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Marketing
Grain Outlook Corn edges upward after WASDE report
The following marketing analysis is for the week ending Nov. 12. CORN — December corn slid slightly ahead of the November World Agriculture Supply and Demand Estimates report, but tagged along with soybeans in post-report trading to break a five-session losing streak. The soybean numbers were the surprise, but corn took its cue and benefited from small gains. Taken alone, the corn report might have been considered bearish, but the postreport rally pushed prices toward the November $5.86 high. The corn yield was increased by a half-bushel per acre to a record 177 bu./acre and higher than the 176.9 bu./acre estimate. This bought production up 43 million bushels to 15.062 billion bushels, the second-largest on record. PHYLLIS NYSTROM CHS Hedging inC. St. Paul
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On the usage side, ethanol use was raised 50 million bushels to 5.25 billion bushels while exports were unchanged. The export forecast at 2.5 billion bushels may be an uphill climb since China hasn’t been in for U.S. corn since May. The ethanol estimate may be too low based on excellent margins. Ending stocks fell just 7 million bushels to 1.493 billion bushels compared to 1.48 billion bushels forecasted. The average farm price remained at $5.45 per bushel.
World ending stocks were much higher than anticipated at 304.4 million metric tons vs. 300.8 mmt estimated and 301.7 mmt in October. Brazil’s corn production was unchanged at 118 mmt. Argentina’s corn production jumped 1.5 mmt to 54.5 mmt and compared to estimates for 53.1 mmt. On China’s balance sheet, they estimate its 2021-22 corn imports at 20 mmt vs. the U.S. Department of Agriculture’s 26 mmt projection.
Weekly ethanol production fell for the first time in six weeks to its lowest point in four weeks. It dropped 68,000 barrels per day to 1.04 million bpd. On the other hand, ethanol stocks rose 157,000 barrels to 20.29 million barrels and a nine-week high. Gasoline demand was declined to 9.26 million bpd from 9.5 million bpd and the lowest in four weeks. Ethanol margins made an impressive jump of 29 cents per gallon to $1.36 per gallon!
Weekly export sales were good at 42 million bushels. Total sales commitments are 1.262 billion bushels vs. the USDA’s target of 2.5 billion bushels. This
Cash Grain Markets
corn/change* soybeans/change*
St. Cloud $5.51 -.02 $12.21 -.05 Madison $5.57 -.02 $12.28 -.05 Redwood Falls $5.61 +.08 $12.31 -.05 Fergus Falls $5.56 -.02 $12.21 -.05 Morris $5.56 -.02 $12.26 -.05 Tracy
$5.59 -.06 $12.30 -.05 Average: $5.57 $12.26 Year Ago Average: $3.79 $11.06
Grain prices are effective cash close on Nov. 16. *Cash grain price change represents a two-week period.
is running 6 percent behind last year. We need to average 28.3 million bushels of sales per week to hit the bull’s eye. Weekly export inspections were the lowest in seven weeks at 563,100 metric tons. Cumulative inspections are down 21 percent from a year ago. China’s corn prices are up nearly 9 percent this month. Russia hinted they will have grain export quotas in the first half of next year. There were rumors in the trade that China was interested/ buying corn from Ukraine despite U.S. origin being cheaper.
— Phyllis Nystrom
The Farm Service Agency released their planted and prevented planted acres at mid-week. Nothing was shocking about the numbers. They put corn acres enrolled in crop subsidy programs at 91.354 million acres. Prevented plantings were 639,000 acres. Soybean acres enrolled were 86.249 million with prevented plantings of 341,225 acres as of Nov. 1. The USDA is using planted corn acres of 93.3 million and planted soybean acres of 87.2 million acres. The FSA and USDA numbers do not usually match, and neither is obligated to reconcile the figures.
Argentina’s corn planting was 43 percent complete as of Nov. 11 vs. 44 percent on average. Conab raised their Brazilian soybean crop estimate by .4 mmt to 116.7 mmt. Outlook: Demand and growing conditions in South America will gain in importance over the next few months. It would not be unusual for the corn yield to increase on subsequent reports. Argentina’s corn production was higher this month as the crop gets planted and higher soybean export taxes may encourage additional corn acres, but high fertilizer prices could offset some of that increase.
Another factor to consider when watching prices is inflation. It’s not unusual for agricultural commodities to benefit from an inflation hedge standpoint. Money flow into commodities may provide underlying strength at times when fundamentals aren’t in agreement. Watch the big picture and not just on our supply/demand sheets. This doesn’t translate into a wildly bullish outlook but does add another dimension to price ranges. We may expect further consolidation as we head into the holidays. Don’t forget about the 2022 crop you intend to plant!
December corn has found support in the $5.50 to $5.30 area with resistance from $5.70 to $5.75 per bushel. For the week, December corn was rallied 24.25 cents to close at $5.77.25, March was 22.75 cents higher at $5.85, and December 2022 closed 8 cents higher at $5.48.5 per bushel. SOYBEANS — Soybeans took a step back to begin the week and traded to a seven-month low before getting a friendly surprise from the USDA. The November WASDE report didn’t disappoint those looking for a catalyst to create some excitement. The USDA cut the U.S. soybean yield .3 bu./acre instead of raising it .4 bu./acre as expected. Low pod weights were cited as a factor. This lowered production 23 million bushels to 4.425 billion compared to 4.484 billion bushels estimated. Exports were reduced 40 million bushels to 2.05 billion bushels. The crush was left alone; which was curious since margins have been very high for quite a while. Ending stocks were still up 20 million bushels from last month to 340 million bushels although the trade was looking for a jump to 362 million bushels. The average farm price fell 25 cents to $12.10 per bushel. Based on the updated numbers, both the yield and crop size would be the second-largest on record.
On the world balance sheet, Brazil’s soybean estimate was unchanged at 144 mmt. Argentina’s crop size dropped 1.5 mmt to 49.5 mmt. China’s soybean imports were lowered 1 mmt to 100 mmt on the USDA report. China’s balance sheet has its bean imports at 102 mmt. World ending stocks were reduced more than expected at 103.8 mmt vs. 105.5 mmt estimated and 104.6 mmt last month.
The big surprise late in the week was in soymeal, which has vaulted $56.70 per ton from its Oct. 13 low at $309.30 to this week’s high at $366 per ton — for an 18.3 percent recovery. This was the highest price since August. What are we missing? Is Argentina running short on meal for export? Is their soybean outlook more concerning than we think?
La Niña›s effects will likely be felt through February. Will the long awaited Renewable Fuel Standard mandate be unfriendly to agriculture as some believe, which could pressure soyoil?
Weekly export sales were within expectations at 47.4 million bushels. This keeps us 33 percent
