Expect within 20 minutes of the noon report release for market’s focus to return to central U.S. and world weather. Traders are also expecting Brazil’s corn production to decline.
Shortly after the report was released, new corn was up 2 cents, new soybeans up 4 cents, and wheat up 13 cents. Just before the report release, new corn was up 11 cents, new soybeans were up 12 cents cents, and wheat was up 7 cents.
Corn and soybean yields should see little changes compared to the June report. Yield numbers should start to see changes reflecting weather conditions beginning with the August 12 report.
Today, expect market reaction to the numbers to be volatile and quick. Numbers that are a surprise could easily move corn and soybeans multiple dimes within 3 minutes.
The tables below detail US production, yields, and ending stocks:
USDA 2021-22 US Corn, Soybean, Wheat Production and Yield (Production is Billion Bushels) (Yield is Bu/Acre)
USDA
Average
Range of
USDA
July 12
Estimate
Estimates
June 10
Corn Production
15.165
15.115
14.863-15.275
14.990
Corn Yield
179.500
178.800
177.0-179.5
179.500
Soybean Production
4.405
4.394
4.335-4.405
4.405
Soybean Yield
50.800
50.700
50.000-50.800
50.800
All Wheat
1.746
1.847
1.724-1.947
1.898
All Wheat Yield
45.800
50.700
USDA 2020-21 US Grain and Soybean Ending Stocks (Billion Bushels)
USDA
Average
Range of
USDA
July 12
Estimate
Estimates
June 10
Corn
1.082
1.088
1.000-1.257
1.107
Soybeans
0.135
0.134
.120-.149
0.135
USDA 2021-22 US Corn, Soybean, and Wheat Ending Stocks (Billion Bushels)
Last week’s USDA report had positive news for farmers, with both on farm stocks and planted acres being lower than the trade was estimating.
Corn
With this report published, weather will be the main market driver going forward. So far, 75% of the Corn Belt has had good weather. However, dry conditions in the northwest part of the Corn Belt have been a concern and its impact on yields is uncertain.
I updated my supply and demand tables to account for the USDA’s planted acre estimates. I’ve also included several potential yield outcomes (the red section).
If Carryout/Ending Stocks hit 1 billion (1,000), it would be as if the country was basically out of corn and prices could reach $8. However, if Carryout/Ending Stocks hit 1.6 billion (1,600), prices would probably pull back to around $4.
Based upon the USDA’s demand structure in the June report, and assuming trendline yields, current prices are somewhat overvalued.… Continue reading
Both corn and soybean acres were below trade estimates. Corn touched up the 40-cent limit
This USDA report day features two reports: U.S. June 30 Acreage and U.S. Quarterly Grain stocks. Watch to see how those numbers compare to trader estimates. Today there are no USDA supply and demand tables published. Updated supply and demand tables will be released on July 12.
Shortly after the report was released, new corn was up 39 cents, new soybeans up 72 cents, and wheat up 20 cents. Just before the report release, new corn was down 16 cents, new soybeans were down 19 cents, and wheat was down 5 cents.
The table below contains numbers for both the USDA June 30 Acreage Report and the USDA Quarterly Grain Stocks Report. The pre-report numbers have been provided by Reuters. The actual USDA numbers have been inserted in the second column.
This morning corn and soybean prices were down double digits as a result of overnight weather forecasts indicating increased rain opportunities in the Dakotas and Minnesota after July 7.… Continue reading
Last week the corn and bean markets were dominated by upcoming weather uncertainty and Friday’s Supreme Court ruling against the ethanol industry and potentially the entire renewable fuels industry. Plus, July options expired on Friday with some traders under water with their positions after this week’s price set back.
Everyone is waiting for Wednesday’s USDA report, arguably the biggest of the year, that will provide estimated total planted acres and quarterly stock numbers. Once the market better knows planted acres and remaining old crop supply, balance sheet estimates become clearer. I am estimating 93.1 million planted corn acres, a 2.5 million acre increase from March, and 89.1 million bean acres, up 1 million from March.
Beans — Comparing 2021 and 2014
The following chart shows a similar market situation developing between 2021 and the prices of beans in the summer of 2014.
Looking back to understand the price structure from 2014 one must first look at the 2013 bean crop.… Continue reading
Soybean futures had a historic price decline on Thursday but rallied back half of that decrease on Friday. Corn futures also fell the limit on Thursday but rallied back on Friday nearly all that was lost the day before.
Every day there is some type of rationale used to justify the price movement, but fundamentally supply is still tight, and the upcoming weather impact is still unknown. Therefore, last week’s price volatility is likely to continue for at least the next 4 weeks. The weather reports are updated every 12 hours and each one can cause the market to move substantially. Several weeks ago, I said to buckle up for a bumpy ride, but with these price swings it seems more like farmers are going off-roading and need to be strapped in with a 5-point harness.
Last week I traveled to and from Minneapolis to our family farm near Beatrice, NE.… Continue reading
Last week the USDA decreased the 2020 corn carryout which caused the stock to use ratio — the total usage compared to the total production — to drop to levels seen in the 2012 marketing year. The USDA also estimated the 2021 crop years carryout to be as tight as that of the 2013 crop year.
In early June of 2013 December corn traded above $5.70 only to drift lower all summer long until trading below $4.20 by Thanksgiving. It is important to remember how dry the country was as we progressed into the growing season and how worried most of the trade was that we would be extremely dry again. But timely rains kept the crop growing and we produced nearly a trend line crop that year. This was the exact opposite of the previous year when in mid-June of 2012 December corn prices were at $5.30 and within two months traded above $8.30 because it never rained in July. … Continue reading
Two things to watch with this report will be old corn ending stocks and old corn US exports. Brazil’s corn production is another key number to watch.
Shortly after the report was released, new corn was up 4 cents, new soybeans down 7 cents, and wheat down 3 cents. Just before the report release, new corn was up 7 cents, new soybeans were up 5 cents, and wheat was up 2 cents.
US corn exports have been strong since last fall. Ponder this – many have been expecting USDA to raise old corn US exports since January. They have increased but at a much slower pace than expected. The January WASDE report pegged US corn exports at 2.55 billion bushels. In May that export number was 2.775 billion bushels. Many analysts are expecting that export number to eventually reach 2.9 to 3.0 billion bushels. Since January, USDA has increased the export number three times.… Continue reading
Dry weather concerns in the Dakotas and possible ridging in the western corn belt later this month pushed some risk premium into the markets the past few days. December corn closed at $5.91, up 91 cents in 6 trading days. That leaves the market 50 cents below the highs from a month ago. November beans also rebounded $1.10 in those same 6 days and is only 30 cents from its high a month ago.
Old crop basis prices
Corn and bean basis has dropped significantly among end users throughout the entire Midwest.
Corn began to decrease when southern plains end users started cancelling some of their corn purchases and replaced it with wheat in the feed rations. That pushed those corn sales back up the marketing chain and into ethanol plants looking for coverage through June and July.
Bean basis fell because most processors covered their needs through July and pulled back bids once old crop futures rallied above $16.… Continue reading
The March 31 Prospective Plantings Report had the United States planting 91.1 million acres of corn and 87.6 million acres of soybeans. When that report was released, it was pretty common for many analysts to suggest we need a record corn yield and perfect weather to produce enough corn to satisfy global corn demand. While that report is old news, the question remains: how much above those numbers will USDA publish with the upcoming June 30 Acreage Report? The report will provide further insights into the actual number of corn and soybean acres planted this spring. Many are expecting both corn and soybean acres to increase from the March 31 report. Mid-May one private analyst indicated 2021 corn acres would be 96.8 million acres. That number caused numerous sell-offs which lasted into the last week of May.
China was extremely active last month buying U.S. new crop corn.… Continue reading
Last Wednesday, the corn market pulled back to a technical point and Thursday it bounced off it. Fundamentally, crops aren’t made or lost in May, so debates over planted acres and Chinese demand for old and new crop will continue to manipulate prices. In June, weather becomes a factor and it’s impossible to know today what exactly will happen. I expect a bumpy road yet for prices this summer.
The export delivery process
Recently I received a request for an explanation of the corn futures delivery process. So, I reached out to my good friend Joe Rich of O’Bryan Commodities to help me summarize this complex process.
History
The current delivery process was set up many decades ago when corn exports were nearly 30% of total demand. The total U.S. exported bushels stayed relatively consistent for 40 years but have increased about 50% in volume in the last 5 years.… Continue reading
Both July and December corn futures closed higher last week compared to the end of the previous week and are still at or above levels from 3 weeks ago.
Old crop corn
The factors impacting old crop corn prices:
Chinese demand for old crop corn is still uncertain, as many in the trade debate how many bushels will be shipped versus being pushed into next year’s crop.
As the economy opens and people start driving to work or on vacations, ethanol consumption should increase.
Beneficial rain throughout the southern U.S. is keeping the grass green and demand for feed stocks at levels that don’t strain the markets.
Old crop carryout is very tight. It seems many ethanol plants have coverage on through the first part of July, but August and early September is less certain. Plus, due to the large market inverse between July and September futures, it’s unlikely commercial elevators are going to be holding grain past July.… Continue reading
Over the 5 trading sessions last week corn dropped 90 cents, while beans were nearly unchanged. The report last Wednesday was neutral for old crop corn and probably a little bearish for new crop. The report still had a bullish tone for both old and new crop beans. There were many speculators going long corn into the Wednesday USDA report hoping for a bullish surprise in the market. This may have led to long position liquidations on Thursday and Friday.
Wednesday’s report was the first look at the 2021 crop demand with supply estimates still based on the March 3 planting intentions. Now the upcoming production size will be debated until the June 30 report when the actual corn and bean planted acre estimates are published. Then July and August weather will determine final yields. Once supply is better known, the demand structure will adjust to accommodate what is grown.… Continue reading
Much is expected with this report. Today’s report will now add in crop year 2021-2022 supply and demand tables. For decades going back to the 1970’s, the May report publishes the first supply and demand tables for new crop grains.
Shortly after the report was released, new corn was 8 cents, new soybeans up cents, and wheat down 7 cents. Just before the report release, new corn was down 5 cents, new soybeans were up 12 cents, and wheat down 4 cents.
New crop U.S. corn and soybean ending stocks will be closely watched. Following the March 31 USDA Prospective Plantings Report, numerous analysts suggested record corn and soybean yields would be needed ALONG with perfect weather to meet world grain demands. For the first time in history, U.S. ending stocks for both old and new soybeans are already considered “tight.”
The first “high wire act” is where USDA has been for months in particular for old crop U.S.… Continue reading
In the last 15 trading sessions, July corn futures closed higher on all but two of them for a total of a $1.40 per bushel increase. Corn hasn’t increased this quickly since the end of June during the 2012 drought and it’s only been 53 weeks since the 11-year market low of $3. Last week prices exceeded $7 — a level only seen three times in history, with the last time being spring 2013.
Prices are high because of Chinese demand and continued dry weather in Brazil. U.S. weather hasn’t even been an impact yet on these markets. Despite another week of increased prices most end users are staying profitable, which seems to indicate there is still more upside potential down the road.
The new crop corn-to-bean ratio shifted dramatically to favor planting corn this year. The western Corn Belt has already made substantial planting progress; however, the eastern Belt has been delayed by rain and the northwest is still quite dry.… Continue reading
The week’s biggest story was the inverse spread between the May and July contracts. Inverses mean that the market is short and really needs to find supply.
Corn
Corn rarely sees inverse at this point in the year, so when they show up in the spring, they are a very big deal. The spread opened in late April with May being 23 cents higher than July on Monday. By Thursday’s close it was 51 cents higher. This kind of spread hasn’t happened since the spring of 2013 which followed the drought year of 2012.
That Thursday was the last trading day on the May futures for most market participants before the delivery process starts on the May contracts. Therefore, it was also the last day that the May contract had a daily price limit. From now until its final trading day in mid-May, May futures movement won’t really matter because there are few market participants trading it. Everyone’s… Continue reading
May corn prices blew past $6, and then a few days later $6.50. Additionally, May futures gained on July futures by almost 10 cents this last week, which is huge, because in a normal week in a normal year a 1-cent move on that spread in a weeks’ time would be a big deal. Basis values across the US also increased another 5 cents this week. These are clear indications that the market is begging for corn and is unable to find it.
How much corn is left to sell by farmers?
The last USDA WASDE report showed on-farm cash corn prices unchanged at $4.30 from the March report, suggesting most farmers already priced the majority of their 2020 crop at lower values compared to today’s prices. Plus, elevator mangers across the Midwest are telling me that a lot of corn was sold around $4 futures and then most farmers sold another big portion of their production again in November when prices hit $4.50.… Continue reading
While temperatures were nearing normal last week on our farm in southeast Nebraska, a cold front has pushed in and put a stop to any planting progress. Usually, we start planting corn by April 11and try to finish within 7 to 10 days. However, ground temperatures in our area remain below 45 degrees and forecasts show lows near 25 degrees on Tuesday. The weather outlook later in the week looks more favorable, so hopefully everyone can start planting soon. The entire Corn Belt along I-80 and I-70 seems to be in the same situation through April 23.
South America’s second corn crop
Brazil’s weather is looking dry, so there are growing concerns for their second crop’s yield potential, with some already speculating a possible 20% yield reduction. If this dryness continues, it will likely support corn prices. However, it’s still early and many in the trade assumed Argentina would have a 20% yield reduction due to La Niña, but late season rains have improved conditions there and losses may only be around 10% below normal according to some recent estimates.… Continue reading
With the USDA increasing demand for all categories, the tightest carryout since summer 2014 is expected. This has led to plenty of uncertainty in the market.
Export potential
Exports have the most potential for change as traders are still debating how much U.S. corn will be exported before late August. Some believe cancelations are possible and reductions are still likely, while others expect exports will increase significantly.
Brazil impact
If exports stay strong, Brazilian corn could be imported into the southeast U.S. to relieve tight carryout pressure. However, much of Brazil’s corn crop was planted late, and with recent dry weather, yields may be compromised. Still, crop development there is early and good weather conditions could help improve yield potential.
U.S. New Crop corn
With current export estimates and the USDA predicting only 91.14 million corn acres for 2021, next year’s carryout could be potentially tighter than where we are this year.… Continue reading
The report was bullish for corn and wheat. There were neutral numbers for soybeans.
Average trade estimates leading into the report were corn ending stocks at 1.396 billion bushels, soybeans 119 million bushels and 847 million bushels of wheat. The trade was expecting slightly higher wheat stocks and expected the USDA to lower corn stocks while leaving soybeans relatively unchanged.
Corn ending stocks were 1.352 billion bushels, down from last month’s 1.502 billion bushels. Soybean ending stocks held steady from last month at 120 million bushels. Wheat ending stocks were 852 million bushels. Last month they were at 836 million bushels.
The trade was estimating Brazilian soybean production at 134.03 million tons. The USDA report estimate was higher at 136 million tons. Argentina soybean production was 47.5 million tons and that is unchanged from last month.
Immediate reaction to the report had May corn up 6 3/4 cents at $5.86 ½ , May soybeans were down 2 cents at $14.13 ¼ and wheat was up 10 ½ cents at 6.39 1/4 .… Continue reading
Since December, numerous rumblings have inferred U.S. corn exports were too low. At that time many had projected U.S. corn exports would be increasing 200 million to 300 million bushels with corn ending stocks shrinking a similar amount. The frustration has been high as USDA seemed stuck in a rut with the January, February, and March WASDE reports unchanged. At those times a common thread suggested USDA was merely “punting,” kicking the can down the road waiting for more information in particular to South America corn production in Brazil and Argentina.
Last month China purchased 4 million tons, or 157 million bushels of U.S. corn. Yet, corn prices were unable to break above the highs seen in early February. In February and March, both corn and soybeans were firmly entrenched in a sideways price pattern. The March 31 USDA Perspective Planting Report was a bullish surprise, a game changer which had both corn and soybeans locked up their respective daily limits of 25 cents and 70 cents. … Continue reading
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