Market Thoughts 02.21.21
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Corn Complex- Old crop corn held relatively steady on the week while new crop worked into new highs for the week. Much of the price action in all three complexes were driven by USDA Outlook forum numbers, those charts included at end of recap. Much of the market chatter this year has been dominated by larger corn acres potentially approaching 95 mil acres. Forum guessed at 92 and there has been a trend for them to underestimate corn acres vs March prospective plantings report. Fall field work and fertilizer; combined with decent spring conditions will likely push corn plantings higher than expected as we usually see in good weather springs. Looking to the southern hemisphere we continue to watch the safrinha corn crop get delayed in Mato Grosso. Estimates are now that 40% of the safrinha crop in that area likely will be planted past the ideal window. This doesn’t mean the crop is smaller today, more potential weather issues can come impact the crop the later it is planted. Funds held positions relatively steady week on week.
Soybean/Canola Complex- New crop beans and canola also pressed into or near new highs. Similar to corn much of the action was ascribed to Forum estimates showing little to no growth in soybean carryout even with trend yields and increase of near 7 million acres of beans vs a year ago. This tightness in the new crop balance sheet will continue to hold decent floors below the new crop until much more is known about the US crop size. South American crop continues to trend about average with Brazilian first crop coming out much slower; with many export vessels waiting to get loaded. This has also led to delays in safrinha crop planting. Even though crop size looks fairly certain at this juncture the timing of exports could ensure most North American bushels that were purchased are shipped. Canola similarly has seen extremely tight carryouts with aggressive crush and export programs in the US and Canada. Funds also remain quiet in the bean complex with a fairly neutral change week on week.
Wheat Complex- Wheat continues to close on the higher side of its recent range bound trade. All wheat rose early in the week on freeze fears for winter wheat across the southern plains due to the severe cold snap there. Much too early to determine what if any damage was done, most winter wheat was still tillering, not much in the more critical jointing phase. On the international front the market continues to weigh carryout tightness in the EU wheat complex combined with the export restrictions and taxes in the Russian crop, continuing to make world wheat values more expensive. Of interest in the outlook forum numbers released this week we continue to see US wheat carryout continue to trend lower. We don’t get class breakdowns in the forum, but one can assume we see drops in nearly all classes and could see particular large drops in spring wheat and durum acreage if current row crop pricing maintains it competitiveness.
Outside Markets- Equity indexes continue their climbs into record and near record territories. Dollar index took a breather this week coming off recent highs and closing in the mid 90’s level. Crude and energy continues it steady climb higher with extreme cold in the south pressuring natural gas price and refinery shutdowns interrupting refined product flows.
USDA Outlook Forum- The trade likes to use these numbers as a gauge for future yield, exports, and usage thoughts. These are baseline estimates and certainly subject to change as market conditions dictate. It does give us a general idea of USDA use of yields and acreage for the upcoming year.
Corn Table- 2019 and 2020 compared to Outlook Forum numbers
Soybean Table- 2019 and 2020 compared to Outlook Forum numbers
Wheat Table- 2019 and 2020 Compared to Outlook Forum numbers
This material should be construed as market commentary, observing economic, political and/or market conditions, and not intended to refer to any trading strategy, promotional element, or quality of service. Information contained herein was obtained from sources believed to be reliable but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author.