Corn, soybeans finish Friday higher
Grain Market Week in Review: Both new crop corn and soybean futures contracts offer a shot at solid profits.
Ag Marketing IQ
Successful CEOs and leaders know that they can’t do everything themselves. Instead, they will often look to surround themselves with trusted advisors to help manage their businesses or organizations. The same logic should extend to a farming operation with the farmer as the CEO. There are ways for growers to establish floors to protect the price per bushel yet maintain flexibility for higher prices. Seek a trusted advisor with the heart of a teacher that can help show you the tools available to accomplish this.
Remember that marketing choices right now boil down to a simple question. Is a bird in the hand worth two in the bush? As I’ve discussed the last two weeks, that bird in hand is a big one: Both new crop corn and soybean futures contracts offer a shot at solid profits for 2021. Nonetheless, with seed still in the bag, months of weather uncertainty loom that could prompt a move to even higher prices.
Thanks to strong demand both domestically and abroad, cattle and hog futures continue to find price support. Exports for first quarter are off to a great start, and domestic demand continues to improve as states and restaurants slowly begin to re-open after the one year mark of COVID-19. And grilling season is just around the corner.
After the February and March USDA reports were complete duds, producers might get lulled to sleep when looking ahead to the March Planting Intentions report coming on the last day of the month. I mean, we all have better things to do right now than worry about that. From getting equipment ready to watching the NCAA tournament (Illinois is going to win I’m plenty certain) we all have plenty on our plate. However, ignoring the impact this historically volatile report can hold might be unwise.
USDA’s latest batch of grain export inspection report data held mixed but mostly positive data for traders to digest. Analysts were expecting a big week for corn export inspections, but actual numbers surpassed the entire range of trade guesses. Wheat also moved moderately higher week-over-week, but soybeans faced a moderate decline from a week ago.
The latest batch of USDA export sales data had another mixed bag of numbers for traders to digest. Corn sales had the best performance last week, with sales moving noticeably higher week-over-week and shipments climbing to a new marketing-year best. Wheat sales were also higher week-over-week, while soybeans faded 31% below the prior four-week average.
Daily corn sales were reported four days in a row this week. China was the only buyer, taking more than 150 million bushels.
A lot of uncertainty remains about what the world will look like by May. Tightening corn and soybean supplies will provide a floor to prices through planting season, but other areas of the ag supply chain deserve a watchful eye from the planter this year.
There are two tales being told in Brazil right now that are somewhat at odds with each other. On one hand, plenty of anecdotal evidence has been trickling out of South America in recent weeks that include reports of heavy rains, sluggish harvest pace and even beans sprouting in their pods. Most consultancies, as well as the U.S. and Brazilian governments, are projecting a record-breaking harvest of around 4.8 or 4.9 billion bushels for 2020/21. In the latest Midweek Markets podcast, we take a closer look of what’s going on and offer our own production speculations.
Corn markets traded about a penny lower this morning due in large part to rain in Argentina, which will likely improve supply conditions in the region, as well as deteriorating trade talks between the U.S. and China. Strong demand for soyoil as the U.S. moves rapidly towards more sustainable fuel sources and the biodiesel sector expands underpinned the morning’s gains in the soybean market. And it was sorely needed as soybean prices are on pace for a weekly drop. Cooling diplomatic relations between the U.S and China sent Chicago and Kansas City wheat futures lower this morning.
Corn prices moved around 1.75% higher on a round of technical maneuvering and bargain buying that erased most of Thursday’s heavy losses. Soybean prices followed corn prices higher Friday on a round of technical buying, with traders staying focused on South American weather while beginning to think about USDA’s planting intentions report. Wheat prices were narrowly mixed after an uneven round of technical maneuvering Friday.