Farm Futures logo

Plenty of data to sort through but the bottom line? Tight carryover remains.

Matt Bennett, Commodity analyst

May 14, 2021

5 Min Read
Steel grain storage bins in the countryside of Ontario at sunset
iStock/Getty Images

The mood of the market coming into this past week was at a fevered pitch. With a sharp rally for both corn and beans that made producers second-guess profitable sales on a daily basis, we were bound to see a setback.

While the May WASDE report was expected to be friendly, that should be no surprise; that expectation has ruled the roost for the last few weeks. Any time we come into a report with one-sided expectations, the potential exists for a less-than-stellar reaction, no matter the data. What’s next, moving forward?

Corn cool down

With regards to cash corn, the cool-down was needed but certainly not one producers were glad to see. For the week ending May 7th, July futures rallied 56 ½ cents, settling at $7.32 ¼, as bull-spreading and strong basis levels were the name of the game. This past week ending on the 14th was an entirely different story, given July futures settled at $6.43 ¾, down 88 ½ cents! This reaction was perhaps surprising if only looking at the USDA report, which slashed old-crop carry-out by 95 million-bushels to 1.257 billion-bushels.

With the USDA making what many thought was a much-needed 100 million bu. increase on exports, old-crop carry came in similar to the trade’s expectation. With basis steady to softer in most areas even as the markets were in free-fall mode, it appears old-crop highs could be tough to overcome.

New-crop corn also took a hit, although the pain wasn’t quite as stout. With Dec21 closing on May 7th at $6.36 ½, the market had rallied 62 ¾ cents. Bids for $6 corn right out of the field were common in the I-states and many producers took advantage on at least a handful of bushels. This weekend, those sales look awfully good as Dec21 lost 93 ¾ cents, settling at $5.42 ¾.

Wednesday’s report showed a carry of 1.507 billion bu. as USDA dropped new-crop exports by 325 mbu year-on-year down to 2.45 bbu. While this carry was over 100 mbu above trade expectations, one must remember we’re looking at extremely tight stocks, so the pressure is on to raise a big crop.  

Soybeans in neutral

When it comes to soybeans, not much has changed. Given USDA stuck to its 120 mbu number like it was glue, even strong exports and shipments weren’t able to get the agency to budge on any of the balance sheet. With carry for 2021/22 going up to 140 mbu, the trade is well aware there is little margin for error in 2021. We certainly need acres and the cooperation of mother nature IF we’re going to see a carry this next year that can be described as anything other than razor-thin.

For soybeans, the week went much smoother, with July beans settling at $15.86 ¼, just 3 ½ cents lower than the previous weekly close. November beans settled at $14.00 ¾, 29 ¾ cents lower on the week. While new beans didn’t fare as well as old beans with bull-spreading still intact, Nov beans certainly gained on Dec corn in a big way, making final acreage even more interesting.    

Your strategy now

So, how does a producer handle all this volatility? If you tell me it’s easier to sell at high prices than low prices, I very well may accuse you of fibbing. Hey, it’s tough to sell no matter the price. However, we must take a reality check when it comes to pricing old or new crop, whether it’s corn or beans.

When a producer tells me they can’t sell 90 cents lower than it was just a week ago without discussing what profit margins look like at these levels, I have a tough time listening. Let’s be real: almost $5.50 corn and $14 beans are something to complain about? I don’t think so. My best advice for producers is to look at what these prices mean to your operation on a profitability standpoint.

As your crop gets up and going and we navigate the potential craziness of these 2021 markets, we must strongly consider hedging off risk as we get more comfortable with production. The bottom line? If this corn market would go down this coming week just like it did this past week, it would be tough to stomach for those thinking these prices aren’t good enough. The name of the game is profit -- not just price, so be sure to manage your profit margins wisely.     

Reach Matt Bennett at 815-665-0462 or [email protected]


The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. AgMarket.Net is the Farm Division of John Stewart and Associates (JSA) based out of St Joe, MO and all futures and options trades are cleared through ADMIS in Chicago IL. This material has been prepared by an agent of JSA or a third party and is, or is in the nature of, a solicitation. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading infromation and advice is based on information taken from 3rd party sources that are believed to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. The services provided by JSA may not be available in all jurisdictions. It is possible that the country in which you are a resident prohibits us from opening and maintaining an account for you. 

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

About the Author(s)

Matt Bennett

Commodity analyst, AgMarket.Net

Matt is a Windsor, Ill., farmer and former grain elevator owner. He is Channel Seed’s grain marketing consultant and holds a Series 3 brokerage license doing business through AgMarket.Net, Farm Division of JSA. He specializes in formulating risk-management strategies for corn, soybean farmers and livestock producers. A graduate of University of Illinois, Matt and his wife Tiffany live on the family’s centennial farm where they raise their five children.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like