Commodity markets this week we're looking for some news to help them breakout of the steady to lower trading pattern we have seen since the Thanksgiving Holiday. The concerns over the LaNina weather pattern in the southern hemisphere seem to have subsided for the time being. The USDA did not give us any reason to believe in this week’s WASDA report that a reduction in bean production is a major concern today. However, we are projecting a carry-over this year of only 175 million bushels of soybeans. This will be the story in the US bean market moving forward, that is only 0.039 stocks-to-use ratio. If we are to believe that our exports are as far ahead of normal, we will reach the 2.200 billion bushels within the next few months. If Brazil or Argentina run into weather issues moving forward and we find China back in the market looking for US beans late this winter or early spring, this bean market could get very interesting. As we are working on finishing up harvest in Ohio, we are beginning to see some quality issues in corn that have put pressure on basis levels. Hopefully, this is a short-term issue as we are seeing restrictions for vomitoxin levels in our corn deliveries. The USDA will be releasing updated stock numbers and revised supply/demand figures on Tuesday, January 12, 2021. The market will be watching private forecaster’s anticipated adjustments to the balance sheet in the coming weeks along with paying attention to the weather in the southern hemisphere and finally the changes in our government that will be taking effect next month. Please continue to use caution as we deal with the pandemic and be safe.
Good afternoon. What a way to end a week in December with sunshine and 60 degree temps. Hope you are all able to enjoy some outside time. Once again we had a week jam-packed full of news. First, we will start with Mondays exports that still show massive movement of soybeans at 2.3 MMT. We are the only county that has exportable supplies and it shows. However new sales have really came to a halt as we have not seen a reportable sale since November 9th. In yesterday’s updated supply and demand numbers the only adjustment to our crop was a 15 million bushel increase in crush, which came right off the ending stocks. We did not see an adjustment to Brazilian production at this time, but we did see a 1 MMT reduction in Argentina production. Cash basis levels for beans have been steady this week as we await the next story. The export pace for corn continues to be much stronger than last year, but with soybean loadings taking so much capacity corn is leaving at a much slower pace. However, we are seeing good sales of corn and we did see confirmation of some nice purchases in the daily reporting from the USDA. Corn shipment will pick up once the bean movement heads to South America. Vomotoxin continues to be a big issue as the pork producers don’t want it and the poultry producers are getting full. The last bit of harvest is going to be a real struggle. The ethanol producers continue to struggle as demand is still lackluster and stocks were showing a big increase again this week. Either they are going to have to slow grind or demand is going to have to pick up. I’m going to guess that it will be easier to slow production, especially when you're operating at a loss. In yesterday's supply and demand report, we did not see any adjustments to our balance sheet, but on the world front, we did see ending stocks drop once again. An increase in Chinese feed usage and a drop in Argentina production attributed to the decline. One interesting fact is that since the May report projected world ending stocks for this crop year have declined almost 40 MMT or 1.575 billion bushels. The market will continue to monitor Brazilian weather as some parts are getting some relief from the dryness, but we have a lot of growing season to go. Please also keep an eye on the fund position as they are still long grains. As always have a great weekend.
The report on Thursday was neutral. With no surprises the market fell, wheat is the crop that held. Russia downgraded their 2021 production to 78.8mmt today on top of talking about limiting exports. Corn and beans rebound today because of the drier forecast for South America. By the time the January USDA report comes around they will have a better grip on how the adverse weather has impacted the crops in Argentina and Brazil.
Happy Friday and good afternoon! Weather in South America and supply and demand have been the two leading factors driving the markets lately. Yesterday at noon was when the December USDA WASDE report was released. Soybeans and corn closed down from the day before the report and wheat was up at the close. According to StoneX, the USDA pegged Argentina’s crops down 1 mmt for each corn and soybeans due to dryness. Regardless of the news, it did not change the size of Brazil’s corn and soybean crops in yesterday’s report. The USDA also reported that China corn imports were increased by 3.5 mmt to 16.5 mmt. If anyone is interested in contracting bushels within Region 2, feel free to text or call me at 419-349-0546. Hope everyone has a safe and enjoyable weekend!
Apart from just a couple, harvest is finally wrapped up here in Mechanicsburg. Overall, yields were quite variable in the area but I believe most were at least content with how things turned out. We appreciate each of you for helping to make this a successful harvest season. All eyes continue to be on South American weather, Chinese demand, and anticipating what changes may come in USDA’s January 12th report. Yesterday’s WASDE report had corn 2020/21 carryout unchanged at 1.702 billion bushels. While soybeans did see a lower carryout number at 175 million bushels, it wasn’t quite as much as the traders had hoped for. The news was not necessarily bearish, but it offered nothing to feed the bulls. USDA did lower Argentina’s corn and soybean production numbers but left Brazil’s unchanged for now. Locally, corn basis has weakened a nickel, while bean basis has remained steady. Both corn and bean cash bids for the week are near unchanged to down two/three cents at midday. Wheat has had a nice recovery this week with new crop gaining 30+ cents. We’re nearing $6 again for next July wheat if you missed locking it in the first time. Have a great weekend and enjoy today’s sunny 60 degrees before it disappears again.
We are two weeks away from Christmas, It does not seem like we are almost there. We still have several customers finishing up harvest. With the bulk of the corn harvest being done this year in November, we are struggling to keep doors open as the equipment to move grain is being stretched. We will continue to make space as we can but there are only so many places to go today. The corn market is still a follower. We topped out a few weeks ago and it has just drifted along. We are still around the 4.00 cash level which is not a bad number and a better price than we saw for most of 2020. The market has put some carry so it does pay to leave it in the bin and sell it for spring delivery. 2021 is an ok number but I still believe that it needs to do some work so not to lose acres to soybeans for next year. Soybeans have pulled back from their highs and seem to be happy where they are today. There seems to be rain in the forecast for South America so that has taken pressure off the markets. We will continue to see what happens with weather in South America and does China come back and purchase more soybeans. The big picture today is with 11.40 cash beans, how much more does the market really need to do. We have a few customers starting to sell 2021 soybeans at the 10.00 level; not their whole crop but at least getting started. Like my comment to them, if 10.00 soybeans are your worst sale for your 2021 crop, you should be a happy customer. Continue to work with us as we make space to finish the harvest that is left and take your crop out of the bin. With the good prices there is more working its way into that pipeline so please be patient we will try to do our best.
Good Afternoon, yesterday brought us the latest USDA numbers and we saw little changes in the numbers. US carryout on corn was unchanged and US carryout on beans inched lower once again. I think the traders were looking for a little more reduction than what we got for beans both in the US carryout number as well as the South American numbers and when we did not get that we saw them sell off some of their long positions they were holding yesterday. But the story behind the bean markets has not really changed and today, as I write this beans, are currently up .08 cents. Weather in South America is still a story and it will continue to be for at least the next month. US carryout on beans is very tight and we don’t have a lot of room for errors. So stay tuned and keep your eyes on the beans going forward. Corn continues to be a follower of the bean market in my opinion. Corn stocks are not tight and we still have to be concerned about the reduction of ethanol being blended into gasoline because people are not driving as much during the pandemic. That said if beans do continue to rally corn has to continue to inch higher as well. Basis continues to stay firm for corn and bean basis at the gulf has been steady in the nearby but has firmed up for spring and summer. We have added some carry back into the market at least for now. How long that holds will be a function of how and where demand will be. Have a great weekend!!!!
If you have any questions or would like more information.