BMO Bank of Montreal - We're here to help.™
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 Agricultural Commodity Prices - July 2021

Review of Agriculture Commodity Prices – July 2021

Corn

The price of corn rose 0.81% in July and is up 95% since June 30, 2020 as measured by the National Corn Index.

The largest issues in corn was weather, USDA reports and production.

In terms of weather, Corn in Brazil was dramatically impacted by frost.  In the Parana district, yields are approximately half of what is typically witnessed.  Only the early safrinha corn has been harvested and this is typically the best yielding corn and yields could decline as harvest progresses.[1]   The 2020/21 corn estimate was lowered to 86.0 million tons from 88.0 million tons due to this frost and drought.  [2]As a result, Brazil could import dramatically more corn this year – Brazil typically imports between 1 and 1.3 million metric tonnes and due to frost and drought, imports could be much higher this year.[3]

In USDA reports, the June 30th Acreage report, corn acres were revised upward only slightly as markets were expecting a great area increase.

Finally, in terms of production and shipping, the cost to ship a container via the ocean has increased dramatically – the average price worldwide to ship a 40-foot container increased by 333% compared to July 2020. The price to ship a container of that size was $8,795.77 (US Dollars) as of July 8, 2021.[4]

Conclusion: The outlook is strong for the price of corn.

Soybeans

The price of soybeans is up 5.93% in the month of July and is up 75% since June 30, 2020 as measured by the National Soybean Index.

The largest issues in soybeans is weather, trade and production.

In terms of weather, the National Oceanic and Atmospheric Administration (NOAA) indicates a potential La Nina over Brazil in the next several months.  This could lead to more drought in this area.[5]

In trade, China’s imports of soybeans increased over 11% in June from May due to meet meal demand for its hog herds.[6]  However, Chinese imports of soybeans is expected to slow in the second half of 2021[7]

Also in trade, Argentina’s new biodiesel low which cuts the amount of soyoil-based biodiesel blended into common diesel fuel sold domestically.[8]  This should increase soyoil exports and drive down the international price.

Finally, in terms of production, Brazil has seen a record soybean crop due to higher acres being planted – this year, there should be 9% more soybeans harvested compared to last year.[9]

Conclusion- the near term outlook for soybeans is weak.

Wheat

The price of wheat is up 2.78% in July and up 39% since June 30, 2020 as measured by the National Soft Red Wheat Index.

The largest issues in wheat is production.

In Europe, the Ukraine grain crop could reach a record of 75 million tonnes which would be a record.[10]  The French (the European Union’s biggest grain producer) wheat harvest is expected to be excellent and exports are expected to reach 10.5 million tonnes in 2021/22 up 40% from the 7.5 million tonnes in 2020/21.[11]

However, there has been flooding in Germany and Belgium which will impact grain production – Germany is one of the top 4 producers in the European Union for cereals.  [12]

Conclusion – with excellent production in Europe, we could see the worldwide price for wheat fall.
 
 
[1] www.soyandcornadvisor.com – July 31, 2021
[2] www.soyandcornadvisor.com – July 28, 2021
[3] www.soyandcornadvisor.com – July 29, 2021
[5] www.soyandcornadvisor.com – July 14, 2021
[6] Reuters Inside Commodities – July 13, 2021
[7] Reuters Inside Commodities - July 26, 2021
[8] Reuters Inside Agriculture – July 20, 2021
[10] Reuters Inside Agriculture – July 2, 2021
[11] Reuters Inside Agriculture – July 14, 2021
[12] Reuters Inside Agriculture – July 30, 2021
mmodities – May 21, 2021