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Corn prices soar

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Market week in review: Soybeans, wheat end week higher as USDA delivers mostly positive grain export data.

Missed some market news this week? Check out the latest from Jacquie Holland, Ben Potter and our Ag Marketing IQ bloggers.

Ag Marketing IQ

The volatility the market has seen the past few months in old crop soybeans does not appear to be over just yet. We appear to be oversold on export soybeans; domestic soybean meal demand continues to run well ahead of USDA projections with only export meal showing signs of backing off.

This year you don’t need to beware March 15, but your risk management plan certainty needs to be aware of it. In addition to the usual crop insurance deadline in many states, the middle of March is also the final date for 2021 farm program signup. Choices made at the start of the current Farm Bill for 2019 and 2020 can be changed annually for the last three years of the law. And even if you’ve already enrolled and selected your crop insurance coverage, figuring how these programs fit into your marketing plan is a crucial chore before the real work of planting begins soon.

In the early months of 2021, without that extra domestic demand from the food box program, milk prices sank to near $15.00 and $16.00 -- not even breakeven for many dairy farms. The December milk production report showed production up 3%, which severely weighed on prices in early 2021. However, there may be optimism for milk prices just around the corner.

February was a successful month for corn and soybeans producers. For the month, new crop corn and soybeans gained 25.5 and 80 cents respectively while the average prices for the month for crop insurance purposes are $4.58 and $11.87. Corn’s February average is a full 70 cents above last year’s levels while the February average for soybeans was an incredible $2.70 above 2020’s guarantee.

Exports

UDSA’s latest round of grain export inspection report held mostly positive data for traders to digest. Corn volume saw marked improvement and made it to the upper end of trade estimates. Soybeans also notched week-over-week gains and exceeded analyst expectations. Wheat volume continues to disappoint, however, with another round of weekly declines while sliding below the entire range of trade guesses.

The newest round of export sales and shipment data from USDA, out Thursday morning and covering the week through February 25, had some bearish and bullish data to digest. Although soybean and wheat volume increased week-over-week, totals were still below their prior four-week averages. And although corn sales fell to a marketing-year low, shipments re-wrote the record books last week.

One export sale was reported this week. Japan took 6.9 million bushels of corn for delivery to Japan during the 2021/2022 marketing year. 

Advanced Marketing Class

I am a proponent of spring and early summer sales, but I think every producer needs a minimum price objective that is consistent with production costs. This is the approach that guides my friend Terry Timer. Like Aunt Tilly, Terry prices 80% of her anticipated new crop corn and soybeans in 20% monthly increments, March to June, and the remaining 20% at harvest. Unlike Tilly, however, Terry has a minimum price objective for new crop corn and soybeans that is consistent with her break-even cost of production.

Recaps

Corn prices rose by 1% this morning on rising prices in the energy complex. OPEC and allied producers will not increase production in April, citing uncertainty surrounding the economic recovery from the pandemic as the main deterrent from expansion. Reduced soybean forecasts from Argentina yesterday and continued harvest delays in Brazil sent the soybean complex rising this morning. The dollar rose to a three-month high overnight after Asian and U.S. stocks fell on rising U.S. Treasury bond yields.

Corn prices soared Friday, moving around 3% higher on a wave of technical buying on sound supply and demand fundamentals after spilling to three-week lows yesterday. Soybean prices trended about 1.5% higher Friday on a round of technical buying supported by dry weather forecasts for Argentina, with spillover strength from corn lending additional support today. Wheat prices followed corn and soybeans higher Friday, closing with moderate gains on some technical buying.

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