Softer markets this morning with corn opening 6 lower, soybeans 15 lower and wheat down 12.
Crude oil continues to drop and has been trading sub $60/barrel for the last few days. Covid outbreaks in Europe and the blockage of the Suez Canal have the crude oil market headed lower, which is not good for corn prices. As I mentioned in yesterday’s comments it was crude that led the charge lower a year ago. Will it be the leader again this year?
Farm Futures magazine indicated that producers expect to plant 93.6 mil acres of corn in 2021, up 3 pct from the 90.8 mil acres seeded a year ago. Soybean plantings for 2021 were forecast at 88.5 mil acres, up 6 pct from the USDA 2020 estimate of 83.1 million acres. Total wheat plantings were seen at 45.6 mil acres, up 2.8 pct year-on-year.
Export sales this week were 343,600 wheat, 4,481,900 mt of corn with China buying 3,890,600 mt, and 101,800 mt of beans. China bought no beans this week, moving the import program to South America.
Central and Eastern Brazil have no rain in the forecast for the next 10 days. The 11-15 day holds the the same hot dry pattern as a high pressure ridge has set up for the past 2 weeks. Rains are being driven south into Southern Brazil, but mostly Argentina. Harvest is already under way in Argentina and will pick up speed in April. Brazilian harvest will be aided by the dry weather, while the second crop corn is going to have moderate stress. As long as there are timely rains, this is less of an issue for Brazilian corn.
I don’t see the market rallying or breaking very far until the March 31st report next week. ASF in China makes traders unwilling to take on new positions, questioning if the disease is worse than reported (it probably is, just under better control). Funds positions are still mostly the same as a month ago and open interest hardly changes on a daily basis. That will not be the case next Tuesday as we have one of the more dangerous reports of the year. This looks like a day when nothing good happens, so I guess we’ll see if it can hold together again.
Whether you are a seller or buyer of grains, I would strongly recommend having 70%+ of your old crop business done and 50%+ of your new crop business done. No one can predict what next weeks report will give us or where the markets will head in the coming months but taking risk off the table is the safest way to remain in business.
Have a Safe Day!