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www.thelandonline.com — “Where Farm and Family Meet”
THE LAND — MAY 28/JUNE 4, 2021
MARKETING
Grain Outlook Corn sees trade limits in both directions with China rumors The following marketing analysis is for dropped 453,000 barrels to 19 million barthe week ending May 28. rels or approximately 18.5 days of usage. This is the lowest stocks figure since CORN — The corn market was chaotic December 2016 and the lowest for this spethis week with very little fresh news and cific week since 2014. Gasoline demand generally favorable weather for crop develincreased to 9.5 million bpd from 9.22 milopment. May 25 saw rumors fly about lion in the previous week as society opens China canceling or rolling U.S. old crop corn back up. Ethanol demand ran to a 62-week purchases which sent prices down the high and 1 percent higher than 2019. 40-cent daily trading limit. By May 27, we Ethanol margins dropped 13 cents to 44 PHYLLIS NYSTROM saw July corn futures touch the 40-cent cents per gallon. Based on current numCHS H edging Inc. limit again; but this time on the upside! bers, there isn’t any reason for the corn for S t. Paul Traders had been expecting to see old crop ethanol category to be lowered on this corn cancellations to China, but instead year’s balance sheet. saw China’s old crop corn purchases increase by 4 million bushels. U.S. corn planting was as expected at 90 percent complete vs. 80 percent average as of May 23. Corn This market is not for the faint of heart as money pushes prices around at will on relatively light vol- emergence was 64 percent compared to 54 percent umes. The trading range this week in the July con- on average. The first corn condition report of the tract was $6.02.75 to $6.72.75 per bushel and in the season is expected to be released on June 1. Bear in December contract, it was from $5.00.25 to $5.57.75 mind initial ratings do not have a good correlation to what the final yield will be. A Reuters article sugper bushel. gested U.S. corn acreage will be 94.1 million acres The surprise in weekly exports was a lack of net this year compared to the 91.1 million acres the cancellations and sales at a seven-week high prompt- USDA is using. They put soybean acreage at 88 miled fund buyers into action and sent nearby futures lion vs. USDA at 87.6 million acres. limit up that erased the weekly losses to that point. The Brazilian Agriculture Ministry wants more Weekly export sales for old crop were 21.9 million farmers to plant corn. This comes after a drought bushels and well above pre-report ideas. Old crop this year has cut the safrinha corn crop. They are commitments at 2.7 billion bushels are just shy of the U.S. Department of Agriculture target of 2.775 billion considering a government options contract to attract bushels with three months left in the marketing year. more acres to corn. The lowest published estimate China has 370 million bushels of old crop purchases for this year’s total corn crop in Brazil is 91.1 million metric tons. Safras & Mercado lowered their still to ship. Brazilian corn estimate to 95.2 mmt. The USDA New crop sales were below estimates, but were still dropped their estimate to 102 mmt on the May an impressive 224.1 million bushels. New crop com- report and many expect that number to decline on mitments stand at 575.9 million bushels vs. a meager the June report. 133.3 million bushels last year by this date. As of the Here’s how volatile July corn has been in calendar May 20 report, China had purchased 421.2million 2021: Dec. 31 July corn closed at $4.80.25, then ralbushels for the 2021-22 crop year. This equates to 73 lied to a high on May 7 of $7.35.25 (a 53 percent percent of the bushels we have on the books for new rally), before falling to a low of $6.02.75 on May crop. I believe ideas that China won’t take all their old crop purchases are fading with recent action. One 26 (an 18 percent decline). The 53 percent rally was comment I heard this week was China was desper- the largest percentage gain for this period since at ately short of feed grains. However, their appetite for least 1973 and the largest percentage drop for the new crop bushels may have been satisfied for the time frame since 1973. time being. The only fresh export sale announcement Outlook: Weather, rumors, and money are driving for the week was 6 million new crop bushels to price action. The burden may be on the bull if unknown. Chinese buying slows down and we don’t have a Weekly ethanol production fell 21,000 barrels per weather event to push us back to the highs. This day to 1 million bpd, but was still the second-highest doesn’t mean we won’t see better selling opportuniof the year. Production was only 4.4 percent below ties, but seasonally corn struggles in the last half of the same week in 2019 (pre-Covid). Ethanol stocks June when we head into the June 30 Acreage and
Cash Grain Markets
corn/change* soybeans/change* St. Cloud $6.91 +.31 $15.14 -.45 Madison $6.93 +.25 $14.81 -.43 Redwood Falls $6.94 +.26 $15.28 -.46 Fergus Falls $6.94 +.21 $14.89 -.60 Morris $6.94 +.26 $15.05 -.24 Tracy $6.84 +.18 $15.08 -.54 Average:
$6.92
$14.99
Year Ago Average: $2.80 $7.87 Grain prices are effective cash close on June 2. *Cash grain price change represents a two-week period.
Grain Stocks reports. In five of the last seven years, June stocks were higher than what the trade expected. The June acreage report was above trade estimates in four of the last five years. The caveat to the lower seasonal price action in June is if Chinese buying is on-going and we have periods of questionable weather. Don’t lose sight of political activity between the United States and China. There were varying views on how the first virtual meeting between officials went this week. U.S. Trade Representative Tai called the relationship “very, very challenging.” Chinese officials called the meeting “candid, pragmatic and constructive.” It doesn’t look like it will be smooth sailing. The National Oceanic and Atmospheric Administration Drought Monitor on May 27 indicated 43 percent of the Midwest was abnormally dry or worse vs. 38 percent in the previous week. This crop is a long way from being in the bin. We can’t afford any crop problems this year, but this doesn’t mean you shouldn’t stay with your marketing plan. If nothing else, this week’s big swings drove home how quickly this market can whipsaw and move to hurt the most people possible. For the week, July corn was down just 2.75 cents at $6.56.75 per bushel. For the month, July corn dropped 16.5 cents per bushel. December corn fell a penny this week to close at $5.45.5 per bushel. For the month, December corn was 18.25 cents lower. SOYBEANS — Soybeans were able to break their string of seven consecutive lower sessions late in the week when corn locked limit up. Soybeans had fallen to their lowest price in five weeks and the lowest for the month of May before attracting buyers back to the market. Meal prices dropped to their lowest level of 2021. Soybean planting as of May 23 wasn’t as far along as the trade anticipated at 75 percent complete vs. 80 percent estimated, but was still much above the 54 percent average and the quickest pace since 2012. See NYSTROM, pg. 17
Information in the above columns is the writer’s opinion. It is no way guaranteed and should not be interpreted as buy/sell advice. Futures trading always involves a certain degree of risk.
