Market Commentary > Weekly Crop Commentary - 1/29/2021

Weekly Crop Commentary - 1/29/2021

Jan 29, 2021

 

Alt TextThe corn market has improved to new highs this week, spurred by continued China buying. Strong world demand and tightening global supplies are going to continue to make for very volatile conditions. The corn basis is staying steady as space and transportation are keeping it in check, even with the heavy volume of farmer movement. Bean basis is somewhat struggling due to reduced crush margins and the onset of the southern hemisphere harvest. The next WASDE report will release on February 9 and the USDA’s 2021 Outlook Conference is schedule for February 18th. Early indications from private forecaster Informa indicate that 94.2 million acres of corn and 90.1 million acres of soybeans will be planted this spring. With the continued reduction in 2021 carryover stocks, we are anticipating the spring planting season and summer growing season will continue to keep the trade on high alert. Please continue to be safe and have a great week. It looks like we may get our first taste of winter weather in Ohio this weekend. 

 
Alt TextGood afternoon everyone.  What another wild week we are having in the grain markets.  The sell-off to end last week has proven to be a buying opportunity for end-users to extend coverage.  The USDA has had a busy week announcing corn sales to China that total over 5 MMT. This is roughly 200 million bushels of corn sold to China this week.  They also announced a few corn sales to unknown destinations, and two separate new crop beans sales to China.  All this export news pushed corn to new highs before topping at 5.50 for right now.  Many now are asking where will the market go, and none of us know that answer.  The answer may have to wait until we see the size of the safrina crop in Brazil and the amount of acres planted here this spring. Needless to say, we are going to be in for some wild moves, so buckle up the road is likely to get bumpy.              

As we have seen the entire month movement of grain continues to be massive. Most are struggling to keep their doors open and when trains arrive they fill back up in a couple days.  This is going to be a battle until farmers get back into the fields.  Attractive prices and the vomitoxin issue are going to keep them hauling.  Look for basis levels to remain steady to a bit weaker as ample supplies seem to be available to the market.  I hope you all have a great weekend.
Alt TextBrazil harvest has started, but the progress is slow due to the late planting and areas of wet conditions. This slow progress is pushing China to buy beans from the US to fill the gap until Brazil gets beans to the ports for shipment.  China has also purchased a record amount of corn from us this week (230 million bushels), US corn is still the cheapest in the global export market.  The one thing we have to see is if China takes the shipments, this could be why the market has not responded in a big way this week but has kept its volatility intact.
Alt TextHappy Friday! This week has included daily purchases from China with yesterday at 1.7 million metric tons of corn for 2020/2021 and an additional 213 thousand tonnes to an unknown source. South American crop and harvest issues still linger (Stone X).

Here in Region 2 for grain, vomitoxin testing has slowed down a bit. Loads have been anywhere between 0 and the 30 range. We are currently not accepting vomitoxin levels over 10 ppm. If you have any questions on our vom discount schedule, contracting grain, or different marketing options, call our Upper Sandusky office at 419-294-2371. We are happy to help and look forward to your phone call! Wishing everyone a safe and enjoyable weekend!
Alt TextGood afternoon! Volatility seems to be the theme across all markets this week. Average trading range for corn and wheat this week has been about 20 cents each day, while soybeans have seen an average range of about 40 cents a day. These wide swings make it even more important to have a marketing plan to reduce the stress of roller coaster markets. We will gladly watch your targets for you, even if they are just a request for a phone call and not for a pre-specified number of bushels.
 
The USDA announced corn sales to China four days this week, totaling an enormous 230 million bushel week. Time will tell if China actually takes shipment of the corn this marketing year or not. They have been known to roll contracts or even cancel some sales. Still, these sales have revived the corn market after last week’s profit-taking, gaining 47 cents on the week as of one o’clock today. Soybeans have also recovered some of last week’s bloodbath, improving 52 cents on the week so far. With demand continuing and stocks tightening, the bulls have plenty to feed on for now. Have a great weekend and we’ll see you in February!
Alt TextAnother wild week in the grain markets as we continue to see big moves almost on a daily basis.

I have had the question several time this week, where is the market going? There are all kinds of technical reasons and news in the marketplace that can cause the market to react the way it has this week.  My best explanation is one that I take from a long-time trader and friend, Craig Taffel.  We have to remember that the market has to have a buyer for every seller, at some point we run out of buyers in a speculative market.  When we had soybeans close to 14.50 you have to have someone who is willing to buy them.  I don’t know about you but I am not ready to jump in and buy a bunch of 14.50 soybeans. The funds only want to get so long and when they decide that they own enough the only buyer you have left is the end-user and he is only going to buy what he needs at those price levels.

Is the market done or are we close to a top, I have no idea.  We will have to see how the fundamental’s play out over the next 6 months.  South American crop which is improving, Chinese demand which seems to be continuing for corn, a new administration, planting intentions, actual planted acres and US weather.  We have a long way to go yet on the 2021 crop.

Please be patient with us through the winter as we get your inventory moved so we can make space to take your crop out of the bin. With these kind of prices, everyone wants to sell.  We have received twice as much grain this January as last.  The end-users in the Southeast don’t need twice as much corn as they needed last year.  I have been telling customers take the extra carry and sell it for March and April delivery. We will do our best to keep our doors open to serve you.
Alt TextGood Afternoon, the markets have continued their upside movement this week. Corn has gained back all that it had lost and more. Beans have rallied back and gained a lot of what it had lost but not all of it. But markets are looking like they are going to finish out the week on the upside as of right now. China has purchased a pretty big chunk of corn this week and that has the market looking pretty bullish today. Corn basis is all over the place depending on where you are at. But in general, basis has pulled back some on corn. A lot of farmer selling has gone on and with no carry in the market there is no good reason for the farmer to hold on to corn or beans right now and he has been doing a pretty good job of selling. Weather wise we have gotten through Jan and not had any real issues and the forecast I have been reading it looks like Feb is going to be above average temps as well here in our area. The next big government report doesn’t come until the end of March when we get the Prospective Planting Report as well as where Quarterly Stocks are at. That report could have a big impact as to where we are headed. Have a good weekend!!!!


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