest issue in the soybean market in June is production, trade and farmer support programs.

In terms of production, USDA sees 2021 acreage at 87.6 million vs. the trade’s expectation of 89.0 million and the USDA’s March estimate of 87.6 million.[8]  The May National Oilseed Processors Association announced that soybean crush fell short of market expectations for a fourth straight month – the association announced that memers crushed 163.521 million bushels of soybeans in May up from 160.310 million bushels in April and down from 169.584 million bushels in May 2020.[9]  Conversely, soybean crushing in Argentina reached a 6 year high in April, when 4.2 million tonnes of soybeans were processed.[10]

The dry weather in South America is still impacting the Parana River – the water depth of this river is still low and not allowing for ships to fill completely when products are exported.[11]

In terms of trade, Brazilian exports of soybeans were 7.56 million metric tonnes of soybeans in the first 3 weeks of June, compared to 9.36 million metric tonnes of soybeans exported in the first 3 weeks of June in 2020.[12]  The reason given is that farmers are not selling their beans to processors or exporters.

Finally, the European United announced in late June that they agreed to a reform of the farming subsidy program, after a 3-year negotiation.  The common Agricultural Policy will spend 387 billion euros on payments to farmers and rural development from 2021 – 2027.[13]

Outlook : the outlook for soybeans also looks strong.

Wheat

The cash price of wheat was down 6.78% in June and is up 24% since May 31, 2020.

The biggest issues in June in the wheat market is production.

The European United states that their soft wheat exports reached 25.38 million tonnes by June 27th, which is down from 34.64 million tonnes at the same point last year.[14]  Part of the reason for this decline is due less wheat production in the 2020/21 marketing year.

Wheat in the European Union is expected to be strong with crop conditions in French and German to be strong.[15]  Wheat in Russia is also expected to be up 1.5 million tonnes to 82.4 million tonnes this year.[16]  Finally, farmers in the state of Rio Grande do Sul in Brazil are increasing this winter wheat acreage by 13.2% to 1.08 million hectares (2.66 million acres) according to Emater-RS.[17]

Outlook: out of the 3 commodities, wheat looks the weakest.
 
 
[1] Reuters Inside Commodities – June 29 ,2021
[2] Soyandcornadvisor.com – June 24, 2021
[3] Reuters Inside Commodities – June 25, 2021
[4] SP Platts – Jun 30, 2021
[5] Soyandcornadvisorcom – June 23, 2021
[6] Reuters Inside Commodities – June 23, 2201
[7] Reuters Inside Commodities – June 11, 2021
[8] https://www.agriculture.com/news/crops/us-2021-acreage-builds
[9] Reuters Inside Agriculture – June 16, 2021
[10] Reuters Inside Agriculture – June 10, 2021
[11] SP Platts – Jun 9, 2021
[12] SP Platts – June 22, 2021
[13] Reuters Inside Agriculture – June 29, 2021
[14] Reuters Inside Agriculture – June 30, 2021
[15] Reuters Inside Agriculture – June 16th and June 21st, 2021
[16] Reuters Inside Agriculture – June 14, 2021
[17] Soyandcornadvisor.com – June 25, 2021