The report was bullish for both corn and soybeans.
U.S. acres numbers for today: corn 91.44 million acres, soybean 87.6 million acres, and all wheat 46.35 million acres. U.S. grain stocks are: corn 7.701 billion bushels, soybean stocks 1.564 billion bushels, and wheat stocks 1.314 billion bushels.
Watch the acres total for corn and soybeans. Early estimates had that total at 182-183 million acres. A number above that total will be difficult to actually achieve. Last year it was 173.9 million acres.
The corn and soybean price declines of the past two weeks has the potential to see this report set the stage differently compared to past March 31 reports. Some suggest neutral reports could yield price gains today. That is not normal.
Just after the noon report release, corn was up 25 cents, soybeans up 60 cents, and wheat up 13 cents.… Continue reading
The upcoming March 31st USDA report is highly anticipated for several reasons:
It provides the estimated remaining stocks stored on farms and at commercial elevators.
It shows how tight stocks are and if price rationing is necessary.
It includes the first official planting intentions estimate for the upcoming year based upon surveys filled out by producers in early March.
Last month the USDA Economic Outlook Forum estimated 92 million corn acres and 90 million soybean acres would be planted in 2021. However, these are budgetary derived numbers and not based upon actual producer surveys. Therefore, the market will be comparing these estimates and other private estimates until the March 31streport. Prices will then adjust accordingly.
How important is each USDA report?
Many people say the end of March report day is important, and it is, but how does it compare with other reports throughout the year?… Continue reading
China’s purchasing of corn and beans is the biggest factor impacting the market right now. Everything else seems to be noise. If buying continues to outpace any potential cancellations, stocks will decrease, and prices should trend higher. If the reverse happens then the market will have difficulty remaining at these levels.
Soybean outlook
Most U.S. beans have already been shipped, and while some of the remaining ones could still be canceled, there is less opportunity every day for that to happen. This means old crop carryout is tight and its likely next year’s will be too pending planting intentions. Beans seem to have more upside potential than downside risk at this point.
Corn outlook
China added more purchases this week, which suggests the USDA will likely need to increase export estimates and decrease carryout in upcoming reports. Unlike beans, a lot of corn has not been shipped out of the U.S.… Continue reading
Global demand is focused on China’s upcoming needs, which are largely unknown. The market is watching to see if they will buy more, cancel purchases, or delay shipments to next season.
Supply is also uncertain and ever changing because it is heavily influenced by U.S. and South American weather, which is highly unpredictable.
With so much uncertainty in so many areas of the world, the market will continue to be volatile until U.S. crop production estimates become clearer by August.
South American corn production
There are many different corn crops grown in South America. The earliest planted is the Brazil’s first season corn crop which is planted from early September to mid-November. Argentina also grows a corn crop at nearly the same time with most of it planted in October. Brazil’s second and largest corn crop is planted in February and early March. In the last couple of years there has even been a third Brazilian crop being planted in the north eastern portion of the country which is planted at nearly the same time as the U.S.… Continue reading
Late last week, March corn and beans futures were trading at higher values than May contracts. Since this is happening in the March contract delivery period, it means demand for the physical commodity is extremely high. Also, basis is stronger for both commodities throughout the Midwest. This suggests the market is begging for grain now and futures may have to work higher to incentivize farmers to sell. However, if futures move too high, it could lead to increased South American export demand and U.S. export cancellations.
The acreage battle is on between corn and beans, with minimal consideration for other crops this year. A couple weeks ago the USDA Economic Outlook Forum predicted 92 million corn acres and 90 million soybean acres (182 million combined) would get planted this year. That’s 2 million more total corn and bean acres than 2018, which is the highest on record.… Continue reading
The report was neutral for corn and negative for soybeans. Brazil soybean production was up one million tons, a small surprise.
It is most interesting to review the market expectations for USDA reports in 2021. Last month, traders were expecting lots of changes with the monthly WASDE Report. That did not happen. The word, “punt,” was used numerous times in comments which followed the February WASDE Report when referencing what USDA did last month.
Conversely, few changes were expected today. The trader’s estimates for corn ending stocks are down 31 million bushels from last month. Trader estimates for soybean ending stocks are down just 3 million bushels compared to February.
Plenty of price volatility has taken place in the past 30 days. Both old and new crop soybeans have made new contract highs. New crop corn made the most new contract highs with the December 2021 or March 2022 CBOT contracts.… Continue reading
The monthly USDA WASDE Report is on March 9. Traders and producers will be most anxious to learn if U.S. corn and soybean exports will increase compared to the February report which projected corn exports at 2.6 billion bushels, while soybean exports were pegged at 2.2 billion bushels. The trade was most disappointed with the February WASDE Report. Some analysts suggested USDA “punted until March or April,” when corn exports were not increased to the degree of expectations. It appeared USDA desired to gather more information regarding South America corn and soybean production in spite of dry weather conditions during December and the first five weeks of 2021.
The second and third USDA reports this month will be on March 31 when the Prospective Plantings Report and Quarterly Grain Stocks Report are released. It seems a forgone conclusion U.S. corn and soybean acres will be above those planted in 2020.… Continue reading
Corn and bean prices will continue to be extremely volatile as the market determines how much grain will ultimately be exported out of the U.S. South America is beginning their harvest and currently their corn and beans are worth less than the U.S. right now. This could slow down U.S. export demand.
While a large percentage of the beans purchased for export have been shipped, a lot of corn purchased for export has not. Both crops still face the potential for cancellations, which could lead to larger carryouts and impact prices long-term.
How do cancellations work? To answer this, it helps to understand how grain trading works after farmers sell and deliver their grain.
What happens to grain after it is delivered to elevators?
Some farmers may be surprised how many times a bushel of grain changes hands before it’s consumed or processed in another country.… Continue reading
Corn demand from China has increased dramatically over the last few months causing corn to rally $2 per bushel from August lows. This chart shows how unprecedented China’s recent corn import demand has been compared to the last 60 years.
Source: Matt Campbell
Currently the USDA estimates China will import 24 MMT (Million Metric Tons) of corn from all over the world this year. Some private forecasts indicate it could even exceed 30 MMT (1 MMT = approx. 40 million bushels). To put that into perspective, China has only imported about 75 MMT of corn TOTAL over the last 60 years.
And for the last 6 years, of the 50 MMT of corn the US exports on average each year, only 2 MMT were sent to China (4%) each year. In the last 6 years the US hasn’t provided even half of China’s yearly import needs. … Continue reading
The February USDA report is usually considered less important than most other monthly reports but this one offered some surprises. Here are some report observations and highlights.
Corn
The market was hoping for some big adjustments but were disappointed when the corn carryout was only decreased 50 million bushels. The average trade guess had expected a drop of nearly 150 million bushels.
The USDA seems to be playing catch up when estimating final carryout at the end of the marketing year in August. If they lower carryout too quickly, the market could spike early and force a rapid drop in demand. That could in turn hurt overall demand and trim usage later or even worse decrease demand long-term. On the other hand, decreasing carryout too slowly may mean limited short-term demand rationing, which could cause supply issues later this year and early 2022.
February’s report showed exports increased by 50 million bushels.… Continue reading
The report was negative for corn and neutral for soybeans.
Traders were expecting lots of changes with this report, which included U.S. corn and U.S. soybean ending stocks, U.S. corn and U.S. soybean exports, as well as corn and soybean production numbers in South America. World ending stocks will also be closely watched.
However, from an historical perspective, the February WASDE often yields few changes.
Corn ending stocks were 1.502 billion bushels, last month was 1.552 billion bushels. Soybean ending stocks were 120 million bushels, last month was 140 million bushels. Wheat ending stocks were 836 million bushels, last month at 836 million bushels. Soybean crush was unchanged with exports up 20 million bushels. Corn exports were up 50 million bushels and ethanol was unchanged.
Brazil soybean production was 133 million tons, last month was 133 million tons. Argentina soybean production was 48 million tons, last month was 48 million tons. … Continue reading
Market volatility is expected to continue for quite some time. Much of the 2020 U.S. corn and bean crop has been sold and China’s demand remains impressive. Even South American farmers have sold 50% more of their new crop beans than usual by this point. Therefore, many are uneasy about shorting the market as it’s unknown who is left to sell into this rally.
Corn
China purchased a lot of corn recently, so the market now expects upcoming USDA reports to show increased export values and lowered carryout. Corn may need the price to rally to help ration what is left until harvest.
South American weather has turned from dry to wet. Parts of Brazil are experiencing bean harvest delays from the wet weather that could push back their second corn crop planting. This delay could push corn pollination on the second crop into late May when weather is drier and reduce yields.… Continue reading
The Argentina dock strike last month lasted far longer than had been expected as it was drawn out to almost three weeks. It has been an annual occurrence for an Argentina dock strike to last 1 to 3 days as the dock workers demand more money. It has been reported the grain companies offered an increase high enough to keep government intervention from taking place. While you may think Argentina is a small player in the grand scheme with soybean production below that of Brazil and the United States, Argentina is the world’s largest exporter of soymeal. As the strike ended, reports noted at least 170 vessels waiting to be loaded with grains.
March 2021 CBOT soybeans finally breached the $12 mark on Dec. 17 after at least five different unsuccessful assaults in a month. The next resistance level of $13 was penetrated in significantly fewer days, taking place on Dec.… Continue reading
Corn stocks were less than expected. Corn production was below trade estimates.
Plenty of changes were expected with this USDA report. The January USDA report today has been called one of the most important USDA report days for the entire year. This report details final U.S. corn and soybean for 2020. In addition, quarterly U.S. grains stocks were released. U.S. corn and soybean demand was expected to increase. South America corn and soybean production changes were expected for both Brazil and Argentina.
U.S. corn and soybean ending stocks along with South America corn and soybean production were the main features with this report. World grain ending stocks were closely watched as well.
Corn ending stocks were 1.502 billion bushels, last month was 1.702 billion bushels. Soybean ending stocks were 140 million bushels, last month was 175 million bushels. Wheat ending stocks were 836 million bushels, last month at 862 million bushels.… Continue reading
South America and U.S. weather, domestic and world demand for grains, COVID-19, and the vaccines will be the major price drivers for at least the first four months of 2021. Digging deeper into that topic, Brazil weather has had a major influence on soybean prices since September. The January and March 2021 CBOT soybean contracts flirted with strong resistance at $12 multiple times the first half of December. Yet, the lack of breaking resistance provided significant choppy, volatile price activity. It’s no surprise the funds continue to be long corn, soybeans, and wheat, while getting even longer compared to their September levels. Higher price action is anticipated in coming weeks and months. Mid-December one analyst suggested the charts were negative but fundamentals were bullish for grains.
The Dec. 10 USDA monthly WASDE report was expected to provide little change compared to the November report. The surprise was, even fewer changes actually took place.… Continue reading
As the holidays approach, the market continues to watch South American weather and Chinese purchases. The Brazilian bean crop was planted later than usual, and precipitation has been lower than normal, but it could still turn out an average size crop. Argentina has been dry as was expected with La Niña present. Crucial crop development will be taking place next month. The export pace over the next couple of months to China will play a pivotal role in price directions.
Recently I set basis on 100% of my 2020 bean crop. With the news of low U.S. carryout, I had hoped basis would continue to rally. However, as the chart below shows, basis climbed until Nov. 1 and then went flat. The red X is the date and value I sold basis, picked up on my farm. The white line shows the best posted bids available since harvest in my area.… Continue reading
The market will be closely watching South America’s weather for the next 45 days. While there is weather premium currently in place, widespread dryness throughout the Southern Hemisphere will need to continue for corn to trade above $4.50 and beans above $12.
Grain marketing is challenging because everyone wants to sell at the top of the market; but no one knows when that will be. Some farmers hold on the entire year, waiting for a huge rally. However, many farmers sell incrementally during rallies to reduce risk, while leaving some crop available to sell if the market rallies further.
My grain marketing plan
Last week I discussed how my grain marketing plan priced me out early on corn, but left upside potential open on beans. This strategy allowed me to hit my summer goals of $4 corn and $10 beans even though when I set those goals prices looked unattainable.… Continue reading
There was some disappointment that soybean production for Brazil was unchanged. Argentina was down 1 million tons. Corn production for both was unchanged.
U.S. corn and soybean ending stocks along with SA corn and soybean production were the main features with this report. U.S. demand, especially exports, and South America weather have been the big price drivers for the past month.
Corn ending stocks were 1.702 billion bushels. Last month they were 1.702 billion bushels. Soybean ending stocks were 175 million bushels. Last month soybean ending stocks were 190 million bushels. Soybean crush was up 15 million bushels, soybean exports unchanged. Corn exports and ethanol demand were unchanged. China corn imports were up 3.5 million tons to 16.4 million tons with last month at 13 million tons.
The average trade estimate for U.S. grains ending stocks were: Corn 1.691 billion bushels, soybeans 168 million bushels, wheat 874 million bushels.… Continue reading
The market has slowed its upward movement as South American weather has seen adequate precipitation and Chinese purchasing has been less active. Ethanol may be running into some profitability issues as well.
On a positive note, funds have reduced their long bean positions by 30% and the market only pulled back 50 cents. Should the funds find a reason to add more length to their positions it could cause a strong rally.
Risk management
Every farmer wants to sell 100% of their crop at the top of the market each year. However, having this as a marketing strategy goal is unrealistic. Working in the grain trading industry over the last 20 years, I’ve yet to meet one person who can do this year after year. In general, I have found the best trading strategies work well 70% to 80% of the time, while the worst strategies work best about 10% to 20% of the time.… Continue reading
Mid-November, corn and soybean harvest activity was quickly winding down for many Ohio producers. The first 10 days of November provided great weather as 70 degree daily highs enabled that final push for many to complete the harvesting of soybeans. Corn moisture levels reached 18% to 20% as they finally were able to move away from the mid 20s and higher, which had plagued many producers well into the final days of October. Vomitoxin was an unwelcome reality for many in Ohio as it became just one more nuisance for the 2020 growing season.
The monthly WASDE Report of Nov. 10 provided a welcome bullish surprise for grain producers across Ohio and the Midwest. Both corn and soybean production and yields had been expected to decline with the hope of seeing a report friendly for grain prices. Those numbers were reduced more than expected with December CBOT corn closing at $4.23, up 15.5 cents.… Continue reading
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