Market Commentary > Weekly Crop Commentary - 5/7/2021

Weekly Crop Commentary - 5/7/2021

May 07, 2021


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The grain future prices continue to make record gains as buyers are still very bullish on potential weather issues in the mid-west and trade concerns over Brazil’s corn crop persist. Safrinha corn crop, in Brazil continues to decline due to drought conditions. While Ohio continues to get ample rains the dry conditions in the northern plains and northwestern Iowa have much of the market on edge. With current rain predictions not showing much relief in the latest 6-10 and 11-14-day forecast. In addition, we look for supply/demand carry-over numbers to be adjusted lower on both corn and beans in the Wednesday USDA report. It feels as if the trade is expecting the corn number to come in below 1.2BB and beans to be around or below 0.100. With the current demand for commodities we will need a bumper crop this coming fall to refill the pipeline for the coming year. Local basis continues to remain strong as we have done little if anything at all to ration demand at the current price levels. Seems as if every day we continue to make history at the CME as the market finds a new reason to buy. Please have a safe and wonderful Mother’s Day weekend.

 
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Good afternoon everyone. 

What a week we have witnessed in the grain markets.  We just saw new highs every day.  The flow of money flowing into commodities is staggering, and this is helping to propel prices too high levels.  We also continue to see weather in the forefront as Brazil’s suffering corn crop has had little relief, and there is not any in the forecast.  I have been asked several times this week as to where the top of this market is, and we really have no idea on that.  As long as the people that use corn and beans are making money the balloon will continue to grow.  Export sales of old crop corn have slowed the last couple weeks, but shipments continue to be strong.  The ethanol sector is back to profitable as the rise in energy prices have sent ethanol futures higher.  

There was virtually zero planting progress this week, we were right on the cusp, but the forecast chased most back to the barns.  The sharp rally in the futures market and the wet weather allowed farmers to sell another round of corn and that has basis for cash corn steady to weaker.  June and July are still being bid aggressively. Great soybean crushing margins are keeping the domestic market hot and basis levels worked higher again this week.  We have also seen a good amount of new crop pricing this week as corn broke through $6 and soybeans broke through $13.50. Have a great weekend and don’t forget mother’s day on  Sunday.
 
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As Wes puts it, Happy Fri-YAY all! It has been an exciting week for grain prices. July and December corn contracts hit new highs. Old crop soybeans hit $16.00 cash on Thursday here in Upper. New crop prices are looking pretty good too. Farmers are waiting for soil temps to warm up and aid their already planted crops. This week’s rain brought around 2 inches at one of our family farms Southwest of Upper Sandusky. North America’s safrinha corn crop is not doing so hot with dry weather concerns. Brazil cut their corn production estimate from 109.3 MMT down to 105.5 MMT. The main purchaser of new crop soybeans this week was an unknown source. Japan led for new crop corn purchases with Mexico following. We hope everyone has a wonderful Mother’s Day weekend and if you are a turkey hunter, best of luck in the turkey woods!
 
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Good afternoon! It’s been another unbelievable week of gains in the market. Corn had some profit-taking for a short while this morning, but that came after fresh contract highs overnight in both corn and beans, old and new crop. Since last Friday’s close, at midday today we have July corn futures up 53 cents and Dec futures up 65 cents. July soybean futures have gained 47 cents and Nov futures 85 cents. July wheat futures have gained 22 cents, as well.

Over the last month, the new crop soybean-to-corn ratio has dropped 11% from around 2.6 to 2.26 as of this morning; meaning Dec corn has made a bigger percentage of gains than Nov beans. Such a steep fall in the ratio during this time frame has not occurred in over 25 years. This indicates the market is more worried about new crop corn stocks than bean stocks.

Next Wednesday we have a USDA S&D report. Due to Brazil’s continued dryness, analysts have been lowering their corn production numbers. It’s anticipated USDA will do the same, making global corn carry out less. Speaking of weather, this week’s Drought Monitor shows that roughly 26% of the U.S.’s corn production is within an area experiencing some level of abnormal dryness or drought. Time will tell if that is cause for concern. Something to consider over the weekend: if you have seed in the ground, but no contracts on the books, please think about protecting your risk by covering some of those costs. Have a great weekend and we’ll talk to you next week!
 
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What a wild week for the grain markets.  We continue to see big moves daily in the markets.  

Are some of these justified or is it all money chasing the hot thing of the day? My opinion is a little of both.  As I wrote several weeks ago, the end-user is nervous.  He needs corn and soybeans, and he is worried that they are going to cost him more tomorrow than today so he is looking to get coverage on old and new crop.  The second crop corn in Brazil is having some issues, so world corn stock will tighten. China seems to keep looking for corn and soybeans to meet their needs. In short, this has happened before.  

We saw this same kind of activity in the spring of 2008; the market topped out in June of that year at $7.30 cash and $7.28 new crop, by October 15th cash corn was $3.56.  We have to remember what goes up in the markets can also go down.  We need to look at the big picture, can we make money at these prices?  The answer I think is yes, so why not continue to sell new crop as prices move higher and lock in profits for 2021.  

I have a customer or two looking at the 22-23 crop as we have close to 5.00 corn and 12.00 soybeans for harvest of 2023.  Sure we don’t have a handle on input cost yet, but if history tells us anything the cure for high prices is high prices.

Continue to be safe as you get your crop planted this spring.
 
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Good Afternoon, this week brought us another week of continued market swings. But in the end, the market is still concerned about slowing down demand. As I write these comments it appears that we will finish out the week strong. Next week on Wednesday, May 12th we will see what the USDA says about this year’s carryout’s as well as the first look at the 21-22 carryout. The question is what will those look like and even if they are bullish have we run this market high enough to curve demand and if so where do we go from here. Lots of questions and not a lot of answers today. What I have been telling all the farmers I am working with is this. Let’s keep rewarding the market as it is going up but let's do smaller amounts and let’s make our next target further apart than we normally would. I have also used this comparison. When a runner runs in a race we know where the finish line is and they know when the race is over. When it comes to the grain markets nobody waves the checkered flag and say that the highs are in and now we are going lower. We don’t know that until long after the fact. So our goal should still be to have a good weighted average and the way we do that is to reward the market as we continue to move higher. Give any of us a call or send us a text so that we can continue to help each of you to have a good weighted average. Next week we will know what those numbers look like from USDA by this time and that will help point the direction going forward. Finally, I would like to wish all the Mothers out there a very Happy Mother’s Day. We all owe so much to our moms. They have helped shape each of our lives and have helped make us who we are today and words can’t thank them enough for all that they have done for us. Have a great weekend and again Happy Mother’s Day to all those moms out there!!!


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