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Corn's been the star this week

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Grain Market week in review: Corn flirts with $6, but will it go higher or lower?

Missed some market news this week? Here's what Jacquie Holland, Ben Potter and our Ag Marketing IQ bloggers shared this week.

Ag Marketing IQ

The trade is having difficulty reconciling the USDA export forecast for Chinese corn imports of 24 million metric tonnes (945 mbu) and the fact that year-to-date “known” purchases from the U.S. are on the order of 920 million bushels. And separately, Ukraine exports to China in the 20-21 crop year are likely approaching 200 mbu. So, it would appear there is room for another 200-225 boost in the export forecast in the coming months.

Belt and forecasts for cool temperatures over the next two weeks should continue to turn talk in the grain market from tight old crop stocks to the potential for 2021 production. A slow start to planting would raise questions about whether farmers will be able to increase acreage beyond the intentions USDA published at the end of March.

Thanks to a friendly April 9 USDA report, May corn futures have been able to push higher to the $6 per bu. level. Old crop futures are well supported now that ending stocks for the 2020/21 crop year have been reduced to 1.352 billion bushels, down from 1.5 billion bushels the month prior. All demand aspects on the April USDA supply/demand report for corn were increased. More corn is expected to be used for ethanol, feed, and exports.

From my vantage point, I can’t imagine ignoring these types of prices. I think the smart move as a person running a business is to lock in some profit margins. However, given what we’ve mentioned as to the potential of this market, producers must stay flexible in their plans. I like placing a floor under the market to quantify a worst-case scenario or selling corn and keeping ownership through a call above the market. Given how volatile our markets could be this summer, an insulated hedge of some sort where we can participate if this market explodes seems like a great idea to me.

Crop progress

Planters have begun to roll for the 2021 crop season – just a bit more slowly than analysts were anticipating, per the latest crop progress report from USDA, out Monday afternoon and covering the week through April 11.

Feedback from the Field

Farm Futures is kicking off its 2021 Feedback from the Field series. Nearly 600 responses were recorded in the 2020 series. And while the data is not scientific, the information will deliver a centralized view of cross-country growing conditions to farmers as they, along with other market watchers, gauge crop conditions for the 2021 growing season. Want to share crop conditions from your corner of the world? Click here for the survey link.

Podcast

With last Friday’s World Agricultural Supply and Demand Estimates (WASDE) report from USDA firmly in the rearview mirror, traders are once again focusing on spring weather.

And Mother Nature hasn’t always been cooperative this past week. Cooler-than-normal temperatures have descended on the Corn Belt in the U.S., and frost has hammered parts of Europe earlier this week.

Exports

The latest grain export inspection report from USDA held some mixed but mostly disappointing data for traders to digest. While corn, soybeans and wheat all trended lower week-over-week, these three crops still stayed within the range of trade estimates, and corn and soybean volume still hold a commanding lead over last year’s pace for the 2020/21 marketing year.

The latest round of export sales data from USDA didn’t have a lot of helpful data for traders to digest. Corn, soybeans and wheat all fell lower week-over-week, with old crop wheat sales landing at a marketing-year low for the second consecutive week. But sorghum sales offered a pleasant surprise, in contrast, rising to a marketing-year high.

Recaps

After yesterday’s lackluster export data sent May 2021 corn futures in Chicago running from $6/bushel, the complex clawed back some of its gains overnight on cool weather concerns as planting season reaches its height, though is likely still hitting technical resistance at the $6/bushel benchmark. Soybean futures prices notched a $0.04-$0.09/bushel gain overnight, following corn’s gains on planting delays and reduced acreage outlooks. Wheat continued its upward rally overnight, rising $0.01-$0.04/bushel. Updated crop condition reports in France have not yet quantified the frost damage to the soft winter wheat crop following frost damage, with more cooler temperatures on the way for the European Union’s top wheat producer.

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Corn prices faded for a second consecutive session Friday after another round of technical selling today. But nearby contracts still finished the week strong, moving more than 1.5% higher after capturing big gains earlier in the week. Soybean prices carved out moderate gains of around 1%, meantime, as traders shifted their focus back to historically tight supplies. Wheat prices were narrowly mixed, meantime, with CBOT futures dropping slightly while Kanas City HRW and MGEX spring wheat futures found small gains today.

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