Marketing

Grain Outlook Market keeps an eye on South America

The following marketing analysis is for the week ending Jan. 7.

CORN — Happy New Year! We wish you a happy, healthy, prosperous, and safe 2022!

Commodity markets shot into a new calendar year with fireworks all around! The ever-changing South American weather forecast was the biggest contributor to the volatility, followed closely by money entering the market for the new year.

Corn rang in the new year with an outside trading day ending with a small loss. However, the next day prices surged over 20 cents higher! The balance of the week was a seesaw as March corn traded within the Jan. 4 PHYLLIS NYSTROM CHS Hedging inC. St. Paul range. March corn did manage to stay above $6.00, but was unable to reach December highs despite rocketing soybean and meal markets.

The Buenos Aires Grain Exchange kept their Argentina corn production at a lofty 57 million metric tons vs. the U.S. Department of Agriculture’s 54.5 mmt outlook. Their corn planting as of Jan. 5 was pegged at 77 percent complete vs. 87 percent on average. They rated Argentina’s corn crop at 40 percent good/excellent which was an 18 percent decline week-to-week.

Weekly export sales were the second-lowest of the marketing year at a measly 10.1 million bushels. Canada was the largest buyer. This brings total commitments to 1.614 billion bushels which are down 7 percent from last year. We need to average 24.7 million bushels of sales per week to hit the current USDA projection of 2.5 billion bushels which is down 9.2 percent from last year. China has 393.7 million bushels of unshipped corn purchases on the books compared to 256 million bushels left last year on this date. The export category on the World Agriculture Supply and Demand Estimates report is expected to be unchanged this month.

Weekly ethanol production was as expected with a decrease of 11,000 barrels per day to 1.05 million bpd. Ethanol stocks were much higher than expected with an increase of 683,000 barrels to 21.4 million barrels; and at its highest since mid-August. Gasoline demand fell 1.55 million bpd to 8.17 million bpd. Net ethanol margins plunged 28 cents to a positive 32 cents per gallon.

Cash Grain Markets

corn/change* soybeans/change*

St. Cloud $5.91 -.04 $13.52 +.22 Madison $5.85 -.04 $13.62 +.27 Redwood Falls $5.94 -.04 $13.47 +.08 Fergus Falls $5.81 -.04 $13.47 +.26 Morris $5.83 -.04 $13.51 +.18 Tracy $5.89 -.04 $13.44 +.18 Average: $5.87 $13.51 Year Ago Average: $4.19 $11.91

Grain prices are effective cash close on Jan. 11. *Cash grain price change represents a two-week period.

The average trade estimates for the U.S. 2021-22 crop are: U.S. yield 177 bushels per acre with production at 15.069 billion bushels and ending stocks at 1.472 billion bushels. U.S. quarterly stocks are projected at 11.6 billion bushels. World ending corn stocks are estimated at 304 mmt..Argentina’s corn crop is pegged at 53.59 mmt and Brazil’s at 116.17 mmt.

Outlook: March corn still feels comfortable between $5.90 to $6.15 per bushel until we see the January WASDE report; but South American weather will be the near-term driver and it is constantly changing. The strong close at the end of the week in both old crop and new crop may set the stage for another leg higher if a hot, dry South American forecast verifies. The Brazilian safrinha corn crop accounts for twothirds to three-quarters of their total corn crop and planting is just beginning, following their soybean harvest. We have a long way to go before that crop is set, but uncertainty is friendly to prices.

If we break to the upside, the next target in March corn will be the $6.33 to $6.40.5 per bushel area. Short-term support will lie from $6.00 to $5.90 per bushel. The December contract continues inside its sideways $5.40 to $5.60 range but may be poised for a step higher.

For the week, March corn rallied 13.5 cents to $6.06.75, July was 11 cents higher at $6.04.5, and December up 11.75 cents at $5.57.75 per bushel.

January report price history: in seven of the last nine years, whichever direction March corn closes on January report day, it followed that direction the day after. In March soybeans it occurred in six of the last nine years. In Chicago March wheat it’s a toss-up with it occurring in four of the last nine years.

The grain markets will be closed Jan. 17 in observance of Martin Luther King Day.

SOYBEANS — The soybean market ushered in 2022 with a decent Jan. 3 uptick, followed on Jan. 4 by the biggest one-day rally since August! March soybeans jumped 34.5 cents on Jan. 4 which made up the lion’s portion of the 71-cent rally for the week and traded to their highest since early June. The upward thrust continued throughout the week with little pause. The March contract finally pierced the $14.00 ceiling going into the weekend on a surging meal market and rumored index rebalancing. March meal made a new contract high at $431.80 per ton. The November soybean contract pushed to a new contract high at $13.22.5 per bushel as it followed the old crop higher. Soy products also provided support with soyoil trending to its highest since November and palm oil setting consecutive contract highs.

The market direction was focused on varying South American weather forecasts. I think you can find a forecast to support whatever your market opinion is. Current conditions in southern Brazil and Argentina would support a shrinking crop, but forecasts for the last half of January look more favorable.

AgRural slashed their Brazilian soybean production estimate 11.4 mmt to 133.4 from 144.7 mmt. Brazil produced a record crop last year of 138 mmt. Conab will update its projection on Jan. 11. With 87 percent of their soybeans in the ground as of Jan. 5 vs. 95 percent on average, the BAGE left their Argentine soybean production outlook at 44 mmt vs. USDA at 49.5 mmt. They rated Argentina’s soybean crop at just 48 percent good/excellent which was an 8 percent drop from the previous week. Constantly changing South American weather forecasts kept the market in flux. It seems that whatever your market opinion, you can find a forecast to back it up. As of Jan. 5, soybeans in Brazil’s Parana province were rated 31 percent poor and their corn 25 percent poor.

Weekly export sales were another marketing year low at a dismal 14.1 million bushels and our window for export opportunities is nearly closed. Total export commitments are 1.532 billion bushels which are down 24 percent from last year. The USDA is predicting a 9.5 percent yearly export decline. It will not be surprising to find a smaller export number on the WASDE report, but they may wait for subsequent reports to make a change. We need to average 15 million bushels of weekly sales to achieve the USDA’s 2.05 billion bushel target. We saw two daily export flash sales for new crop totaling 9.25 million bushels sold to unknown destinations for the 2022-23 marketing year and another for 3.75 million bushels of old crop soybeans to Mexico (routine business). China’s total commitments this year are 874.5 million bushels compared to 1.2 billion bushels last year. China has 154.3 million bushels of unshipped purchases left vs. 202 million bushels left last year on this date.

The average trade estimates for the Jan. 12 WASDE report: U.S. yield 51.3 bu./acre with production at 4.433 billion bushels and ending stocks at 348 million bushels. U.S. quarterly stocks are projected at 3.129 billion bushels. World ending soybean stocks are estimated at 99.93 mmt. Argentina’s soybean crop is pegged at 48.11 mmt and Brazil’s at 141.62 mmt.