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THE LAND — FEBRUARY 4/FEBRUARY 11, 2022
www.thelandonline.com — “Where Farm and Family Meet”
MARKETING
Grain Outlook Corn market not for faint of heart The following marketing analysis is for the week ending Feb. 4. CORN — Chart action in corn wasn’t encouraging to begin the week when a new contract high was established; but we closed near the day’s low. The trading ranges were large during the week and at mid-week March corn posted a key reversal lower when prices tested, but couldn’t push through, the contract high. Technically, this week’s action was not friendly. Fundamentally, corn has been supported by the strength in soybeans and the December contract continues to fight for acres. The December corn made a new contract high at $5.80.25 before pulling back. The uncertainty between PHYLLIS NYSTROM Ukraine, Russia, and NATO CHS Hedging Inc. nations seems to have stabilized St. Paul until after the Olympics which end Feb. 20. The countries mentioned all signed an agreement that China introduced to the United Nations to not do anything until a week after the Olympics end. The Feb. 9 World Agriculture Supply and Demand Estimates report will answer some of the lingering questions about Chinese demand and South American production. The U.S. Department of Agriculture attaché in Beijing cut his old crop Chinese corn import forecast to 20 million metric tons compared to the January USDA projection at 26 mmt. That’s a difference of 236.2 million bushels. Will the USDA follow suit? Last year, China imported 29.5 mmt. The attaché also put China’s ending stocks at 214.2 mmt compared to the USDA estimate of 210.2 mmt. It was a surprise late in the week when the USDA announced China canceled nearly 15 million bushels of old crop corn purchases. This was the largest single-day cancellation of U.S. corn in at least seven years! This leaves them with 338 million bushels of unshipped old crop U.S. corn purchases. This will show up on next week’s weekly export report. Weekly export sales were within expectations at 46.3 million bushels. Total commitments at 1.8 billion bushels are now 20 percent behind last year. We need to average 20.2 million bushels of sales per week to hit the USDA’s 2.425 billion bushel bullseye. Last year at this time, China was heavily buying U.S. corn. Japan and Mexico were the leading buyers for the week ended Jan. 27.
Cash Grain Markets corn/change* St. Cloud $6.22 +.12 Madison $6.14 +.14 Redwood Falls $6.17 +.07 Fergus Falls $6.17 +.17 Morris $6.17 +.13 Tracy $6.16 +.10 Average:
soybeans/change* $15.14 $15.29 $15.09 $15.29 $15.29 $15.09
+1.52 +1.47 +1.46 +1.62 +1.57 +1.54
$6.17
$15.20
Year Ago Average: $4.88
$13.03
Grain prices are effective cash close on Feb. 8. *Cash grain price change represents a two-week period.
Weekly ethanol production was up 6,000 barrels per day to 1.04 million bpd. Ethanol stocks jumped 1.4 million barrels to 25.8 million barrels and are at record levels for late January as well as the highest since April 2020. Days of usage on hand are reportedly the highest since May 2020. Gasoline demand fell from 8.5 million bpd to 8.2 million bpd. Margins however did recover 11 cents to a positive 5 cents per gallon. The average trade estimates for the Feb. 9 WASDE report: U.S. corn carryout at 1.512 billion bushels vs. 1.540 last month; world ending stocks at 300.32 mmt vs. 303 mmt in January; Argentina’s crop at 52.16 mmt vs. 54.00 mmt last month; Brazil’s corn crop at 113.63 mmt vs. 115 mmt last month. The Buenos Aires Grain Exchange lowered its Argentina corn rating 4 percent to 28 percent good/excellent with planting 99 percent complete. In other news, Russia plans to ban exports of ammonium nitrate for two months beginning immediately. China and Russia signed a 30-year natural gas deal. The two countries issued a joint statement calling for a halt to any NATO expansion. Russia expressed support for China’s “One China” policy concerning Taiwan. China will allow wheat and barley imports from all parts of Russia, lifting restrictions which were on for parts of Russia. This could mean larger shipments to China through the Black Sea. Outlook: Where is your risk? That is a more important question to ask yourself about unsold old crop bushels and yet-to-be-grown new crop bushels. Fear of missing out shouldn’t drive your marketing plan. There are ways to participate in a rally/protect against a price decline without leaving yourself open to a black swan sell-off. The February WASDE, what happens in the Black Sea region, and how Brazil’s safrinha corn crop develops will be the headlines to watch. Technically, the charts are still in an uptrend; but short indicators suggest a pull back. We’ll need fresh food for the bulls to climb to the next level. Where will it come from: inflation fears, lower estimates out of South America? This market isn’t for the faint of heart, but
you still need to manage your risk. Be flexible and pay attention to what early acreage estimates surface. For the week, March corn was 15.5 cents lower at $6.20.5, July declined 7.75 cents at $6.18.5, and the December contract was 4.25 cents higher at $5.73.75 per bushel. SOYBEANS — Soybeans were a wild ride this week as prices rose dramatically before finally snapping a seven-session winning streak in the last half of the week. From the recent low on Jan. 24 to the contract high on Feb. 2, March soybeans rallied $1.81.5! Price spikes were experienced at times during the week in both the night and day sessions. This makes traders cautious. Case in point, on Feb. 3 at 5:33 a.m., volume in March soybeans jumped to 5000 contracts and prices surged over 20 cents in a minute. At that time of the morning, the volume was shocking. Why the action? Someone made a mistake? Unable to meet a margin call? We’ll never know, but it shows the volatility. South American weather has improved over the last couple of weeks, but heat is expected to move back into Argentina in the middle of February. Estimates for Brazil’s soybean crop continue to shrink with the lowest estimate I’ve seen at 125 mmt. Last fall, most estimates were in the 144 mmt area. What we’re trying to determine now is what losses are irreversible. We may not have that answer until well after their harvest is complete. Soybean offers out of Brazil are thin and farmer selling has slowed as they see higher prices and may be unsure what percentage of their crop has been sold. China was on holiday for the entire week for Lunar New Year celebrations, but this didn’t mean we didn’t see business from them. Trade estimates for the February WASDE report: U.S. carryout at 310 million bushels vs. 350 million in January; world carryout at 91.51 mmt vs. 95.2 mmt last month; Argentina’s crop at 44.51 mmt vs. 46.5 mmt last month; Brazil’s soybean crop at 133.65 mmt vs. 139 mmt last month. The BAGE lowered its Argentine soybean production 2 mmt to 42 mmt and the Rosario Grain Exchange is at 40 mmt. The BAGE pegged the soybean rating at 37 percent good/excellent, down 1 percent from the previous week. Last year’s conditions were rated at 17 percent good/excellent. Conab will update its Brazilian crop production forecast the day after the WASDE report. Weekly export sales were a marketing year high in soymeal and at the upper end of expectations in soybeans. Soybean sales were 40.3 million bushels, bringing total commitments to 1.66 billion bushels. We are running 23 percent behind last year when the USDA is projecting a 9.5 percent decline year-onyear. We need 12.8 million bushels of sales per week to achieve the USDA’s 2.05 billion bushel goal. Mexico was the biggest buyer and China had net 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.
