February 12, 2021
Good Morning,
Markets have turned lower this morning with corn down 2 and soybeans down 4.
Today is Chinese New Year, and most everything is closed in China. US markets will be closed for President’s Day on Monday. The US Ag Outlook Forum will meet next week and we will see their projections next Friday.
I am not expecting much for trade today. The market will be plenty volatile next week. I think the funds who are now long 325,000 corn and 168,000 bean contracts will want to remain long soybeans, but corn could be a bumpy ride. Corn prices are at a level that wheat is replacing it in rations which could add to the ending stocks number.
Have a Safe Day and Stay warm!
Garry Gard
920-348-6844
February 10, 2021
Good Morning,
Turnaround Tuesday and Wednesday? Corn is down 12 and soybeans are down 26 to start the day as the markets follow thru on yesterdays selloff.
Markets are correcting sharply after a dud of a USDA crop report yesterday. The funds are holding record long positions in corn, meaning a correction is unfolding of greater magnitude. The Funds held somewhere between 320-340 thousand contracts at the high on Jan 13th before the position was liquidated on a dollar fifty break and eventual low with a fund position close to 80,000 long. The current bean position is probably a little North of 200,000 this morning. The USDA didn’t alter much on the crop report, which just about anyone could have guessed. They are taking the approach that the market will figure it out on its own and have little interest in lowering carryout much further. Crop insurance is set in February, so it may not be in their best interest to chop 300 million bushels out of the corn carryout.
This market could still head higher in the coming weeks and months, but fundamentally this corn market is too high given the stocks that we have on hand and historical price charts. After yesterday’s adjustments we are still north of a 10% stocks to use ratio which would imply that this market is close to a dollar too high. This recent setback needs to be a reminder to anyone holding grain that the markets will not continue to run higher and the floor could fall out at anytime. (Remember what happened 12 months ago!)
Have a Safe Day!
Garry Gard
920-348-6844
February 9, 2021
Good Morning,
Mixed markets overnight as old corn was up 1 and new corn down 1. Soybeans were up 11. USDA stocks report will be released at 11am today and all estimates are for lower carryout in corn and soybeans. I believe yesterdays strength was positioning ahead of todays report.
The Russian Government signed off the export duty that will start on June 2nd. The tax will be 70% above the export price base of 200 dollars per metric tonne.
According to agribusiness consultancy AgRural, as of Feb. 4, Brazilian farmers had managed to double the area harvested to 4%, from 2% in the previous week. Yet harvesting is still way behind historical averages for this time of the season. Last year, farmers had reaped 16% of the cultivated area at around this time. Because of planting delays and the rains that have recently disrupted work in top grain states like Mato Grosso, the pace of harvesting is the slowest in 10 years.
USDA is expected to estimate US corn carryout near 1,392 mil bu versus 1,552 last month. USDA is expected to estimate US soybean carryout near 123 mil bu versus 140 last month. USDA is expected to estimate US wheat carryout near 834 mil bu versus 836 last month. The Brazilian corn crop is expected to be 108.4 mmt and beans at 132.4. The Argentina corn crop is expected to be 47 mmt and beans at 47.6 mmt. China corn imports are expected to be 20 mmt for corn and 101 mmt for beans.
The last crop report came in very close to pre-trade estimates, and this one will very much be the same. The record exports are easy for the USDA to quantify as shipments have been keeping up with the pace of sales. The USDA is unlikely to change much to the Brazilian and Argentina crops until more is know from harvest. This isn’t really a very big or import report here today. The more volatile one is the planted acres at the end of March, which will have record corn acres.
February 2020/21 US Ending Stocks (bil bu.)
| USDA Feb | Ave. Est | USDA Jan | |
| Corn | 1.502 | 1.392 | 1.552 |
| Soybeans | .120 | .123 | .140 |
| Wheat | .836 | .834 | .836 |
February 2020/21 World Ending Stocks (mil. Metric tons)
| USDA Feb | Ave. Est. | USDA Jan | |
| Corn | 286.53 | 279.79 | 283.83 |
| Soybeans | 83.36 | 83.30 | 84.31 |
| Wheat | 304.22 | 312.86 | 313.19 |
Have a Safe Day!
Garry Gard
920-348-6844
February 8, 2021
Good Morning,
Stronger markets to open the week with corn up 7 and soybeans up 10.
The United States exported $28.75 billion of agricultural goods and related products to China in 2020, data from the U.S. Department of Agriculture showed on Friday, missing the $36.5 billion targeted under the Phase 1 trade deal. Beijing and former U.S. President Donald Trump signed the deal in January 2020 after two years of acrimony and a steep slump in imports by one of the biggest buyers of U.S. farm goods. The missed target was widely anticipated despite a recent uptick in sales of corn and soybeans to China. U.S. President Joe Biden’s administration has said the deal is under review.
The crop report will be out tomorrow at 11 and stocks in corn, beans and wheat are expected to decline. The USDA probably takes a middle of the road approach on this report again. Carryout of 1,400 for corn, 120 for beans and 830 for wheat are the average trade estimates. News is pretty limited this morning as we wait for the crop report tomorrow.
Have a Safe day!
Garry Gard
920-348-6844
February 5, 2021
Good Morning,
Markets are 2 higher in corn, 10 higher in soybeans and 7 higher in wheat to open the day. Crude oil is up 40 and US stocks are up 130. The 1.9 trillion dollar aid package passed the US Senate dropping the dollar and sending stocks higher.
The corn fund position is still holding up toward record long with a crop report coming next Tuesday. The bean position is long but nowhere near what it was when we were 14.40 futures. The wheat position is slightly short, which is signaling a low for the week. After yesterdays close the funds were long 380,000 corn, 157,000 soybean and 60,000 wheat contracts.
China’s Veterinary Association did confirm that a strain of African Swine Flu was found this week. They do not expect damage to the growing hog industry as the strain is not as deadly as the previous strain.
The Buenos Aires Grain Exchange lowered the corn crop estimate for Argentina to 46 mmt which is equal to their soybean crop at 46 mmt. They are saying that the soybean crop is 19 percent good to excellent vs 65 last year and corn at 24 percent good to excellent vs 59 last year. These are the worst condition ratings we have seen posted for the Argentina crop. The Southern Argentina corn bean crop are probably going to show much worse yields than expected come harvest.
We only have a couple trading sessions before the USDA release the February crop report. The trade looks for US corn carryout near 1,392 mil bu vs USDA 1,552, soybean 123 vs 140 and wheat 834 vs 836. After all the sales made to China in the last month, the USDA is going to want to reduce carryout and raise exports. The recent corn sale would take out 300 million bushels of carryout that was done just in the last week.
Have a safe day and stay warm!
Garry Gard
920-348-6844
