Market Commentary > Weekly Crop Commentary - 2/26/2021

Weekly Crop Commentary - 2/26/2021

Feb 26, 2021

 
Alt TextGood afternoon everyone, and welcome to the final weekend in February.  We seemed to have gotten our first taste of spring this week, and I for one was a huge fan. The month sure did provide its share of obstacles and troubles, but we seem to have conquered them all.  Now we get to look forward to a new month and new season.

The grain markets sure had a wild ride this week. 
We were trading sharply higher until the week's export sales report yesterday morning.  Sales of both corn and beans were below trade estimates and seemed to shift the mood of the market.  The Chinese were out on holiday last week, and expectations were lower knowing that.  Apparently just not low enough.  There are also starting to be some reports of African Swine Fever showing up in the Chinese hog population again.  The news sent soymeal lower and cause soybeans and corn to follow.  In weather news out of South America, we continue to see harvest in Brazil behind last year.  This is really causing a log jam of empty boats waiting at port to load. This will likely keep new sales coming to the US, at least until they get some of those boats loaded and out of the way.  Argentina is still dealing with extreme dryness in areas causing more crop deterioration.  Today brings an end to the first round of crop insurance prices.  If the market closes close to where we are at this time we look to have Dec corn @ 4.58 and Nov beans @ 11.86.  These are much better levels than a year ago, so it will take a major weather event to not see higher acres than last year.  
 
Alt TextGain continues today on a downward path following the poor USDA export sales numbers yesterday that prompted fund profit-taking ahead of the month’s end.  China also canceled some corn and soybean sales, but this is not a big surprise this time of year when South American beans start hitting the ports.  Today is first notice day for March futures.  As we move into March look for volatility in the markets, many things are happening, South America’s harvest, USDA report on the 9th, and the USDA quarterly and prospective planting report on the 31st to name a few.  
 
Alt TextGood morning and happy Friday! This week was off to a wonderful start for the grain markets. By Thursday morning, soybeans had hit 6.5 year highs. According to StoneX, “This morning, prices started to trend lower with volume reduced a bit and the spot March contracts heading into delivery, along with the calendar flipping over the weekend. South American forecasts are unchanged at least heading into the weekend, leaving dryness in Argentina and wet conditions to slow fieldwork and soy supplies in Brazil.” At our Upper Sandusky office, we are still taking up to 20 on vomitoxin. If you have any questions, please call the Upper office at 419-294-2371. Hope everyone has a wonderful weekend!
 
Alt TextGood afternoon! After nearby soybeans hit fresh 6 1/2-year highs, the export sales data released Thursday morning took some of the excitement out of the air. However, with an hour left in the trading day, May bean futures are still positive on the week by 18 cents, May corn up 3 cents, and July wheat up 8 since last Friday.

The bleak export sales report showed lower sales in all three commodities than what was expected. China and “unknown” together actually canceled 12.7 million bushels of bean sales and 13.6 million bushels of corn sales. Between this, increased concerns over rising African Swine Fever outbreaks in China, traders taking month-end profits, and a poor ethanol production number this week, Thursday and Friday’s markets have been in the red. While those export cancellations may be worrisome, we are still above the pace needed to reach USDA’s export sales expectations. China has been quiet since their Lunar New Year holiday. Normally they would be switching to buying beans from South America this time of year, but with the harvest rain delays in Mato Grosso, there is still a small window opportunity for the U.S. to take advantage of the slowed export supplies in Brazil. I hope you all have enjoyed the warmer temps this week! Have a great weekend and we’ll talk to you next week.
 
Alt TextThe month of real winter broke this week and it seems like spring is just around the corner as Monday is March already.  The farmer is moving grain as the snow melts around his grain bins as most of our facilities are seeing good grain movement, and I understand why with corn well over 5.00 and soybeans around the 14.00 level.  We are still dealing with vom in some of the corn crop, but so far, the market has found homes for most everything.  As I have written all winter, we will get through this, but it is just going to take time.

New crop corn and soybeans have hit multi-year highs this week before we saw a pull back on Thursday and as of this morning, today.  You are starting to hear the “I” word creep into conversations in the financial and grain markets, the “I” word being inflation.  

With all the money the governments around the world have pumped into the economy in the last 12 months, something has got to give.  We are seeing long term Treasury bill values start to rise, as they are at their highest levels in almost a year.  The Fed is going to try to keep interest rates low, but if the market demands higher rates it will be hard not to see interest rate rise.  That will be something to watch over the next 6 to 12 months as Covid restrictions are eased around the country. 

Marketing your crop today is not hard, because price levels for old and new crop give us a profit.  The question I have been asking is what is our downside risk on new crop?  With tight carryout’s I think it is somewhat limited today, not to say it can’t go lower but there are as many or more reasons for it to stay steady or rise.  Your best plan of attack today is keep chipping away as the markets rise to new levels.  We don’t have to hit a home run, but if we keep hitting signals and driving home profits, we will have a successful 2021.
 
Alt TextGood Afternoon, the markets continue to be like a yoyo. Up then down and then back up again. Not a lot has changed this week on the fundamental side. Our bean carryout is still tight and corn is also continuing to tighten up as we progress. Wet weather has continued to slow harvest in Brazil and there is some concern about quality but that has not become a widespread concern as of yet. Stay tuned as we progress over the next few weeks. The other concern if beans don’t get off in a timely manner that slows down the planting of the second crop corn which could have an impact as to what the world number looks like during our growing season. So lots to pay attention to as we progress over the next number of months. Basis levels on both corn and beans have been steady here in the NE part of the state. The other concern this week is what effect the cold weather has had on the wheat crop. We won’t know the answer to that for a little while but the markets have had some concern this week and wheat has had some positive moves but currently is pulling back some. The last piece of info I will add for this week is this. We continue to see the funds pulling money out of stocks and  injecting money into commodities because of the fear the interest rates are going to start to climb and inflation starts to kick in. That injection of money into the markets will help support the commodities over the long haul. It’s nice to see the sun today as well as to melt away the snow and the ice. Have a great weekend and enjoy the warmer temps coming our way this weekend.


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