Market Commentary > Weekly Crop Commentary - 4/16/2021

Weekly Crop Commentary - 4/16/2021

Apr 16, 2021

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Good afternoon. As we reach the mid-point of April, we find outside equity markets reaching record highs with grain prices continuing to march higher as well. Corn for the week is looking at a fifteen-cent improvement on weather concerns in Brazil as the safrinha corn crop continues to be stressed by dry weather. The corn market is consumed with buying; with very few sellers, due to concerns that we will need at 15.0- billion-bushel corn crop in the coming year to meet demand. This is going to continue to keep corn prices very volatile in the coming months. Soybeans have improved more than thirty cents this week. We are pushing towards life of contract highs due to fund buying based on dry weather in Argentina and forecasts that show little relief in sight. With the anticipated shortage, this summer for beans in the US balance sheet, bean basis is showing signs of a 2014 repeat by continuing to move higher. The USDA will roll out the first glimpse of crop production for crop year 2021-22 on Wednesday, May 12, along with anticipated adjustments to this year’s carry-over figures. Looking further on the calendar, the grain stocks and final planted acres report will be released on Wednesday, June 30. Please continue to keep safety first and have a great week.

 
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Good afternoon.  What a difference a week makes on the weather in mid-April in central Ohio.  Well, last Friday we got updated supply and demand numbers from the USDA.  They took another 150 million bushels of corn right off the bottom line for this year.  The increased demand was a conglomeration of exports, ethanol, and feed.  The soybean and wheat numbers were left relatively alone other than a small adjustment’s, but nothing that made a substantial impact. This really seems to ignite the corn market as old crop broke the 6.00 mark this week and new crop has been screaming higher all week.  This has started a good ole fashioned acre battle.  We really cannot afford to lose any acres of any commodity for the upcoming planting season.

Bean basis this week really seemed to have an awakening after being relatively quite for a bit of time.  Most of the domestic crushers are getting nervous going forward as the export market gobbled up a lot of beans this winter and early spring. Now the war begins to procure bushels going into the spring and summer while fieldwork must happen, and the attractive prices encourage the farmers to sell the bulk of their production.  Corn basis this week has been on the retreat as the fancy futures price has drummed up more selling from the farmers and the pipeline has not had a real chance to make space.  The domestic market could begin to heat up once fieldwork really begins to take effect.

We still have some weather around the world that is also getting noticed.  The cold snap in Europe was as advertised, and really took a toll on the sugar beet crop, the jury is out on the wheat still.  Brazil is still experiencing hot and dry conditions on the Safrina corn crop, that will likely lead to more reduction in production.  For right now it appears that there is limited downside risk in grains, but there will be some wild moves in both directions as we move along.
 
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We had a strong week in the markets.  The cold snap continues to delay planting.  Weather volatility will pick up in the markets as we advance into the growing season. South American corn crop still struggles but may not be as bad as earlier thought.  Export sales last week were disappointing, news of China and unknown destinations canceled some bean contracts, was not good news, but you wouldn’t know it from the CME.  Today, on the other hand, has corn and wheat are taking a breather while beans carry on the upward trend.   
 
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Good afternoon and happy Friday! May spot corn hit contract highs yesterday, hitting $6.00 a bushel for the first time since 2013. Our Upper Sandusky branch is still taking up to 30 ppm vomitoxin and has also gone to free delayed price (DP). Many here in Region 2 have already started to get some crops in the ground for the season. The trade is worried about the US temps next week. According to StoneX morning comments, “Export/overall demand indicators are slowing slightly into the spring/summer but supplies remain plenty tight.” We hope everybody has a safe weekend!
 
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I have to remind myself that we live in Ohio.  The old saying if you don’t like the weather wait 15 minutes and it will change applies this week.  We went from 70 and sunshine to 50 and cloudy.

The rain we received over the weekend was needed as it was getting dry.  We are starting to see a few guys back in the field and some planters running in the area.  I guess they are following the instructions on the bag, store in a cool dry place.

The corn market saw May 2021 futures trade to over $6.00 this week.  We have not seen cash corn this high since late summer 2013. 
I keep getting asked the question, why is corn continuing to go higher?  The simple answer in two words is demand and fear.  Demand for US corn is as good as it has been, as exports are going to be as high as we have ever seen.  Domestic livestock usage is very good as hog numbers in the US continue to expand as there is profit in feeding pigs. 

The other is fear from all end users around the world that IF the US has a problem, corn will be hard to come by and very expensive by fall.  We will have to see how this all plays out the next several months as we plant and grow the 2021 crop.

Soybeans are holding their own and are staying in the trading range we have been in for the last several months.  The soybean issue on the front end is not as pressing as we have a good South American crop coming to the market, but just like corn, if we have an issue here, there will be fireworks for sure.

We have to remember when we get to these price levels that volatility will go up and the swings can be wild.  But the downside risk today seems somewhat limited as demand and fear take hold of this market.
 
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Good Afternoon, not a lot of new news to report on this week. The markets continue to stay well supported this week. Dec-21 corn hit a new high this week at $5.17 and May-21 corn went through the $6.00 mark as well. It did not close above $6.00 but this is the first time we have seen corn trade through the $6.00 mark since 2013. The balance of April looks to stay below normal as far as temps go but the latest precip looks to also be at or below normal as well so that is one bright thing as we work through the balance of April. Planting progress has not changed at all this week here in the NE part of the state. Very little corn or beans are in the ground as of right now. And that is a good thing from my perspective. The second crop corn in South America is concerned about the dryness they are having right now so that continues to keep the market bulls concerned. Basis levels continue to stay steady verse May. It is going to be very interesting to see what happens to basis at the start of May when we roll from May to July. Today we are trading around a .12 cent inverse. The end-user seems to have enough coverage on for the short term but its difficult to say how much coverage they have on for the long term. One would think that basis should strengthen up but we will just have to wait and see. Have a great weekend and we will talk to all of you next week.



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