Market Commentary > Weekly Crop Commentary - 3/19/2021

Weekly Crop Commentary - 3/19/2021

Mar 19, 2021

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The commodity markets continue to be supported by daily announcements of Chinese corn purchases. We are approaching one billion bushels in export commitments to China alone on this week’s buying spree, while the total could reach 2.8 billion bushels (BB). The funds continue to buy both nearby futures on corn and beans as the carry in the futures market continues to remain unusually inverted. The USDA will be releasing the stocks report at the end of the month along with prospective planting intentions for the upcoming year. The market anticipates that we will see some adjustments to the carry-over figures on corn-based on increased exports for this crop year. We currently are looking at a 1.5 BB carryover in corn with beans at 0.120 BB. We could easily trim 200 million bushels from this figure on corn which will keep grain prices very volatile as we approach planting and the early growing season. Local cash basis remains firm in Ohio for corn as we continue to work through vomitoxin issues, renewed ethanol demand, and excellent Ohio River values. Bean basis has turned steady as we move completely to a domestic market with Brazil in full harvest mode which is dominating export shipments to Asia. Please continue to be safe as we welcome in spring this weekend and the upcoming planting season.

 
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Good afternoon once again. 
After loading a couple trains last weekend and the first of the week we witnessed another week of massive corn movement.  The nice weather coupled with the advantageous prices made for quite the duo in getting farmers busy.  The ability to take some of the higher vomitoxin corn also increased volume. The USDA reported several sales of old crop corn sales to China this week that added up to over 3.8 MMT.  That is a lot of corn, about 150 million bushels. This is keeping the inverse alive in the corn market, and rightfully so.  If we add this into what was reported for the prior week’s exports sales report, we have sold 97% of the USDA estimate.  We are only halfway through the marketing year, so the rest of the year could get dicey.  There were some in the processor market that realized this week that they need to buy corn later this spring and into summer.  Basis levels for corn in June/July have gained cents on the week but have more work to make holding corn a good proposition.  Sales of soybeans are really slowing down as the focus is on the South American crops.  With 99% of the USDA’s projected sales forecast already booked we need this to slow. Soybean processors are also beginning to realize they need coverage for the summer and are increasing their June/July bids.  Along with corn, the bean basis still has work to do to encourage holding until late spring into summer.  Please do not forget that March 31st we will see the Prospective Planting Report. The trade is figuring roughly 92 million corn and 90 million bean acres this spring.  Once we see these numbers all eyes will revert back to spring weather and the ability to get rolling early.
 
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Big change in the weather from last week.  Local fieldwork was in motion until the rain/sleet/snow came in yesterday.  The western plains drought monitor has eased up after this week’s passing storms.  South America still is struggling with their weather.   The corn and bean market is giving back what was taken away yesterday, with the repeated China U.S. corn purchases totaling above 150 million bushels.  For the current marketing year, China has purchased 900 million bushels of U.S. corn that’s keeping the demand strong.  
 
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Good afternoon and happy Friday! It looks like we have a beautiful weekend ahead consisting of sunshine and warm(ish) temperatures. South America’s forecasts look less beneficial than they did yesterday. According to StoneX, “…trade remains confident enough in Brazilian soybean and corn supplies overall to avoid a disaster heading into the spring and summer.” Sources mention that focus is on flash sales the past three days due to China buying 3+ million metric tons of U.S. corn. That puts China at purchasing a total of 21 million metric tons of corn from the U.S. for the marketing year. Other news includes U.S. ethanol production improving from last week but still down from this time last year. Gasoline demand is still down as well compared to this time last year. According to Joe Vaclavik from Grain Markets and Other Stuff, “China has apparently launched a campaign to reduce corn and soybean meal in animal feed. The government has sent out documents to animal producers with a plan that lays out an alternative grain that will reduce meal needs. In my opinion, this will be a difficult task to replace corn on a large scale.” Keep a lookout for the March 31st report on Prospective Plantings and Quarterly Grain Stocks. Everyone have a great Friday and enjoy the weather!

 
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Happy Friday! Mechanicsburg area received about 1.6” of rain this week, putting a halt to any fieldwork. The next 3-4 days look sunny with warmer temps though, so hopefully, it will dry out soon. Old corn was the winner in the grain market this week, gaining 19 cents with an hour left in the trading week. Old beans are also in the green by about 4 cents. New crop is not faring well, however. Fall corn down eight cents and beans down about 20 cents. The support for old corn this week has come from a marketing-year high for corn export inspections of 86.8 million bushels on Monday’s report, as well as several days worth of flash sale announcements to China, totaling nearly 153 million bushels.

Next Tuesday, March 23rd, is National Agriculture Day. I want to thank you for being the base of the ag industry. As of 2019, agriculture, food, and related industries contributed $1.109 trillion to the U.S. GDP (a 5.2% share). In addition, agricultural and food related sectors provide 22.2 million full- and part-time jobs, equaling 10.9% of U.S. employment in 2019. It all starts with you as a producer, so thank you! Have a great weekend and good luck with your March Madness brackets!
 
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I was able to get to Texas last week for our grandson’s first birthday.  It reminded me how good the last year has been even in light of all that has gone on.  We took my wife’s 80 year old parents with us to meet him for the first time, so I guess life is getting back to normal.  We also have the best time of the year starting this weekend, as March Madness is back.  The other is that it was a year ago that we started all the lockdowns and such with Covid. 

Looking back a year ago, we were seeing the start of the fallout of the corn and soybean markets from Covid, as cash corn closed at $3.39 and soybeans $8.57.  New crop 2020 corn was $3.33, and beans were $8.11. As we can see today, we are $2.00 higher on corn and almost $6.00 a bushel higher on soybeans.  We need to keep in mind that these markets can change quickly.  

We have seen the corn and soybean markets fall back off multi-year highs but are still very good price levels. The farmer has been a very active seller of old crop grain. Many of you know this as you are sitting in harvest type lines as you go to the elevator.  We have the March planting intention reports in less than two weeks; that will be the first of many things that will affect the market over the next 90 days.  We have seen a lot of old crop grain sold already and the farmer keeps pecking away at new crop sales as the market moves to new pricing levels.  We need to remind ourselves that selling grain at these price levels is profitable and we should keep working our plan to get old and new crop sold.  

As one customer reminds me from time to time, “I didn’t grow this crop to look at it, I grow it to sell”.  I think we all can keep that in mind why we plant and raise our crops, it is not to put them in a bin and look at them it is to sell them for a profit so we can continue until next year.
 
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Good Afternoon, the markets have been pretty quiet this week. Up and down from one day to the next but in the end we are pretty close to where we started this week. We did see China show up again this week for some more corn purchase’s and it appears that they were not moved from unknown but were new sales. If that holds true we might see the USDA lower our ending carryout on corn this year. If that is the case the weather card will continue to be a bigger factor as we start into the growing season this year. Basis levels on corn and beans here in the eastern part of Heritage territory have not changed a lot this week. End users continue to have enough coverage for the short term. With the inverted market going into the summer it’s yet to be seen what basis levels will look like. Enjoy the weather that is coming this way over the next week!!!
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Heritage Cooperative
59 Greif Parkway
Delaware, OH 43015



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