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www.thelandonline.com — “Where Farm and Family Meet”
THE LAND — DECEMBER 24/DECEMBER 31, 2021
MARKETING
Grain Outlook Soybeans lead the way for corn rally The following marketing analysis is for the week ending Dec. 24. CORN — The higher trend in corn continued as March corn finally pushed through the $6.00 per bushel resistance for the first time since July 2021. Corn felt pressure to start the week from the macro side with big energy losses on fears of Omicron repercussions. Dry forecasts for South America were set aside for a day but came back into focus as the holiday-shortened week progressed. A very strong soybean complex paved the way for the rally in corn. Weekly export sales were as expected for old crop at 38.7 million bushels and very strong for PHYLLIS NYSTROM new crop at 5.3 million bushels. CHS Hedging Inc. Total old crop commitments St. Paul stand at 1.55 billion bushels and are running 6 percent behind last year. The U.S. Department of Agriculture is anticipating a 9 percent year-on-year decline in exports. We need to average 25 million bushels of sales per week to hit the USDA’s 2.5 billion bushel export projection. Weekly export inspections were over 1 million metric tons, but we need to average 1.37 mmt per week to hit the USDA’s export outlook, and we haven’t achieved that level in this marketing year. Weekly ethanol production fell 36,000 barrels per day to 1.05 million bpd; but held above the needed pace to hit the USDA outlook. Ethanol stocks were down 178,000 barrels to 20.7 million barrels and the first decline in five weeks. Weekly gasoline demand fell from 9.472 million bpd to 8.986 million bpd. Gasoline demand over the last four weeks is up 15 percent compared to a year ago. Ethanol margins were slammed 25 cents as they dropped to 88 cents per gallon. High corn prices in China suggest they will be in the market for corn imports. However, China’s November corn imports were the lowest in nineteen months at 790,000 metric tons and down 35.7 percent lower than November 2020. We haven’t seen China in our corn market for months. Brazil’s second corn crop or safrinha corn crop is the larger of their corn crops. It is planted after the soybean harvest. Current weather shouldn’t have an impact on the safrinha crop at this time, but it may in the future if La Niña is lengthy. This situation will
Cash Grain Markets
corn/change* soybeans/change* St. Cloud $5.95 +.19 $13.30 +1.00 Madison $5.89 +.15 $13.35 +.95 Redwood Falls $5.98 +.17 $13.39 +.99 Fergus Falls $5.85 +.10 $13.21 +.86 Morris $5.87 +.12 $13.33 +.89 Tracy $5.93 +.13 $13.26 +.98 Average:
$5.91
$13.31
Year Ago Average: $3.87 $11.18 Grain prices are effective cash close on Dec. 28. *Cash grain price change represents a two-week period.
be monitored over the next few months for potential problems. Outlook: While everyone is aware of the issues with South American weather, don’t lose sight of the tensions between Ukraine and Russia and what that could mean to agricultural commodity markets if they come to blows. If Covid and related strain cases continue to increase around the world, economic growth may be slowed. Good demand and positive ethanol crush margins should keep basis levels firm. The next obstacle for March corn is the $6.16.5 level from July after March corn closed above $6.00 for the first time in six months. The next level of resistance lies near $6.25-$6.33 per bushel. For the week, March corn was 12.5 cents higher at $6.05.75, July rallied 13.25 cents to $6.06, and the December 2022 contract was 7 cents higher at $5.53.5 per bushel. The markets are not taking any time off for the New Year’s holiday. The markets will be open normal hours on Dec. 31 and Jan. 3. SOYBEANS – Fireworks were seen in soybeans during the holiday-shortened week and ahead of the January option expiration. On the continuous monthly soybean chart, soybeans are headed for the first higher monthly close since April! South American weather forecasts for hotter and drier conditions through the end of the year for Argentina and southern Brazil were the driving factor. Their temperatures have surpassed 100 degrees in northern Argentina and southern Brazil. January soybeans traded through $13.00 per bushel for the first time since Sept. 30. January soybeans topped out for the week at $13.34 per bushel and the March contract traded as high as $13.42.5 per bushel. January and March soybeans soared to their highest prices since August 2021. January meal traded to prices not seen since mid-May when it topped out at $423.60 per ton. This week’s high was $407.80 per ton.
Private estimates for South American soybean and corn production are beginning to decline. Up until now, rain in Argentina and southern Brazil were enough to get by, but we weren’t adding anything to the subsoil. Dryness and heat have increased with reports of aborted pods in Parana, Brazil with some reports that Parana’s soybean yield is already down 12 percent. One private consultant cut their Brazilian soybean production 2 mmt to 142 mmt vs. the USDA’s 144 mmt forecast. For Argentina, the number fell 1 mmt to 49 mmt compared to the USDA’s 49.5 mmt outlook. Northern Brazil is developing in favorable conditions with some early soybean harvest expected in December; but there have also been reports of flooding in northeastern Brazil. If the weather allows early soybean harvest in Mato Grosso, Brazil could begin before the end of the year. The soymeal market continues to strengthen on a shortage of lysine for feed. Soyoil trade was volatile as was the energy market. Energies affect the soyoil market through biofuel usage. Fears of further lockdowns and restrictions fed into a huge energy sell-off to begin the week before recovering through the end of the week. Weekly export sales were a marketing-year low at 29.8 million bushels. Total commitments, at 1.5 billion bushels, are down 24 percent from last year when the USDA is forecasting a 9.4 percent yearon-year decline. We need to average 15 million bushels of sales per week to reach the USDA’s 2.05 billion bushel outlook. Weekly export inspections were at the lower end of expectations at 1.7 mmt. Year-to-date soybean inspections are down 22.8 percent. Outlook: Both January and March soybeans have a string of eight higher closes as of Dec. 23. March soymeal traded to its highest price since mid-May. South American weather will continue to be the main focus of the market. Into the end of the year, the current forecast is hot and dry for southern Brazil, Argentina and Paraguay. Northeastern Brazil has been receiving decent rain and to an excess in some locations. In Brazil, it is difficult to say to what extent losses in the south may be countered by gains in the north. Early soybean harvest in Brazil is expected to begin before the end of the year. Other items of interest will be the ongoing tensions between Ukraine and Russia, the lysine shortage, and the world’s reaction to Omicron cases. The high this week in March soybeans was $13.42.5 per bushel. The next upside target for March soybeans is $13.76.25 per bushel, the high in August; but it’s all dependent on Mother Nature. Merry Christmas and happy New Year! Weekly price changes in March wheat: Chicago jumped 39.75 to $8.14.75, Kansas City surged 51.5 cents to $8.61.5, and Minneapolis was a dime higher at $10.32.5 per bushel. v
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.
