A stronger greenback continues to wreak havoc on grain costs
Regardless of a 4.4-million-bushel 2020/21 corn export sale to Japan as introduced by USDA this morning, previous crop corn futures costs fell by a % due largely to weakening wheat costs and losses within the vitality sector incurred by transport delays within the Suez Canal. The greenback’s in a single day rally additionally contributed to the buying and selling session’s losses for the corn advanced.
Corn exports stole the present on this morning’s export sales report from USDA. For the week ending March 18, USDA reported 80.2 million bushels of corn had been shipped to worldwide prospects by way of U.S. terminals.
Whereas the quantity was 7% decrease than final week’s record-breaking complete of 86.6 million bushels, this week’s haul was the second largest weekly corn export quantity on report. Actually, three of the final 4 reporting weeks for USDA’s weekly export loadings knowledge have notched new report highs for weekly corn export loading paces.
However the speedy corn export loading paces weren’t the one excellent news for the corn advanced on this morning’s report. New 2020/21 corn export gross sales for the week ending March 18 jumped to 176.5 million bushels, rising 4.5 occasions larger than final week’s new sale quantity after China booked 153.2 million bushels of corn forward of final week’s diplomatic talks between China and the U.S.
The goodwill gesture accounted for 86% of all complete new 2020/21 corn export gross sales for the week. New orders from South Korea (13.9M bu.) and Mexico (7.7M bu.) additionally rounded out new export gross sales for the reporting interval.
The March 2021 Farm Futures survey forecasts 2021 corn acres to rise 3.1% from a yr in the past to 93.6 million acres. Whereas it might be the most important acreage since 2016 (94.0 million acres), it might solely be the fourth largest corn acreage the U.S. has seen since 1945.
But when corn yields maintain true to the 179.5 bushel per acre trendline, U.S. corn growers might harvest as much as 15.413 billion bushels of corn in 2021 – the most important corn crop on report. The upper corn output within the U.S. is prone to increase world corn manufacturing estimates in 2021/22 additionally, with the Worldwide Grains Council forecasting world manufacturing at 47.0 billion bushels – an almost 5% improve from 2020/21 world corn manufacturing.
Factoring in present 2020/21 ending inventory projections for corn, in addition to USDA’s preliminary 2021/22 demand forecasts from the February 2021 Outlook, Farm Futures estimates place 2021/22 ending shares of corn at 1.815 billion bushels. The ensuing stocks-to-use ratio of 12.0% could be a rise from this yr’s 10.3% and would doubtless be the liquidity increase the corn market wants to take care of sufficient provides.
These estimates assume slightly conservative export figures for each the 2020/21 and 2021/22 advertising and marketing years. USDA has reported a number of weeks of record-breaking corn export volumes over the previous month, with one other sturdy week of corn export loading paces launched in the present day.
Subsequent week’s Quarterly Shares and Potential Plantings studies from USDA are anticipated to rattle markets as previous crop utilization charges are weighed in opposition to potential new crop provides. Whole Farm Advertising’s Naomi Blohm provides a number of potential situations for doable outcomes in subsequent week’s knowledge within the newest Ag Marketing IQ column.
Backside line: Blohm expects the soybean market to stay tight no matter subsequent Wednesday’s quantity. And for corn, “there is a much broader scope to consider for Wednesday’s report,” Blohm cautions. “Lower yields last fall, attractive prices, strong exports, and farmers owning more bins, makes it a bit trickier to know for sure where current supplies on hand actually are.”
Blohm expects that if corn acreage is available in above 94 million acres, corn futures costs might take a unfavorable hit. “Being ready for this type of price reaction and volatility takes time on your part to prepare your marketing strategy for any of the scenarios above,” Blohm concludes. “This is a market where you need to manage upside price potential, but also manage price risk. Managing both aspects ahead of the report is what makes you a good marketer.”
Slowing U.S. export paces to China performed a major function in in the present day’s losses for soybean futures. Smaller than anticipated U.S. hog numbers additionally decreased home demand outlooks for soy merchandise.
Soyoil futures costs suffered in the present day as costs got here off yesterday’s peak. Soymeal futures rose regardless of lightened home end-user demand and weakening export demand on the U.S. Gulf.
Argentina’s Ministry of Agriculture reported that its farmers have offered 28% of its soybean crop as of March 17. The Buenos Aires Grains Alternate expects the 2020/21 Argentine soybean harvest to succeed in 1.617 billion bushels regardless of dry climate situations this rising season.
The Argentine agricultural ministry expects that soybean gross sales are doubtless slower this yr than the identical time a yr prior as lingering farmer and provide chain uncertainty stays about yields amid a rocky crop yr. Argentina produced 1.8 billion bushels of soybeans within the 2019/20 marketing campaign.
Farmer gross sales of corn additionally had been slower than the identical time a yr in the past, in accordance with knowledge from the Ministry of Agriculture. Argentine farmers have offered 771.7 million bushels of corn to date this yr, about 59.1 million fewer bushels than the identical time final yr on related drought issues.
Soybean export prospects had been much less rosy than these of corn final week. Weekly export loading paces fell barely from final week to 18.4 million bushels, down 1.2 million bushels from every week prior. Egypt was the highest vacation spot for U.S. soybeans final week, with practically 6.1 million bushels shipped to the North African nation throughout the week ending March 18.
Weekly loading paces to China dropped by 2.5 million bushels from every week prior to simply shy of half 1,000,000 bushels this week. The decline shouldn’t come as a whole shock to the market – Chinese language consumers usually supply extra soybeans from Brazil this time of yr.
The extra shocking facet is how lengthy the Chinese language have relied on the U.S. soybean provide relative to earlier years resulting from Brazil’s ongoing harvest and transport delays. During the last 5 weeks, common U.S. soy transport paces to China are greater than double the charges of a yr in the past resulting from Brazil’s sluggish harvest.
Count on these paces to proceed to say no – and probably much more quickly after this week. A stronger greenback in a single day elevated the worth of Brazilian soybeans relative to these sourced from the U.S., which will increase China’s monetary incentives to cut back sourcing of U.S. soybeans and easily wait out Brazil’s transport delays.
The March 2021 Farm Futures producer survey estimates 2021 U.S. soybean acreage at 88.5 million acres, up 6.5% or 5.4 million acres from 2020. If realized, it should doubtless be the third largest soybean acreage ever planted within the U.S. And barring any important opposed climate occasions, a trendline yield of fifty.8 bushels per acre would set a brand new manufacturing report of 4.451 billion bushels.
It’s no secret soybean provides are working tight, as evidenced by excessive previous crop costs. However will each report setting crops yield sufficient provide to replenish dwindling stockpiles?
Given present USDA soybean provide estimates and new crop demand projections, the 2021/22 soybean stockpile will doubtless solely depart 71.9 million bushels out there for use on the finish of the 2021/22 advertising and marketing yr. That interprets to six days of carryout and a brand new report tight stocks-to-use ratio of 1.6%. USDA projected 90 million acres of soybeans to be planted this spring on the February 2021 Outlook. That additional 75 million bushels of soybeans supplies extra cushion to the soybean market than the Farm Futures estimate.
And simply over midway by means of the advertising and marketing yr, soybean exports are already nearing 89% of USDA’s 2.25-billion-bushel goal for the yr, with one other 304.7 million bushels remaining on the books as of March 18.
A stronger greenback, sturdy worldwide 2021/22 manufacturing forecasts, and enhancing crop situations within the U.S. Plains did few favors to the wheat advanced. Chicago futures recorded $0.10-$0.13/bushel losses, whereas Kansas Metropolis and Minneapolis wheat futures fell $0.09-$0.11/bushel.
Russian agricultural consultancy IKAR raised its 2021 wheat manufacturing outlook as favorable climate boosted crop situations within the nation’s key southern wheat rising areas. IKAR raised its forecast 2% from earlier estimates to 2.932 billion bushels. USDA knowledge exhibits that Russia produced 3.316 billion bushels of wheat in 2020 when climate situations had been far much less agreeable, suggesting that IKAR’s estimate might tread on the conservative aspect.
At any fee, IKAR expects Russian wheat exports to rise within the coming advertising and marketing yr. IKAR boosted their export forecast by 36.7 million bushels to 1.451 billion bushels for the 2021/22 advertising and marketing yr, which is able to start on July 1 in Russia.
Weekly export loading volumes for wheat edged barely decrease from final week, however at 24.2 million bushels, the weekly quantity was miles forward of historic paces for the time of yr. Wheat export transport paces usually see a seasonal increase this time of yr and if the final two weeks are any indicator, this yr’s wheat export season may very well be even hotter than most.
Bangladesh was the highest vacation spot for U.S. wheat for the week ending March 18, at 4.3 million bushels. Almost 3.0 million bushels had been shipped to Japan from U.S. ports final week, with one other 2.6 million bushels destined for China.
Chinese language demand is a key contributor to the bullish wheat export quantity, however some non-traditional consumers have been reserving massive shipments over the previous couple weeks as Russia’s steep wheat export tax costs many smaller nations out of the worldwide wheat commerce, sending them to U.S. shores for wheat.
Algeria, usually one of many European Union’s largest prospects, was shipped 2.7 million bushels of U.S. wheat final week. And Taiwan, Peru, Chile, and Namibia had been all shipped wheat vessels from the U.S. final week after not shopping for any within the prior week.
Rain showers will transfer out of the Southern Plains in the present day and into the Decrease Mississippi River Valley, in accordance with NOAA’s short-range forecasts. From there, the showers are anticipated to shift north into the Central Mississippi River Valley and Japanese Corn Belt by this night, bringing a probable likelihood of thunderstorms. The higher japanese half of the U.S. will doubtless see properly over an inch of accumulation over the following 24 hours.
The College of Nebraska’s Drought Monitor launched earlier in the present day pointed to enhancing soil moisture ranges throughout the U.S. as current precipitation favored rising situations. For the week ending March 23, 64.21% of U.S. acreage was reported to be in some type of dry or drought situation, down 1.64% from the earlier week.
Coronavirus circumstances within the U.S. rose by 141,629 to 30,011,550 circumstances as of this morning in accordance with the Johns Hopkins Coronavirus Resource Center. The loss of life toll elevated by 1,433 lives to 545,282 deaths as of this morning.
Many farmers are itching to begin spring fieldwork. However Farm Futures senior editor factors out that farmers might wish to take a second take a look at enter methods earlier than the wheels hit the bottom. Potter’s interview with Rabobank inputs analyst Sam Taylor means that farmers shouldn’t focus solely on yields.
“Inputs should be measured by the margins they provide, not just on the bushels they bring,” Taylor factors out. “Keep the ratio of input cost to value creation in mind.” Take a look at Potter and Taylor’s tips for the best inputs strategies forward of planting to verify your farm is optimizing inputs.
Earlier this week, a big container vessel grew to become lodged within the Suez Canal in Egypt, a key artery alongside one of many world’s largest and busiest transport paths. New studies recommend the ship might doubtless be caught within the canal for a number of weeks as crews scramble to dislodge it from the channel.
The Ever Given is among the largest vessels on the planet at 1,312 ft – a couple of quarter mile lengthy. Each the bow and stern of the ship ran aground within the Suez Canal on Tuesday after excessive winds and a mud storm restricted steering visibility, inflicting it to lodge sideways within the canal and fully blocking some other vessel motion by means of the canal. Employees are resuming efforts to dislodge the vessel this morning whereas 156 ships are idling within the Canal as they await passage.
About 30% of world container quantity passes by means of the Suez Canal per day, accounting for 12% of complete world commerce. The canal is vital for Russian and Saudi Arabian exports, particularly oil and wheat. India, China, and South Korea are the highest locations for crude oil merchandise shipped by means of the Suez Canal.
Power costs tumbled in the present day in response to the continuing provide chain nightmare, because the canal is a key artery for Center East oil shipments. U.S. inventory futures rose on higher than anticipated weekly jobs knowledge and optimism over financial restoration from the pandemic. S&P 500 futures traded 0.66% larger eventually look to $3,914.83.
|Morning Ag Commodity Costs – 3/25/2021|
|Contract||Models||Excessive||Low||Final||Web Change||% Change|
|MAY ’21 CORN||$ / BSH||5.525||5.415||5.465||-0.0675||-1.22%|
|JUL ’21 CORN||$ / BSH||5.365||5.275||5.32||-0.0525||-0.98%|
|SEP ’21 CORN||$ / BSH||4.8575||4.81||4.8275||-0.04||-0.82%|
|DEC ’21 CORN||$ / BSH||4.6825||4.6425||4.655||-0.035||-0.75%|
|MAR ’22 CORN||$ / BSH||4.76||4.7225||4.735||-0.0325||-0.68%|
|MAY ’22 CORN||$ / BSH||4.805||4.77||4.785||-0.03||-0.62%|
|JUL ’22 CORN||$ / BSH||4.82||4.79||4.8||-0.0325||-0.67%|
|MAY ’21 SOYBEANS||$ / BSH||14.3175||14.105||14.155||-0.1725||-1.20%|
|JUL ’21 SOYBEANS||$ / BSH||14.2||14.0025||14.0525||-0.1575||-1.11%|
|AUG ’21 SOYBEANS||$ / BSH||13.7325||13.55||13.59||-0.1525||-1.11%|
|SEP ’21 SOYBEANS||$ / BSH||12.7625||12.61||12.6525||-0.1375||-1.08%|
|NOV ’21 SOYBEANS||$ / BSH||12.2825||12.105||12.155||-0.1275||-1.04%|
|JAN ’22 SOYBEANS||$ / BSH||12.2475||12.09||12.125||-0.1275||-1.04%|
|MAR ’22 SOYBEANS||$ / BSH||12.045||11.915||11.9525||-0.11||-0.91%|
|MAY ’22 SOYBEANS||$ / BSH||12.0225||11.885||11.9175||-0.105||-0.87%|
|JUL ’22 SOYBEANS||$ / BSH||11.98||11.885||11.9175||-0.1||-1.06%|
|MAY ’21 SOYBEAN OIL||$ / LB||57.51||54.98||54.98||-2.5||-4.35%|
|JUL ’21 SOYBEAN OIL||$ / LB||54.38||51.9||52.13||-2.27||-4.17%|
|MAY ’21 SOY MEAL||$ / TON||405.3||399||404.4||3.4||0.85%|
|JUL ’21 SOY MEAL||$ / TON||405.7||400.1||405.2||3.2||0.80%|
|AUG ’21 SOY MEAL||$ / TON||399.2||394.4||398.9||2.8||0.71%|
|SEP ’21 SOY MEAL||$ / TON||388.9||384.6||388.2||1.8||0.47%|
|OCT ’21 SOY MEAL||$ / TON||375.9||372.1||374.8||1||0.27%|
|MAY ’21 Chicago SRW||$ / BSH||6.255||6.09||6.1125||-0.135||-2.16%|
|JUL ’21 Chicago SRW||$ / BSH||6.1975||6.045||6.07||-0.1175||-1.90%|
|SEP ’21 Chicago SRW||$ / BSH||6.1925||6.0525||6.0775||-0.1075||-1.74%|
|DEC ’21 Chicago SRW||$ / BSH||6.255||6.1175||6.15||-0.095||-1.52%|
|MAR ’22 Chicago SRW||$ / BSH||6.3025||6.17||6.2||-0.095||-1.51%|
|MAY ’21 Kansas Metropolis HRW||$ / BSH||5.775||5.655||5.6575||-0.105||-1.82%|
|JUL ’21 Kansas Metropolis HRW||$ / BSH||5.8325||5.72||5.72||-0.1025||-1.76%|
|SEP ’21 Kansas Metropolis HRW||$ / BSH||5.8975||5.785||5.785||-0.1||-1.70%|
|DEC ’21 Kansas Metropolis HRW||$ / BSH||5.975||5.8775||5.8825||-0.09||-1.51%|
|MAR ’22 Kansas Metropolis HRW||$ / BSH||6.0625||5.9525||5.97||-0.0775||-1.28%|
|MAY ’21 MLPS Spring Wheat||$ / BSH||6.27||6.165||6.17||-0.1||-1.59%|
|JUL ’21 MLPS Spring Wheat||$ / BSH||6.36||6.26||6.2725||-0.09||-1.41%|
|SEP ’21 MLPS Spring Wheat||$ / BSH||6.4225||6.335||6.345||-0.0825||-1.28%|
|DEC ’21 MLPS Spring Wheat||$ / BSH||6.495||6.4075||6.425||-0.075||-1.15%|
|MAR ’22 MLPS Spring Wheat||$ / BSH||6.5175||6.4825||6.49||-0.06||-0.92%|
|JUN ’21 ICE Greenback Index||$||92.94||92.52||92.8||0.27||0.29%|
|MA ’21 Gentle Crude||$ / BBL||60.86||57.44||58.52||-2.66||-4.35%|
|JU ’21 Gentle Crude||$ / BBL||60.84||57.46||58.52||-2.64||-4.32%|
|APR ’21 ULS Diesel||$ /U GAL||1.8205||1.731||1.7477||-0.0779||-4.27%|
|MAY ’21 ULS Diesel||$ /U GAL||1.8222||1.7322||1.7479||-0.0786||-4.30%|
|APR ’21 Gasoline||$ /U GAL||1.9838||1.9028||1.9176||-0.0714||-3.59%|
|MAY ’21 Gasoline||$ /U GAL||1.9829||1.9018||1.9165||-0.071||-3.57%|
|MAR ’21 Feeder Cattle||$ / CWT||136.2||135.875||136.15||0.375||0.28%|
|APR ’21 Feeder Cattle||$ / CWT||144.475||142.65||143.975||1.525||1.07%|
|AP ’21 Reside Cattle||$ / CWT||119.975||119.275||119.625||0.5||0.42%|
|JU ’21 Reside Cattle||$ / CWT||121.75||120.375||120.775||0.475||0.39%|
|APR ’21 Reside Hogs||$ / CWT||99.75||98.25||99.475||1.7||1.74%|
|MAY ’21 Reside Hogs||$ / CWT||99.025||97.3||98.85||2.05||2.12%|
|MAR ’21 Class III Milk||$ / CWT||16.2||16.19||16.19||-0.04||-0.25%|
|APR ’21 Class III Milk||$ / CWT||16.9||16.62||16.8||0.18||1.08%|
|MAY ’21 Class III Milk||$ / CWT||17.5||17.14||17.28||0.08||0.47%|
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