Market Commentary > Weekly Crop Commentary - 2/12/2021

Weekly Crop Commentary - 2/12/2021

Feb 12, 2021

 
 

Alt TextFutures markets have been extremely volatile since the latest USDA supply/demand report. The carry-over numbers had minor adjustments made to them; corn 1.502MB and beans 0.120MB, both lower than a month ago. The corn market had set life of contract highs earlier this week only to trade down fifteen cents as we head into Friday’s close.  Beans punched through fourteen dollars again and have traded in a fifty-cent range for the week, to currently show only a nickel improvement since Monday. Funds continue to buy beans based on a delayed harvest in the southern hemisphere and the potential for extremely tight carryover numbers this summer. We are close to 100% sold on anticipated exports for the year and have six months to go! Corn continues to find support from excellent export and improved ethanol margins boosting demand. We are starting to see basis improvement as freight is beginning to become more available with concerns over vomitoxin in Ohio easing. Today we are at a dime discount over other origins for corn going into the southeastern rail market, due to toxin. The domestic bean market is starting to show signs of improvement as processors are starting to look for spring coverage. The strong exports driven by China will begin to slow when weather allows Brazil farmers to begin to harvest their crops. It looks as if winter isn’t over in Ohio as the forecast calls for colder than normal temps and additional snowfall. Markets are closed on Monday in observance of President’s Day. Please continue to be safe and have a great week.

 
 
Alt TextGood afternoon once again.  I’m not sure about you all, but I’m ready for spring.  The weatherman is talking again about a significant snow event coming our way.  Oh well, enough about that.  We had another volatile week in the grain markets as we once again made new highs in corn and failed to find buyers above the market.  This was mainly due to our monthly USDA report that showed us a reduction of ending stocks by fifty million bushels.  Now that’s not bearish news by any means, but the market was expecting a much bigger drop.  Beans also rallied and failed as we approached the highs, but we have seen a good run in the Brazilian harvest this week that probably had more to do with that. The USDA did decrease our ending stocks by another twenty million bushels.  This will make our current situation the tightest since 2013/14 and takes us down to less than 10 days of supplies.  We have already sold 97% of the USDA estimate on soybeans and still have not reached the halfway point in the marketing year.  We will continue to see some extremely volatile markets as we move through the end of March when we will get our first look at planting intentions. Through last night we have the insurance prices on new crop at 4.515 corn and 11.655 beans.  This is fairly neutral at a 2.5 to 1 price ratio, so no real advantage of one over the other at this point.
 
 
Alt TextGood afternoon and happy Friday! As mentioned last week, mark your calendars for Wednesday, February 24th. Heritage will be posting a link on our website for you to access this year’s virtual grower meeting that will be put on by StoneX, formerly known as FCStone. You will be able to view the meeting at your own convenience in the comfort of your home. If you have any questions regarding details of the meeting or how to navigate a virtual meeting, please call our Upper Sandusky office at 419-294-2371. We are happy to assist you in this process!

According to sources from London and Beijing, “China bought a record 11.3m tonnes of corn last year, of which more than a third came from the US. In late January, the USDA announced that China had bought another 2.1m tonnes, the largest sale to the country in history and the second-largest on record. Since then, corn prices have hit a near eight-year high. With China set to become the world’s largest corn buyer this year, as well as being the top soybean importer, the big question for the sector is whether the country will stay ahead of other leading corn buyers such as Japan and South Korea.”

Just a reminder that the market will be closed on Monday. The USDA Ag Outlook Forum takes place next Thursday and Friday and they may release their estimates of new crop supply and demand tables. As always, Region 2 wishes everyone a safe, warm and enjoyable weekend!
 
 
Alt TextHappy Friday! The markets were a bit of a roller coaster this week with the WASDE report, but as of 1:30 this afternoon, our cash corn is with 2 cents of where we closed last Friday and cash beans are 10 cents higher. A lot of action with minimal net change. The USDA increased export estimates, lowering the ending stocks for both corn and soybeans. While that sounds like bullish news, it was not as much as the traders had expected and therefore we saw some negative movement in the middle of the week.
 
We are about halfway through the February crop insurance averaging and the Dec corn futures are $0.63 ahead of last year at this time and Nov soybean futures are $2.48 above this time last year. If you have not locked in any new crop bushels, now may be a good time to contract some to cover some risk. Have a great weekend and remember, no grain markets on Monday!
 
 
Alt TextWinter looks like it has moved in and going to be with us a while.  The grain markets on the other hand seem to be trying their best to act like Mother Nature, you just don’t know what they are going to do.

We had a report on Tuesday that at face value was neutral and we saw the markets not react well on Tuesday and Wednesday.  Then we saw some recovery on Thursday and as I write this on Friday morning we are seeing a green screen.  

I remind customers that when prices are above $5.00 corn and $13.00 soybeans the air is a little thin.  There are not as many people who are willing to play at these price levels, so the market tends to be more volatile.  We are going to have tight supplies until we get to new crop, and the USDA is telling us we will have less than a 30-day supply of corn and soybeans when we get to September 1.  If we have any kind of issues this year with the 2021 crop we could be in for a wild ride this summer. 

Does a farmer need to sell today?  Sure he can keep working through his old-crop as he sees fit. At these price levels, you are well over any price you thought you were going to receive when you planted last spring.  With a new crop, you have to weigh the risk versus reward today.  How much downside risk do we have in the market today, and what is the upside potential?  I believe with the tight carryout stocks the market will be on edge most of the spring and summer until we get a handle on how many bushels we will have for next year. 

The markets will continue to react like the weather in Ohio, if you don’t like it wait 15 minutes.
 
 
Alt TextGood Afternoon, it’s hard to decide what to put in this week's comments. There is a lot that we could talk in-depth about but we don’t have the space to get it all in. So I guess we will start with the numbers from Tuesday’s USDA update. Corn & Beans carryout’s both tightened up( corn 1.55 billion & beans 120 million bushels) but neither was not near as tight as the bulls were looking for and henceforth the lead to a sell-off on Wed, not Tuesday when the report came out. But then yesterday (Thursday) we bounced back some. So we ask, what has changed? My answer would still be nothing. We just didn’t get enough new fodder to keep the bulls engaged at the level they had been participating at lately. So where do we go from here? I think we continue to chop around at these levels now until our next update and that does not come until March 9th. China has continued to be a buyer of soybeans and is filling in the gaps with US beans until South America’s harvest picks up and that will continue to hold pressure to not let the bean market slide too much as we enter our 2021 planting and growing season. Corn’s story continues to build on its own merits as we move along and is not just riding on the coattails of beans anymore as well. So where do we go from here? Time will tell. Continue to reward the market as we see rallies so that when we look at our overall weighted average it continues to climb. Stay warm and have a nice weekend!!!!!


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