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Market week in review: WASDE surprises markets, fertilizer costs soar to multi-year highs.

Compiled by staff

February 12, 2021

3 Min Read
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Missed some market news this week? From the WASDE release to the cotton market, we've got something for you.

Ag Marketing IQ

In January I wrote about a surge in nutrient costs. That rally threatened to go hyperbolic last week, taking N-P-K markets to multi-year highs with triple-digit gains in some products. What do current expenses mean for your bottom line? A look at new offer sheets posted last week offers some unsettling clues.

The last time our stocks-to-use ratio was at this level was six years ago in the 2014/2015 crop year. Corn prices in the fall of 2014 dropped to $3.20 per bushel. In the summer of 2015, corn topped out at $4.40. While past performance does not necessarily equal future results, these figures are worth pondering. Are we simply looking at a weather market, are current prices inflated, or is the USDA off in their ending stocks number?

Cotton futures continue to excel upward in a rally that began back in April, with still no sign of a top. U.S. cotton demand remains strong, while supplies of cotton have been reduced due to a combination of less production and strong export demand. The result is that ending stocks are nearly cut in half from year ago levels.

WASDE

USDA’s February 2021 World Agricultural Supply and Demand Estimates report surprised markets – but not quite in the way everyone expected. Domestic corn and soybean supplies tightened on rising exports to China, but global corn and soybean production is forecast to reap strong yields despite dry global growing conditions

Export

Costa Rica, Guatemala and unknown destinations purchased corn this week, while unknown destinations cancelled 5.2 million bushels of corn.

The latest batch of grain export inspection data from USDA, out Monday morning and covering the week through February 4, held mostly positive data for traders to digest today. Corn inspections saw moderate week-over-week improvements and exceeded all analyst estimates. Wheat also saw moderate improvements while staying near the middle of trade estimates. Soybeans faced a modest decline from last week, in contrast.

USDA’s new export report, covering the week through February 4, held some healthy sales data, although there was a lack of eye-popping numbers that could match last week’s performance, which saw the biggest weekly corn volume on record. Corn’s tally returned to orbit, landing in the middle of analyst estimates. Soybeans climbed to the upper end of trade guesses, meantime, and wheat moved above all analyst estimates last week.

Recaps

Corn prices ticked up this morning amid renewed buying interest following lower prices this week following USDA’s updated monthly supply and demand estimates on Tuesday. Regardless of the overnight gains, corn prices are expected to take a 1% hit on the week. Soybean prices traded half a percent higher this morning on delayed harvest activity in Brazil and shrinking stocks in the U.S. Chicago wheat prices struggled to post gains this morning, while futures in Kansas City and Minneapolis inched up amid winterkill concerns in the Northern and Central Plains.

Wheat prices were mixed but mostly higher, with some winter wheat contracts up as much as 1% Friday on a round of technical buying spurred by weather worries emerging in the frozen Midwest and Plains. Soybean prices firmed by about 0.25% on Friday, leaving prices slightly improved for the week. Corn prices put a period on a bad week by spilling another 0.25% lower on a round of technical selling today.

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