Market Commentary > Weekly Crop Commentary - 7/2/2021

Weekly Crop Commentary - 7/2/2021

Jul 02, 2021

 
 
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The grain markets appear to be entering into the Fourth of July weekend on a positive note. Corn is poised to close some 60 cents higher on the week, while beans are pushing towards the $1.30 mark. The major driver in the market this week was the USDA acreage report on Wednesday, which took the trade by surprise. While corn acreage was increased by 1.5 million acres (92.7/91.2), beans were left unchanged (87.6) from the March anticipated planted acreage report. Thus, the early fireworks began, and we saw beans jump some .90 cents per bushel in just minutes. Most if not all traders found it difficult to believe that we did not increase bean planted acres with new crop bean prices in excess of $14.00 back in May. Additional support continues to be from the Northwestern grain belt, continuing to show the effect of LA Nina’s hot and dry weather. The crop ratings are in the 25% good/excellent, with not much relief in sight for the coming month in the Dakota’s, Minnesota, or Northern Iowa. Overall ratings for the US are in the 60% G/E, while Ohio is showing better ratings thru last Monday at 70% G/E. Cash basis on both corn and beans remained pretty much unchanged for the week. The USDA will release updated supply/demand numbers on Monday, July 12. We will get our first look at 21-22 carry-over adjustments based on updated acreage and early crop anticipated yields. CME is closed on Monday in observance of the Fourth of July holiday. If you have a few minutes, please take time to read: https://www.archives.gov/founding-docs/declaration-transcript.   Happy 245th birthday.
 

 
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Good afternoon.  Here we are at one of the more pivotal weekends for the summer growing season. Typically, this weekend is the make or break for the markets, and this year should not be any different.  The USDA on Wednesday gave us a friendly acreage and stocks report.  Holding true to fashion the June 30 reports are again market movers.  With the current acreage and demand structure we really have no room for error.  This had the market quickly put back in the weather premium that it had taken out before the report.  Once again weather is the key factor, and it will cause extreme volatility as we go deeper into the growing season.  Drought continues to plague the northern plains and northern corn belt.  That is the opposite of what we are seeing in this area as most received a couple inches of rain over the last 3 days.  All in all, the crops in our area look great. Bean basis in the area is steady as domestic soybean usage continues to be strong with good crush margins.  Corn basis has weakened up a bit as ethanol continues to show negative crush margins and the export market is too expensive to compete in the international market.  Hope everyone has a great 4th of July.
 
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The USDA came in on the lower side of expectations for planted acres, and ending stocks were also lower, bringing the markets back up to the highs.  

Thursday Brazil cut their corn production 1.8 MMT, this season has been a struggle for them with drought and now freezing temperatures.  We, the US, are also watching the weather very closely. 
Although we have received scattered rain showers parts of the Northern Plains and northern Midwest still have crops that are highly stressed with drought.  

The markets will be closed Monday.  Everyone have a safe 4th Of July.
 
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Happy Independence Day Weekend! It’s been a wild ride watching the markets this week. Corn had nearly a dollar trading range, soybeans about a buck-sixty, and wheat over a sixty-cent range. While USDA did increase corn acres from the March report, it was not as much as traders expected. Soybean acres did not change at all. The report stated there are 317 million Principal Crop (22 crops) Acres planted. This is higher than the last two years since there was so much prevent plant, but it is about 7-10 million acres less than 2012 thru 2014 when prices were also high. If those missing acres were not planted this year with high prices, are they gone for good?
 
With a smaller-than-expected acreage for corn and soybeans, demand might need to be rationed if we do not have trendline or better yields, so now we continue to watch the weather. In this week’s drought monitor 38% of corn production area is in some level of drought and 33% of soybean production area is experiencing drought. All eyes are on the Northern Plains and Northern Midwest forecasts.
 
Mechanicsburg received our first round of wheat harvest before the rains this week. Vomitoxin does not appear to be an issue on the samples we have run so far. We did see a sample with signs of sprout, so after the fields dry it would be best not to delay harvesting before it becomes a potential problem. Have a great holiday weekend!
 
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The last line of my article last week, get ready for the roller coaster and whiplash. That was true on Wednesday.  We saw soybeans and corn go from lower to limit higher in a matter of minutes.  The other thing I wrote was these markets do nothing quietly at these levels.

We are just going to have to get used to the increased volatility in these markets for a while.  When you have tight numbers, every little news item or weather forecast moves the market in a big way.  With the increased volatility, have your price targets in mind and get them set, it will make your marketing plan better in the long run.  Even if you think they are a little far-fetched or a long reach, put them in and let them work to help you market your crop.

The crops in my area look outstanding.  Most in the area received 1 to 2 inches of rain this week.  We will start to see corn tassel next week and wheat harvest should really get rolling by next Monday.  What little wheat we have seen come in is good quality and little to no VOM.

Have a safe and happy 4th of July, as we remember that a group of citizens put everything on the line to form a great country.
 
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Good Afternoon, this week's USDA report did not disappoint. As soon as the report was released the corn market went from down .20 cents to limit up at .40 cents higher. The planted acre numbers are as follows. We planted 92.7 million acres of corn and we planted 87.6 million acres of soybeans. Quarterly stocks were also below the average trade guess. Now we will turn our attention going forward to the next 30 to 60 days on the weather. We have almost no room for any error on this year's yields. The 2nd crop corn in Brazil continues to tighten up as well. This week saw 2 nights with below freezing temps and its my understanding that it hurt another 2 to 3% of the crop. That not a lot but when yields continue to decline because of dryness in a lot of the area every little reduction makes a difference. I have attached a map provided by Stone X that shows corn production by county throughout the corn belt in 2020. What I want you to pay attention to is the blue line that divides the haves and have nots when it pertains to rainfall this year as well as the counties in red. Everything west of the blue dividing line has not been getting rain and everywhere east of the blue line has been getting pretty good coverage. Each of the counties shaded in red produce 20 million or more bushels per county. The eastern corn belt has the potential to be above trend yields and the western corn belt could be below trend yields. Only time will tell. But the question today is this. If the eastern corn belt is above trend and the western corn belt is below trend can the eastern corn belt make up that production that would be lost in the west with so many of those western corn belt counties producing over 20 million bushels of corn per county? As one person said that I have a lot of respect for this week. “Throw a dart and take some Dramamine, this roller coaster ride has just begun.” Have a wonderful 4th Of July!!!!
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Heritage Cooperative
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Delaware, OH 43015



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