Weekly Crop Commentary - 5/14/2021

May 14, 2021

Weekly Crop Commentary - 5/14/2021
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The USDA gave us fresh fodder to chew on this week and after the excitement wore off and we were able to digest the news the market’s traded off life of contract highs. Traders were expecting a greater reduction in this year’s carry-over stock on corn and a reduction in the Brazil corn crop. Although the South American corn crop was reduced by 7 million metric tonnes due to the ongoing drought in northern Brazil growing region.  And the corn export was adjusted higher by 100 million bushels, putting corn carry-over to 1.257 billion bushels. However, this was not enough positive news to bring more buying to the corn pit and so much so that we tested the new limit’s on Thursday, posting forty cent losses at one point. The chatter in the market today on beans, as the USDA numbers remain unchanged, is boats for this summer to arrive at our ports from Brazil for processing. With the tight supplies of eastern beans, this was expected and the numbers work. Today we still have very good prices for cash and new crop, much of the premium in the new crop market is the tight supplies that we are looking at for the next eighteen months. We currently have very little room for error in production this summer and thus we will continue to see a tremendous amount of volatility. Soybean basis has come under pressure as processor’s now have ample coverage and plants are looking at extended shutdowns this summer. Corn on the other hand continues to remain firm but toppy as end users are beginning to look at feed alternatives to meet demand. Please continue to be safe and hopefully, we have a great planting week!

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Good Afternoon.  Not any field progress in this area to mention.  There will likely be some done over the weekend, but farmers will still have to be choosy where they go.  Hopefully, the crops that are emerged didn’t get too hurt by the couple of frosty mornings this week, I guess time will tell.  We had another wild week in the grain markets which was all to do with the supply and demand report released.  We got our first look at the 2021-22 crop year.  They pegged the corn crop at 179.5 bushels per acre, and some will argue that is an ambitious for this time of year.  They tend to use a trendline yield number for this report, which makes this number right in line.  I am more concerned that we see additional acres planted in the west as they have been screaming right along.  Regardless we did see projected ending stocks up 250 million bushels from expectations.  If this comes to fruition we will have a 1.5 billion bushel carry out, and that really doesn’t negate $6.00 new crop corn.  As far as the soybeans go things were just about as expected.  They have a 50.8 bushel yield, which again is pretty lofty for right now, but is a trendline number.  This will leave us with a 140 million bushel carry out. 

This is up 20 million from this current year, but still extremely tight, and if we do not get 50+ bushel beans that will drop.  The weakness in the beans could be more attributed to rumors of Brazilian origin soybeans coming to the US.  Basis levels there have been absolutely crashing this week, so this is a real possibility.  So can we end up seeing our current bean carryout get bigger than 120 million bushels? 
I know we are just getting started with the growing season and a lot of things need to go right yet, but this week is a good reminder that what was here today can be gone tomorrow.  
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We saw a bit of a bounce on the overnight this morning, since then corn has backed off, but wheat and beans are still in the green at 1:00.  The report on Wednesday held no real surprises. Thursday the market gave way to price correction.  Traders will be waiting for the June 30th acreage report, now we watch the weather. 

Brazil is forecasting rains, but will it be too late for most of their corn?  Here in the US portions of the midwest are still looking for more moisture but here in Hardin County, we need a few good drying days with some heat to make the corn that is up, GREEN.   The Mississippi River has opened back up for barge traffic during the daylight hours but remains closed for vehicles.  
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Happy Friday and good afternoon! The markets are trending higher today even after yesterday’s sell-off in response to the USDA report being released on Wednesday. Some of the things affecting the markets today include predicted Brazilian weather, a cracked bridge in Memphis causing barge traffic, and corn purchases. According to Matt Zeller with StoneX, “…cumulative corn sales to all destinations stand at least 7.3 MMT through 5/13 (290 million bushels), with new-crop sales to China now at 3.8 MMT, or around 150 million bushels...” 

Around Wyandot County, there were many who were close to finishing up their planting before the rains came through. Yet there were many who had not begun. Now we wait for the fields to dry out a bit and see how much replanting will be necessary. A few have mentioned trying to get back to it this weekend. Our Upper location is still currently taking up to 30 on vomitoxin. As always, we hope everyone has a safe and enjoyable weekend! 
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Another wild week for the grain markets.  

We continue to see big moves daily in the markets.  

These markets are not for the faint of heart.  If you are trying to guess when the top is going to be in, you will drive yourself to the poor house.  When we are at these price levels, the volatility picks up as players get in and out of their positions.  

We saw December 21 corn futures top out last Friday at $6.38; since March 31 we had risen a $1.75 a bushel, I am old enough to remember when corn was $1.75 a bushel, with only 6 down days in that run.  We generally see markets correct at some point.  There were several things that caused the sell off yesterday, some profit taking after the big run, some new crop sales were canceled and a general risk off as other things going on around the world.

It looks like we get a few days back in the field over the weekend, as we have not seen much field activity for a couple of weeks.  This cold weather has slowed the progress of the crop that is in the ground. 
We will have to see what, if any, damage has been done.

As you get your crop planted and it begins to emerge, we need to remind ourselves that we plant this crop to sell it, not just look at it in the field or the bin.

Continue to be safe as you get your crop planted this spring.
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Good Afternoon, I hope this week's comments find all of you doing well, and hopefully, some of you are just ready to be able to get back in the fields or you are starting today. I have talked to a few farmers here in the east and they are finding some hit-miss fields that are dry enough to get in today. What a week it has been in the grain markets. July corn closed at 7.32 on the CBOT last Friday and currently as I write this column is trading down .15 cents at 6.60. We will see where we close but right now that’s down .72 cents per bu in a week. Nothing has changed fundamentally in the grain markets since last week. Wednesday’s USDA updates on Wednesday continue to keep the carryout’s for the 21-22 balance sheet tight and there is no room for any errors today. The simple fact I think is this. We had gone up so fast and so much we are seeing some profit taking going on right now and we just did not get enough bullish news to keep the bulls engaged today. Weather wise it appears in this morning's updates that in our part of the world we are going to have below normal precip and above normal temps in the 6-10 as well as the 8-14 day maps this morning. The crop across the country is getting planted pretty darn quick. I wish all of you a very nice weekend. Enjoy the weather as well as staying safe in all that you are doing!!!

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