Week ends on quiet note

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Market week in review: Disappointing exports send corn, soybean, wheat prices downward.

Missed some market news this week? Here's what you need to catch up.

Ag Marketing IQ

If there is one positive to all the COVID-19 related cancellations for me, it would be less travel and the opportunity to be at my desk most days during one of the longest lasting, highest volatility price increases we have ever seen. In the past we have witnessed ag markets reach higher pricing levels than we are seeing today, but to be in an uptrend with only a few price breaks since August is a unique situation. It is also a great opportunity for the grower.

Multi-year highs in old crop corn and soybean futures are part of a larger commodity boom sweeping markets from crude oil to copper. But USDA helped turn traders’ attention at least a little to new crop prospects last week at its annual outlook conference.

Acreage Battle Follows Price Signals

USDA announced at their annual outlook forum that their 2021/22 estimates for total acreage of corn, wheat and soybeans rose to 227.0 million acres from last year’s 218.3 million. That compares to an average trade guess of 228.0 million acres. I do not think that these estimates were any surprise to the trade.

Price volatility continues for grain futures. Extreme price swings, dynamic fundamentals, and strong global demand are creating an exciting bull market. Last Friday’s USDA Outlook Forum fed the bulls again with a continued view of tight ending stocks for corn, soybeans, and wheat for the remainder of 2021, and even heading into 2022. After trading quietly since the Feb. 9 USDA report, grain futures prices resiliently resumed the uptrend this week. The outlook again remains friendly. Looking ahead, here are items to watch closing during the month of March which could spur the round of price action for this bull market.

The agricultural community is due for a super cycle. History tells us that four to six years of cheap sideways consolidation builds demand and is usually followed by a two- to four-year rally in markets. Technical traders often identify this four to six year consolidation as a “rounded bottom.” These are rare and very powerful technical formations when they begin to break out.

U.S. Corn Stocks & Stocks To Use Ratio

Exports

USDA’s latest weekly grain export inspection report, out Monday morning and covering the week through February 18, didn’t hold a lot of bullish data for traders to digest. Corn, soybeans and wheat all trended moderately lower from a week ago, while all three crops managed to stay within the range of trade estimates.

The latest USDA export sales report, covering the week through February 18, held a lot of bearish data to digest. Corn and wheat totals faded to marketing-year lows, while soybeans took a significant week-over-week tumble. The disappointing data set pushed grain prices substantially lower Thursday morning.

Podcast

Ethanol production tilted 28% lower this past week to multi-month lows of just 658,000 barrels per day. The question is – why? That’s just one of several topics we discussed in the latest Midweek Markets podcast. Listen to the latest Midweek Markets podcast for February 24, 2021.

Recaps

Corn futures prices fell 1% as the losses continued after weak export sale data was released by USDA yesterday. Prices also took a hit on falling financial markets and a round of profit-taking after yesterday morning’s six-and-a-half-year highs. Concerns about Chinese demand amid increasing concern about new African swine fever outbreaks across China drove soybean futures prices over 1.5% lower this morning. Profit-taking was also at play as a weak export report from USDA yesterday also played a significant role in investors’ willingness to pay for higher soybean prices. Wheat prices followed the losses in the grains complex lower this morning, with lackluster export data yesterday continuing to wreak havoc on prices. It was the lowest weekly export sale volume for wheat in over a year. A stronger dollar was the final nail in the coffin for wheat prices this morning.

It was a quiet day in the commodity markets, which did little to feed the bullish prices of late. Profit-takers had their day in the sun as corn prices continued to lick their wounds after yesterday’s abysmal weekly export sales report. There was little new news to support soybean prices today, which largely contributed to their slight losses. Expectations of a large Brazilian soy crop and concerns about African swine fever in China muted demand in today’s trading session. A strengthening dollar and a hangover from yesterday’s dismal export sales report continued to wreak havoc on wheat prices in today’s trading session. Large wheat crops in Australia and India also contributed to 2-3% lower prices for the wheat complex today as global wheat buyers find more accessible supplies than those in the U.S.

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