Stronger dollar and profit-taking batter grain commodity futures prices in a quiet trading session
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It was a quiet day in the commodity markets, which did little to feed the bullish prices of late. Profit-takers had their day in the sun as corn prices continued to lick their wounds after yesterday’s abysmal weekly export sales report.
Today is the first notice day for March corn, soybean, and wheat contracts on the Chicago Board of Trade. A few deliveries were reported for the March corn contract, sending prices marginally higher.
Spring is less than a month away and as market watchers continue to compare this year to 2008, Total Farm Marketing’s Naomi Blohm takes a deep dive into pricing similarities between the two years. Blohm finds that in 2008, corn and soybean markets both saw sharp downward corrections during the month of March.
Could we see a repeat in 2021? It’s not impossible. But there is a silver lining – Blohm points out that the March 2008 correction provided the legs for a summer rally in the latest Ag Marketing IQ column.
There was little new news to support soybean prices today, which largely contributed to their slight losses. Expectations of a large Brazilian soy crop and concerns about African swine fever in China muted demand in today’s trading session. Losses were capped by strong U.S. usage projections.
Chicago-based AgResource released a lower production estimate for Brazil’s 2020/21 soybean crop currently being harvested, based on heavy rains slowing optimal harvest progress. AgResource pegs the crop at 4.775 billion bushels, down from USDA’s February 2021 WASDE estimate of 4.886 billion bushels.
This is significant because Brazil’s exportable soybean supplies are already forecast 8% lower than a year ago despite an 8% annual increase in soy production. But any further tightening of Brazil’s exportable supplies would send international soy buyers to U.S. shores. That would be favorable to upward price movement, especially after yesterday’s lackluster export report for soybeans.
Strong biodiesel production figures in December 2020 released today by the U.S. Energy Information Administration offer some insight into record-breaking domestic usage demand for soy stocks over the past several months. In December, U.S. biodiesel production rose 8 million gallons from the previous month to 159 million gallons.
But will January 2021 soy crush data begin to show signs of demand rationing? Monday’s crush report from USDA is likely to show 195.6 million bushels of soybeans were crushed in January 2021. If realized, it will be the second largest crush volume on record, following only October 2020’s crush rate of 196.5 million bushels.
The chances Monday’s crush volume will be high are pretty good. Average analyst guesses for the January 2021 crush range between 195.0 million – 196.1 million bushels. The January crush is expected to be even higher than December 2020 volumes, which came in at 193.7 million bushels – the second largest crush volume to date.
Soybean oil usage, which is the primary feedstock for biodiesel production, rose nearly 9% from the month prior to 744 million pounds. The increasing numbers in this morning’s report from the EIA suggest that demand rationing, rising soybean prices, and rapid export demand was not yet impacting biodiesel production as 2020 came to a close.
New African swine fever outbreaks in China sent Chinese soymeal futures on the Dalian Commodity Exchange 5% lower in overnight trade as concerns about demand weighed heavily on traders’ minds. The outbreaks, which began in China’s northern and northeastern provinces, have spread farther south suggesting this latest round of outbreaks may be more problematic to China’s goal of a pre-ASF hog herd volume by June 2021.
A strengthening dollar and a hangover from yesterday’s dismal export sales report continued to wreak havoc on wheat prices in today’s trading session. Large wheat crops in Australia and India also contributed to 2-3% lower prices for the wheat complex today as global wheat buyers find more accessible supplies than those in the U.S.
Russia released updated harvest data for the 2020/21 crop year this morning. Russia’s Federal Statistics Service (Rosstat) estimates 2020 wheat production at 3.156 billion bushels, a 15% increase from the previous year. The forecast remains the largest Russian wheat crop on record. USDA’s February 2021 WASDE report pegs the 2020 Russian wheat crop at 3.133 billion bushels. Russia is the world’s largest exporter of wheat.
Rosstat’s updated stats also placed 2020 Russian corn production at 547 million bushels, down nearly 3% from the year prior.
Despite a cold snap earlier this month, France’s winter wheat crop remains in good condition. As spring approaches, the winter wheat crop was rated at 87% good to excellent as of Monday according to French farm office FranceAgriMer, down from 96% good to excellent in November 2020. Favorable growing conditions will likely lead the 2021/22 French winter wheat crop to surpass last year’s yields, which struggled amid a wet planting season and late season drought.
Money managers and speculators have largely flocked back to grain commodities in recent weeks amid strong export forecasts and tight projected 2021/22 ending stocks. Today’s weekly Commitment of Trade report from the CFTC will provide more insights into investor sentiment for the February 17 – 23 reporting week.
Wheat, corn, and soybeans are likely to see another week of supportive speculator buying amid mixed winter wheat conditions in the U.S. and Russia, soybean harvest delays in Brazil, corn planting delays in Brazil, tight new crop ending stock projections, and strong long-term export forecasts as announced by USDA in last week’s outlook.
A storm system in the south will push precipitation further north late this evening, according to NOAA’s short-range forecasts. Expect a rain-snow mix in areas of the Eastern Corn Belt and Wisconsin over the next 24 hours, with the more northern areas of the storm receiving a higher chance of snow and ice.
Snow systems developing in the Northern Rockies could also send scattered snow showers into the Northern Plains over the weekend.
Coronavirus cases in the U.S. rose by 77,069 to 28,413,635 cases as of this morning according to the Johns Hopkins Coronavirus Resource Center. The death toll increased by 2,415 lives to 508,314 deaths as of press time.
The snow is melting in Northern Indiana and Between the Fencerows columnist Kyle Stackhouse is busy working on tax paperwork to bide time before starting on planting preparations. Winter meetings are winding down and last-minute changes to crop rotations are being made. Stackhouse is also trying to squirrel away enough chelates for micronutrients ahead of an industry-wide shortage.
Managing a marketing plan in the middle of planting is one of the last things farmers want to worry about in the spring. As planting activity ramps up, one good business goal to keep in mind is to replenish working capital. “Just make sure the farm gets a little healthier,” Illinois farmer Matt Bennett recommends while juggling both planting and marketing activities during the spring.
Keeping break even costs in the front of one’s mind also provides more flexibility to capitalize on marketing opportunities. “My go-to that has always worked for me is to try and stay consistent,” Bennett shares.
“You can have a bad day or two and still be off very well,” he says. “Being profitable without hitting the high is still more of a blessing than a curse.”
Spring is coming and the race for profits starts now. Looking for some helpful management tips to ensure a profitable harvest this fall? Farm Futures editors Mike Wilson and Ben Potter dig into marketing, scheduling, and delegation strategies to get the 2021 season started off on the right foot.
|Morning Ag Commodity Prices - 2/26/2021|
|Contract||Units||High||Low||Last||Net Change||% Change|
|MAR '21 CORN||$ / BSH||5.565||5.4625||5.565||0.0175||0.32%|
|MAY '21 CORN||$ / BSH||5.49||5.4||5.49||-0.0075||-0.14%|
|JUL '21 CORN||$ / BSH||5.3875||5.2925||5.365||-0.0325||-0.60%|
|SEP '21 CORN||$ / BSH||4.9175||4.8375||4.9025||-0.0275||-0.56%|
|DEC '21 CORN||$ / BSH||4.725||4.6525||4.71||-0.03||-0.63%|
|MAR '22 CORN||$ / BSH||4.7975||4.73||4.7875||-0.0275||-0.57%|
|MAY '22 CORN||$ / BSH||4.8325||4.7675||4.83||-0.02||-0.41%|
|MAR '21 SOYBEANS||$ / BSH||14.0825||13.8||14.0825||0.0225||0.16%|
|MAY '21 SOYBEANS||$ / BSH||14.08||13.7825||14.0775||0.0025||0.02%|
|JUL '21 SOYBEANS||$ / BSH||13.955||13.6775||13.9425||-0.03||-0.21%|
|AUG '21 SOYBEANS||$ / BSH||13.545||13.2925||13.5075||-0.0575||-0.42%|
|SEP '21 SOYBEANS||$ / BSH||12.7325||12.51||12.705||-0.05||-0.39%|
|NOV '21 SOYBEANS||$ / BSH||12.3||12.085||12.2575||-0.05||-0.41%|
|JAN '22 SOYBEANS||$ / BSH||12.2425||12.0425||12.205||-0.045||-0.37%|
|MAR '22 SOYBEANS||$ / BSH||11.9525||11.7975||11.92||-0.05||-0.42%|
|MAY '22 SOYBEANS||$ / BSH||11.88||11.7225||11.8125||-0.075||-0.65%|
|MAR '21 SOYBEAN OIL||$ / LB||51.5||50||51.5||0.54||1.06%|
|MAY '21 SOYBEAN OIL||$ / LB||50.08||48.6||50.08||0.41||0.83%|
|MAR '21 SOY MEAL||$ / TON||426.2||417||424.2||0.1||0.02%|
|MAY '21 SOY MEAL||$ / TON||425.1||415.3||422.4||-0.6||-0.14%|
|JUL '21 SOY MEAL||$ / TON||421.9||413.2||419.3||-1.1||-0.26%|
|AUG '21 SOY MEAL||$ / TON||410.2||402.3||407.9||-0.9||-0.22%|
|SEP '21 SOY MEAL||$ / TON||397.3||390||394.8||-1.5||-0.38%|
|MAR '21 Chicago SRW||$ / BSH||6.6575||6.53||6.55||-0.1675||-2.79%|
|MAY '21 Chicago SRW||$ / BSH||6.74||6.5825||6.6025||-0.155||-2.29%|
|JUL '21 Chicago SRW||$ / BSH||6.62||6.48||6.495||-0.14||-2.11%|
|SEP '21 Chicago SRW||$ / BSH||6.5825||6.4475||6.4575||-0.1425||-2.16%|
|DEC '21 Chicago SRW||$ / BSH||6.6175||6.4875||6.4975||-0.135||-2.04%|
|MAR '21 Kansas City HRW||$ / BSH||6.37||6.27||6.275||-0.1675||-2.60%|
|MAY '21 Kansas City HRW||$ / BSH||6.505||6.325||6.3375||-0.1875||-2.87%|
|JUL '21 Kansas City HRW||$ / BSH||6.54||6.365||6.37||-0.1925||-2.93%|
|SEP '21 Kansas City HRW||$ / BSH||6.58||6.405||6.405||-0.2||-3.03%|
|DEC '21 Kansas City HRW||$ / BSH||6.615||6.47||6.47||-0.2025||-3.03%|
|MAR '21 MLPS Spring Wheat||$ / BSH||6.385||6.2975||6.3||-0.115||-1.79%|
|MAY '21 MLPS Spring Wheat||$ / BSH||6.4875||6.37||6.3975||-0.1075||-1.65%|
|JUL '21 MLPS Spring Wheat||$ / BSH||6.565||6.4475||6.47||-0.115||-1.75%|
|SEP '21 MLPS Spring Wheat||$ / BSH||6.6325||6.52||6.55||-0.105||-1.58%|
|DEC '21 MLPS Spring Wheat||$ / BSH||6.7||6.6||6.63||-0.1||-1.49%|
|MAR '21 ICE Dollar Index||$||90.935||90.135||90.845||0.71||0.79%|
|AP '21 Light Crude||$ / BBL||63.57||61.34||61.49||-2.04||-3.21%|
|MA '21 Light Crude||$ / BBL||63.24||61.04||61.22||-2||-3.16%|
|MAR '21 ULS Diesel||$ /U GAL||1.9099||1.8487||1.8565||-0.0577||-3.03%|
|APR '21 ULS Diesel||$ /U GAL||1.9044||1.8388||1.8394||-0.0585||-3.08%|
|MAR '21 Gasoline||$ /U GAL||1.8979||1.8666||1.877||-0.0251||-1.33%|
|APR '21 Gasoline||$ /U GAL||1.9894||1.9429||1.9451||-0.0313||-1.58%|
|MAR '21 Feeder Cattle||$ / CWT||140.375||138.05||138.05||-2.375||-1.69%|
|APR '21 Feeder Cattle||$ / CWT||144.9||142||142||-3.075||-2.12%|
|FE '21 Live Cattle||$ / CWT||117.05||113.05||113.1||-3.95||-3.38%|
|AP '21 Live Cattle||$ / CWT||121.75||119.775||119.825||-1.85||-1.52%|
|APR '21 Live Hogs||$ / CWT||90.275||86.8||87.375||-2.375||-2.65%|
|MAY '21 Live Hogs||$ / CWT||91.35||88.7||88.875||-2.275||-2.50%|
|FEB '21 Class III Milk||$ / CWT||15.63||15.63||15.63||-0.02||-0.13%|
|MAR '21 Class III Milk||$ / CWT||16.56||16.08||16.28||-0.28||-1.69%|
|APR '21 Class III Milk||$ / CWT||17.5||16.95||17.45||0.05||0.29%|