This Week In Commodities 04-09-2021

New Crop Futures Continue Climbing

May CBOT corn futures added 17-1/2 cents this week to close at 577-1/4. December futures added 12 cents this week to close at 496-1/2. The USDA cut US 2020/2021 corn ending stocks by 150 million bushels in today’s April WASDE report. Increases to feed use, ethanol use, and a 75 million bushel increase to exports all helped to further trim 2020/2021 corn carryout down to 1.352 billion bushels. This was slightly below what the trade was expecting going into the report. Today’s demand adjustments were just enough to push new crop December futures to trade above the $5 mark for the first time since May of 2014. With the projected lower than expected planted acres for new crop corn last week the trade will most likely remain sensitive to any hiccups in Brazilian or US weather.

China raised its estimate for corn imports by 12 million tons this week up to 22 million tons for the 2020/2021 marketing year. The USDA has Chinese imports currently pegged at 24 million tons for the 2020/2021 marketing year. Corn shipments to China in the week ended April 1 were 22.8 million bushels. Shipments to China need to average 25.8 million bushels the rest of the marketing year to ship currently known sales on the books to China. Weekly export sales ending April 1 showed net corn sales for this marketing year at 757,039 tons, this was within the range of expectations. Cumulative sales have reached 100.7% of the USDA forecast for the 2020/2021 marketing year versus the five-year average of 77.3%. China accounts for 35% of the 2.61 billion bushels on corn sold for exports in the current marketing year. Mexico and Japan follow behind accounting for 19% and 14% of the total respectively.


Old Crop Adds a Penny, New Crop Sheds a 1/2 Cent this week

May CBOT soybean futures added 1 cent this week to close at 1403. New crop November futures shed a ½ cent this week to close at 1263-1/4. After a bullish reaction to the USDA’s March planting intentions and stocks report last week front month soybean futures have settled back into the range they have spent much of the last three months, around $14 per bushel. While supplies are tight here in the US a cancellation by China of previous soybean sales this week reiterated the currently wrapping up harvest in South America has taken the drivers seat when it comes to meeting current world soybean needs. US soybean carryout was left unchanged in today’s WASDE report, but global soybean crush was forecast lower mainly due to a slower crushing pace than normal in China. Many feel the resurging African swine fever and falling meal prices in China have much to do with the slowed crush pace.

Sales of US soybeans stood at 2.23 billion bushels as of April 1st, this is 99.2% of the USDA’s 2020/2021 marketing year forecast. China remains the top destination for US soybeans so far this year accounting for 59% of the total. Sales of the new crop 2021/2022 soybeans are also above average for this time of the year. As of April 1st, 206 million bushels were already sold on the books, China accounts for 46% of the total, unknown destinations comes in a close second accounting for 37% of the total. The 2021/2022 marketing year for soybeans will being in September of this year.


Spring Wheat Shoots Higher this Week

May CBOT wheat US wheat was 27-3/4 cents higher this week to close at 638-3/4. May KC wheat added 21-1/2 cents this week to close at 586-1/2. May spring wheat added 54-1/2 cent this week to close at 654. ending stocks increased with today’s WASDE report release. Domestic use saw a 26 million bushel decrease from last month’s numbers. Current stocks to use for wheat come in at 40.3% down 8.9% from last year. Projected average market price was left unchanged by the USDA this month at $5.00 per bushel. Drought area expanded across the Dakotas and upper plains this week and the two-week forecast is looking dry for much of that area. This dryness and dry outlook is believed to be much of the reason for the sharp rally in spring wheat this week.
Spot Cheese Ramps Up to Finish the Week

This week, the highlight of the spot market was certainly the spot cheese market, as it gained 11.75 cents on the week to finish at $1.76125/lb. The breakout earlier in the week over $1.67/lb confirmed the higher breakout potential to the $1.80/lb level and after today’s impressive 6.5 cent up day, prices are already almost to the next level of resistance. The primary driver of the higher block/barrel average continues to be the barrel price as the spread between blocks and barrels has gone from almost 25 cents at the start of the week to only 14 cents. Class III futures have been moving higher for the majority of this week but traded lower on Friday, despite the higher cheese prices. The futures market is still pricing in more upside to the spot cheese market at this point.

The class IV market is continuing its upward trend, as well as we saw the second month class IV contract settles the week over $16.00. This is a price level we haven’t seen since February of 2020. Butter and powder both traveled higher on the week in the spot market to help class IV futures break this $16.00 psychological barrier. Butter prices finished the week at $1.88/lb but still look to have the potential to make it to the next level of resistance at $2.00/lb. Non-fat powder is finishing at the very upper end of its recent range and a breakout above $1.21/lb could open the door for more upside. Recently, Class III and Class IV have been maintaining a spread of about $3.30/cwt on the 2nd-month contract and we saw the market hold this pattern to end the week.


Keegan Madigan

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