Market Commentary > Weekly Crop Commentary - 6/25/2021

Weekly Crop Commentary - 6/25/2021

Jun 25, 2021

 
 
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The grain prices this week have drifted lower as recent rain events in the northwestern corn belt have sent buyers packing. The market is feeling much more comfortable as crop condition ratings came in at 65% good to excellent on corn and 60% on soybeans. With the upcoming USDA acreage and stocks report on tap for Wednesday, the expectation is that both corn and bean planted acres will be up from March numbers. Adding to the mix, the current weather forecast is putting additional pressure on grain prices. While we have traded over a dollar a bushel off recent highs, we need to keep in mind we are still well above cash price levels from just a year ago. Granted, a lot has taken place in the past year, but we are two dollars a bushel higher on corn and four dollars higher on beans! The cash basis has taken a hit in the past two weeks as end users have found ample coverage for the near term and do not want to get over-bought as we deal with the inverted market on commodity future prices. Wheat programs are out and again this year, we have no drying charges on wet wheat (shrink only). We will do our very best to provide hours for wheat deliveries through the holiday weekend if needed. Please check our website for wheat programs and updates in the coming week.

 
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Good afternoon.  It has been a couple weeks since we last wrote commentary, and we have seen some drastic moves in the markets.  The crops in our area look great, so when the USDA has Ohio’s good to excellent on corn at 76% and 72% on soybean it was not a big surprise.  The forecast for the week ahead is wet also, so moisture for us does not appear to be a problem.  Many of the areas to the west that have been dry are getting some much-needed moisture which is not helping the markets.  As we approach the end of the month, we appear to be seeing some risk off mentality as bids get rolled to other months and we have the much-anticipated final acre report and quarterly grain stocks.

Basis levels for corn and beans this week were on the defensive.  As ethanol plants were rolling corn bids to the Sept futures, we also seen them back off upwards of thirty cents from just a couple days before.  With this market no one wants to buy more than one bushel more than necessary.  Old crop stocks need to be priced.  The way things are shaping up we could see cash prices converge into new crop, not the other way around.  This need to be remembered as we do not want to see the inverse go away for bushels that are still unpriced.  We still have good prices for corn and beans, but they are well off the highs.  

There are some things going on in Washington on the biofuel blending front. Small refiners are still fighting the blend mandate.  This is putting uncertainty into an already fragile market.  We all know that markets do not like uncertainty.  Wheat harvest is just around the corner and that is always an exciting time as it usually involves Independence Day.  I hope you all have a good weekend and look forward to next week.
 
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Here we are again another week of rain forecasted that is putting a hurting on the markets.   For the next seven days, there is a band of rain forecasted from Texas going up through Illinois/Indiana that could get up to three inches.   There was a substantial flash sale this week to China, Unknown, and Mexico could be a start of heavier sales like last year when China started in July, we will have to wait and see.  

The report for Acreages, quarterly stocks, and supply and demand will be out at noon on Wednesday. 
It is no surprise that the estimates for acres of corn and bean are much higher than the March report.  

With the forecast of rain, the mediocre weekly export report, the Funds still in a long position, and next week’s report puts the bulls in control of the markets for now.
 
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Happy Friday! We’re firmly in a weather market as other news has been minimal. The 7-10 day forecast is on the bearish side as a large portion of the “I” States, Missouri, and Wisconsin is set to receive 1-3” or more of rain. Perhaps too much rain in some areas, as parts of Missouri received over a foot of rain last night. Hopefully, the upcoming storms track a little further north to Minnesota and South Dakota, as some models show, where it is needed most.

In USDA’s Flash Sale notices this week, 46.4 million bushels of new soybeans have been sold to China, Mexico, and unknown, but it seemed to have little effect on the markets. It’s easy to look at these new crop prices and be disappointed at what they’ve done the last couple weeks, but just remember we are still closer to the highs than we are the lows.

Wheat harvest is quickly approaching. This year’s discount sheets have been uploaded to heritagecooperative.com and can be found about halfway down the Grain page. Have a great weekend and we’ll see you next week!
 
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If you can find someone who can honestly and with good backup tell you what is going on with the markets the last few weeks, I would like to meet them. 

I wrote several weeks ago at these price levels these markets do nothing quietly, the last couple of weeks are a great example. We have seen the market stabilize a little this week but we are still seeing big daily moves. This is going to continue until we figure out what we are going to have for a crop and what China does over the next few months.

Wheat harvest is just around the corner, so that will make things a little different at our elevators for a week or so.  What I have seen looks good and some of my wet wheat tests have shown little to no vom, so lets’ hope that continues. I am tired of dealing with vom this year.

If you think the grain markets have been wild over the last 60 days, take a look at lumber futures. Not for the faint of heart.

Like I wrote a few weeks ago, have a plan, get sales made when we have prices that you like and don’t second guess yourself. This is going to be a wild summer until we have a better handle on what we are going to have for production. Get ready for the roller coaster and whiplash.
 
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Good Afternoon, Today’s market action continues to see the liquidation on all 3 fronts. The main driver for the pullback continues to be the weather. Indiana, Illinois, and Michigan continue to see good rain coverage today. There is talk that parts of Indiana and Illinois could see as much as 7 to 8 inches of rain out of this system. My midday report showed that parts of northwestern Missouri had as much as 14 inches of rain in the last 24 hours. Here in eastern Ohio, we see updated forecast taking out a lot of the rain for us over the next few days. This current rain event is coming from 2 large high pressure systems , one off to the west as well as a high pressure system off the east coast. We have a cut off upper level low sitting in between these two high pressure systems not letting this cutoff low to move. The question going forward is after this rain event what comes next? There is some talk that we will see high pressure take over again and there will be a lack of moisture in the western corn belt. Stay tuned to see where we go from here. The other big thing coming next week is our updated planted acres for corn & beans. Most believe that the US farmer has planted a fair amount more this year. I am also in that camp. With the recent pull back off the highs it's hard to imagine that even if the report is negative that with we would be limit down but anything is possible. Once we get the acre number behind us weather will become the primary factor going forward. With stocks continuing to be tight the US must have a good national average both for corn & beans and until we know more the volatility in this market will continue. Have a great weekend!!!!
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Heritage Cooperative
59 Greif Parkway
Delaware, OH 43015



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