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More price consolidation ahead of Friday’s USDA reportMore price consolidation ahead of Friday’s USDA report

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

Naomi Blohm

April 8, 2021

4 Min Read
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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 [email protected]

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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