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www.thelandonline.com — “Where Farm and Family Meet”
THE LAND — DECEMBER 10/DECEMBER 17, 2021
MARKETING
Grain Outlook
WASDE report adds little fuel to market
Cash Grain Markets
corn/change* soybeans/change* St. Cloud $5.76 +.29 $12.30 +.48 Madison $5.74 +.21 $12.40 +.48 Redwood Falls $5.81 +.23 $12.40 +.43 Fergus Falls $5.75 +.23 $12.35 +.48 $5.75 +.23 $12.44 +.52 The following marketing analysis is for the week Morris ending Dec. 10. Tracy $5.80 +.28 $12.28 +.44 CORN — Now that the yawner of a December Average: $5.77 $12.36 World Agriculture Supply and Demand Estimates report for corn is behind us, we’ll focus our main Year Ago Average: $3.81 $10.98 attention back on weather in South America and Grain prices are effective cash close on Dec. 14. world events. March corn matched the most recent highest closing price of $5.91.75 in post-report trading since Nov. 26. The next highest settlement was back on July 1 at $5.95 per bushel. This week’s high in March corn was $5.94 per bushel, just missing the most recent high from Nov. 24 at $5.96.75 per bushel. PHYLLIS NYSTROM CHS Hedging Inc. First, we’ll take a look at the St. Paul benign report. The U.S. Department of Agriculture did not change a thing on the December U.S. balance sheet for the third year in a row. The ending stocks number remained at 1.493 billion bushels when the trade was expecting 1.487 billion bushels. Many were expecting a higher ethanol usage number and will be looking for it on the Jan. 12 report. World ending stocks were slightly higher at 305.5 million metric tons vs. 304.5 mmt expected and 304.4 mmt previously. Ukraine’s corn crop was increased 2 mmt to a record 40 mmt with exports raised 1 mmt. China’s corn import outlook was unchanged at 26 mmt. Despite corn running to Canada this year, Canada’s corn imports were unchanged at 3 mmt. Rumors abounded this week of China buying a big chunk of Ukrainian corn; but of course, there’s no confirmation. China is miffed at the United States for their announcement that no diplomats will attend the February 2022 Olympics in Beijing. Both U.S. and Ukrainian corn are competitive into China. China’s state statistical bureau estimated their corn production was up 4.6 percent this year at 272.6 mmt. The USDA lowered its number this month from 273 mmt to 272.6 mmt. Weekly export sales were as expected at 44.6 million bushels. This year’s sales are running 8 percent behind last year when the USDA’s 2.5 billion bushel export forecast is 9.2 percent lower than last year. Total commitments are 1.44 billion bushels vs. 1.56 billion last year. We need to average 26.7 million bushels of weekly sales to hit the USDA’s projection.
*Cash grain price change represents a two-week period.
A fresh sale to Mexico this week totaling 72.6 million bushels (42.9 million for old crop and 29.7 million for new crop) was the first largest one-day sale in history to any country and the market took it in stride.
Attention will focus on good U.S. corn demand for ethanol, but disappointing interest in exports, and how South American crops develop. The Environmental Protection Agency’s proposed biofuel mandates were released this week. The ethanol industry in the end may be disappointed with lower 2020 and 2021 mandates, but was satisfied that 2022 levels were returned to the pre-Covid level of 15 billion gallons. The 2020 conventional ethanol blending mandate is 12.5 billion gallons, 2021 is 13.3 billion, and 2022 is 15 billion gallons. The previous 2020 and 2021 levels were 15 billion gallons. The United States blended approximately 12.6 billion gallons in 2020 and 13.8 billion in 2021. The proposed levels are open for public comment until Feb. 4. There was trade talk that the $700 million in subsidies will be allocated to biofuel producers at 4.5 cents per gallon produced for both 2020 and 2021. Weekly ethanol production was up 55,000 barrels per day to 1.1 million bpd. This was higher than expected, the highest in seven weeks, and the fourthlargest of the marketing year. Ethanol stocks rose 163,000 barrels to 20.46 million barrels. Stocks tend to rise now through February. Ethanol margins slid 24 cents lower for the week, but are still a healthy $1.07 per gallon. Gasoline demand over the past four weeks is averaging 13.7 percent above last year with this week’s demand at 8.9 million bpd. As far as how Argentina’s corn is looking, the Buenos Aires Grain Exchange rated 85 percent of the crop as good to excellent this week. Corn planting is 39 percent complete vs. 50 percent on average. The USDA left Argentina’s corn estimate alone at 54.5 mmt. For Brazil, the USDA stayed at 118 mmt while
Conab’s updated forecast increased from 116.7 mmt to 117.2 mmt. Outlook: Attention will focus on good U.S. corn demand for ethanol, but disappointing interest in exports, and how South American crops develop. Look for the markets to stay choppy with holiday mode upon us and the next WASDE report on Jan. 12. Don’t forget about next year’s corn. Since 2007, in the years when the stocks-to-use ratio is 10 percent or higher, the average farm price was $4.50 per bushel or lower. In the years when the ratio is 10 percent or lower, the average farm price was $5.00 or higher. This year’s ratio is sitting at 10.1 percent with an average farm price projected at $5.45 per bushel. For the week, March corn was 6 cents higher at $5.90, July was 6.5 cents higher at $5.91, and the December contract fell 1.25 cents to close at $5.51 per bushel. SOYBEANS — The U.S. soybean balance sheet was totally unchanged on the December WASDE report. This was a slight surprise since the ending stocks remained at 340 million bushels when the trade was expecting an increase to 352 million bushels through lower exports. World ending stocks fell to 102 mmt from 103.8 mmt last month and 104.1 mmt estimated. China’s soybean crop was cut 2.6 mmt to 16.4 mmt from 19.0 mmt or a 15 percent drop. China’s soybean imports were steady at 100 mmt. Fresh export sales announcements continued into this week with only Friday missing a new sale. The weekly export sales report showed sales at the high end of expectations at 60.2 million bushels and the highest in seven weeks. Total commitments at 1.4 billion bushels are down 27 percent from last year. We need to average 16.3 million bushels of sales per week to achieve the USDA forecast for 2.05 billion bushels of exports. In Argentina, the soybean crop was rated 75 percent good/excellent by the BAGE. The rain that Argentina has received has been useful but hasn’t replenished the subsoil. If La Niña persists, which it is expected to do, any prolonged period of hot and dry conditions will likely negatively impact crop prospects. This is a wait-and-see game for the next 60 days at least. The USDA left its estimate unchanged at 144 mmt for Brazil and 49.5 mmt for Argentina on the latest update. Conab on the same day raised their Brazilian outlook from 142 mmt to 142.8 mmt. The EPA this week finally released the proposed blending mandates for 2020, 2021 and 2022. The EPA also decided to deny 65 small refinery exemptions from the Renewable Fuel Standards mandate, although they could appeal. Outlook: We could be in for more choppy trading until the South American crop size is better defined in the coming weeks. No one is lowering their production estimates although some have a neutral to See NYSTROM, pg. 11
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.
