This Week In Commodities 03-19-2021

China buys 152 million bushels this week

May CBOT corn futures added 18-3/4 cents this week to close at 557-3/4. December corn futures lost 7-1/4 cents to close at 471-1/2. Ethanol production for the week ending March 12 averaged 971,000 barrels per day. This is up 3.52% versus last week but still down 6.18% versus last year. Total ethanol production for the week was 6.80 million barrels. Corn used in last week’s production is estimated at 98.1 million bushels. Corn use needs to average 96 million bushels per week to meet this crop year’s USDA estimate. One-month outlooks from the CPC are calling for above-normal temperatures everywhere east of the Rockies with above-normal precipitation centered on the eastern Corn Belt.

Four consecutive days of corn flash sales to China came in the middle to end of this week. China purchased around 152.6 million bushels of US corn for 2020/21 in total this week. Overall, for the 2020/21 marketing year China has now purchased at least 915 million bushels. Export sales for the week ending March 11 totaled 38.8 million bushels for the 2020/21 marketing year as well as 9.5 million bushels for the upcoming 2021/22 marketing year. China bought a net 24.6 million bushels of US corn in the week ending March 11, but 24.1 million of that total was a switch from previous purchases by “unknown destinations” and not new purchases.

 

Old crop soybeans higher, new crop lower this week

May CBOT soybeans added 3 cents this week to close at 1416-1/4. November soybean futures shed 23-3/4 cents this week to close at 1220. The soybean market continued its consolidation once again this week. Prices have chopped along in the last 8 weeks with little indication on which way the market wants to break. The upcoming March Planting Intentions report will most likely determine market direction into spring planting. China bought a net 2.6 million bushels of US soybeans in the week ending March 11, but 2.4 million of that was a switch from unknown destinations. Rumors of increased buying activity from China have supported futures in the last few weeks. Given the tightness of US supplies, China will most likely turn to South America to meet any upcoming soybean needs.

China, the world’s biggest importer of corn and soybeans, is looking to reduce corn and soybean use in livestock feed in an attempt to curb the country’s dependence on foreign supplies. This comes according to an official publication by the Chinese Ag Ministry this week. The plan is to partly replace the usage of corn and soybean meal with alternatives such as rice, wheat, potatoes, and other oilseed meals, the China Swine Industry Journal said, posting an official ministry document, but gave no details on the target for substitution.

 

Chicago, KC & MPLS lower this week

May CBOT wheat futures lost 11-1/2 cents this week to close at 627. May KC wheat shed 18 cents this week to closed at 585-1/2. May spring wheat futures lost 6-3/4 cents this week to close at 627. The last week has featured plentiful rains for much of the breadbasket of the US that had been abnormally dry dating back to last summer. Much of Kansas picked up 2+ inches of rain over the last 7 days, this will help enormously with winter wheat which is just coming out of dormancy. Sovecon consultancy on Wednesday upped Russia’s 2021 wheat crop to 79.3 million tons from a prior forecast of 76.2 million tons. Crop conditions have reportedly greatly improved due to a mild winter and recent ample precipitation. Adding pressure to the wheat market this week was the US dollar which resumed its uptrend after last week’s slight correction lower.
Markets Slide Lower On the Week

Throughout this last week, the dairy markets have been slowly trading lower as Friday marks the 6th consecutive down day in the market for Class III milk. Most of the recent slippage in the market is coming from disappointing trade in the CME spot market. Every product in the spot market, other than the whey market, finished lower on the week. The fat complex was the worst performer as butter and cheese both finished 5 cents lower on the week. Short-term support for butter looks to be near the $1.60/lb area and short-term support for cheese looks to be closer to $1.55/lb. While prices still look to be in a positive trend for both of these products, a break of short-term support would break that view. The non-fat powder market continues to be rangebound between $1.15 and $1.20/lb. Look for a breakout at either level for additional momentum higher or lower. Whey continues to be the standout product as it finished 2 cents higher on the week at the all-time high for the spot market of $0.6125/lb.

From a fundamental perspective, we did receive the milk production report for the month of February this week. The report states that milk production was down 1.5% from the previous year, but it is comparing a leap year with an extra day in 2020 vs. 2021. On a normalized basis milk production in February is up about 2% YoY. Additionally, the USDA adjusted the milk production number for January higher to go from 1.6% higher YoY to 2.4% higher YoY. This week we also saw the first GDT auction since November finish lower after an impressive 10 auction win streak. Next week we are set to receive the Cold Storage report to see if cheese inventories are continuing to grow at a fast pace vs. last year.

 

Author

Keegan Madigan

Sign up to get daily TFM Market Updates straight to your email!

back to TFM Market Updates