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More price consolidation ahead of Friday’s USDA report

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Will this report finally move prices out of the current trading ranges?

I am not a fan of “hurry up and wait.” Yet here we are again, with grain prices still trading in a consolidation pattern, even after the friendly March Quarterly Stocks and Prospective Plantings report.

May Corn futures have support on daily charts at the $5.30 area, while resistance is near the $5.80 price point. May soybean futures have support near the $13.75 area while resistance is near $14.50.

These are wide trading ranges, but they have held for months thanks to tight ending stocks of both domestic corn and soybean supplies.

Perhaps we should be thankful; normal seasonal price patterns typically suggest a price sell off for grain futures from Mid-March through Mid-May. Yet, here we are, with corn and soybean futures prices continuing to defy gravity at these loftier prices – at least, for the moment.

What’s next?

Next potential market mover will be on Friday, April 9th with a monthly USDA supply and demand report. The agency hasn’t shown much for demand changes or global supply changes in over two months, so trade is anxious for some fresh news.

Heading into the report, trade anticipates slight reductions for both corn and soybean carryout. Current ending stocks for soybeans for the 2020/21 crop year are pegged at 120 million bushels. For Friday’s report the average estimate is 118 million bushel with a range of 105 to 135 million bushels. For corn, ending stocks for the 2020/21 crop year are currently pegged at 1.5 billion bushels, and pre-report estimates have near 1.38 billion bushels with a range of 1.2 to 1.55 billion bushels.

Corn’s silver lining demand

Looking at corn demand, silver linings for demand continue to show, starting with ethanol. The weekly ethanol report for week ending April 2 said that total production was 6.825 million barrels, up 1 percent from the week prior. Corn used in last week’s production was estimated to be near 98.5 million bushels, ahead of the 96 million bushels needed each week to keep corn use for ethanol in line with the USDA projection of 4.95 billion bushels.

In related news, ADM is restarting ethanol production at two facilities: Cedar Rapids, Iowa, and Columbus, Nebraska. These facilities will start accepting corn in Mid-April and expect to be fully operational by late spring. Curiosity will get the best of me as I wonder how a start-up of those two facilities will affect cash prices and basis for corn in those Midwestern areas.

Trade will also monitor demand for corn and wheat for feed, along with an important look at export demand for all grains.

And now, exports

Corn export sales on the books for the 2020/21 crop year are at 99.5% of USDA projections of 2.6 billion bushels, and what has actually left the country is near 50% of those sales. Most industry experts do feel that the remaining corn will be able to get on ships and exported before this crop year comes to a close. Will the USDA increase export demand for corn or beans on Friday’s report? Will the USDA increase the amount of corn that China will be importing not only for this marketing year, but next year as well? Will global corn carryout nudge lower with an expected smaller second crop corn in Brazil?

Many of the important industry questions may finally be answered on Friday. We only need to “hurry up and wait” just a bit longer.

Reach Naomi Blohm: 800-334-9779 Twitter: @naomiblohm   and naomi@totalfarmmarketing.com
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The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 
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