Market Thoughts 04.05.21
Current Clients we will be sending out a separate email with the weekly Market Algo readings.
We hope all had a joyous and relaxing weekend celebrating the Easter holiday with family and friends.
Corn Complex- Month end reports were catalysts for volatility in prices as we ended the week. The USDA printed corn acreage substantially below market expectations. Post report action was a limit higher move on Wednesday followed by strength into Thursday but a close below the limit higher from Wednesday by end of the week. New crop gained on the old crop with surprising acreage numbers. Funds were net buyers for the week. Weekly corn export sales were good and export inspections were solid, but we are continuing to lag needly weekly Chinese totals to make export estimates.
Soybean/Canola Complex- Oilseeds complex traded limit higher post report as the market digested significantly lower than expected soybean seeding acres for soybeans. Canola did see increased acreage expectations, but the bigger StatsCan numbers will be coming here in April. Soybeans did lock limit Wednesday much like corn, but old crop May beans still failed to take it out its old high even with follow thru in the market on Thursday. In fact, beans gave back half of the limit move in the May complex by trade at the end of the week. New crop beans did close off the week highs but did not give up as much given the bullish acreage numbers that were released. Funds pre report continued their liquidation of their long position, next weeks report will be a bit more telling if they added back to their positions post report.
Wheat Complex- Wheat was weakest in the complex last week with stocks and acreage numbers at or above market expectations. All wheat acres were on high end of market expectations with winter wheat well above. Spring wheat and durum acreage were both down from one year ago but at or near market guesses. One note on spring wheat, we continue to hear more switching of wheat to beans and corn as field conditions combined with insurance guarantees are pushing producers more towards row crops.
Outside Markets- Equity indexes reached record highs near weekend as continued better economic news pushed the market higher. US dollar index continued to climb on the week with a slight pull back at week end.
Acreage and Stocks Report- See below snapshot for market expectations versus what USDA did print. Stocks were in line to slightly higher versus trade guesses. Acreage expectations on the other hand for corn and beans were both well below market expectations. There were some questions marks being raised by the trade as to the big divergence in acreage given the higher prices. We put together a few charts charting out various breakdowns of the report and how it compares to PP reports since 2010. One overriding theme you can make is given the higher prices that producers are seeing for the 2021 crop, it does not appear that at least according to USDA we are maximizing potential acres given comparison to other higher priced years. Does this leave a window for potential acreage increases as we get data this summer from the planted acreage report? Does the wide open window for spring planting upcoming also increase potential for bigger primary crop acres?
Prospective Planting-Principal Crop Acres
Prospective Planting- Principal Crops plus Hay Acreage
Prospective Planting- Combined Corn, Beans, Wheat
Prospective Plantings- Corn, Wheat Beans Wheat and Cotton
Prospective Plantings- Combined Corn, Bean, Sorghum
Prospective Plantings- All crops excluding corn, beans, wheat and cotton
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.