March corn added 12-1/4 cents this week to close at 496-1/4. December corn futures added 5-3/4 cents this week to close at 440-1/2. While US corn export sales have remained strong, actual exports have been relatively weak considering the record expectations of 2.65 billion bushels forecasted by the USDA. Much interest has been on shipping soybeans to start the marketing year; corn exports have taken a back seat. Corn exports in November were 3.8 million tons with 30% of that total going to China. For the rest of the 2020/21 marketing year, corn exports will need to average 4.5 million tons per month to meet the USDA’s goal. While not impossible, the 4.5 million ton per month average would be slightly above the previous record pace for corn shipments set in 2018.For the USDA Supply and Demand report set to be released next week Tuesday, traders see corn ending stocks near 1.599 billion bushels as compared with 1.702 billion in December. World endings stocks are expected to come in near 283.5 million tons versus 288.96 million tons in December. Brazil’s corn production is expected to be revised lower to near 107.74 million tons as compared with 110 million tons in December. A similar reduction is expected for Argentina’s corn crop, down from the projected 49 million tons in December. With the market at such an extreme overbought condition, an underwhelming USDA report versus expectations could spark a waterfall of selling in an attempt to preserve profit.
March soybeans added 63-3/4 cents this week to close at 1374-3/4. November soybeans added 50 cents this week to close at 1161-3/4. The US exported 11.1 million metric tons of soybeans in the month of November, bringing exports for the first quarter of the marketing year to a record 29.8 million tons (1.1 billion bushels). China accounted for 70% of this total which is in line with the average for this period prior to the trade war beginning in 2018. China canceled 5-6 cargos of US soybeans according to this week’s export sales data. It is believed this cancellation will be replaced by freshly harvested soybeans out of Brazil in the coming weeks. US soybeans shipped from the Pacific Northwest in February to Chinese ports are running around $17.85 per bushel, which is roughly 20 cents above soybeans coming from Santos, Brazil.
For the USDA Supply and Demand report on Tuesday, ending stocks are expected to come in near 139 million bushels, this would be a 36-million-bushel reduction from December’s 175 million bushel ending stock projection. World ending stocks are expected to come in near 4.158 billion bushels down from 4.17 billion in December. The trade is expecting about a 2 million ton cut to both Brazil and Argentina’s soybean crops. With the more than $2 rally higher in soybeans over the last month, much of these expected cuts have most likely already been priced in. This week’s low of 1301 should act as first resistance on a pullback.
Winter wheat is slightly lower this week
March CBOT wheat was 1-3/4 cents lower this week to close at 638-3/4. March KC wheat was 8-3/4 cents lower this week to close at 594-3/4. March spring wheat added 8-1/2 cents this week to close at 607-3/4. After a push higher on Tuesday, the winter wheat markets fell lower late in the week to finish lower overall on the week. This week’s back-test action of the markets break above topside resistance last week is not uncommon. The overall trend in the wheat complex remains higher. For the USDA report next week, traders see total winter wheat planted acreage near 31.5 million acres, as compared with 30.4 million last year. Wheat ending stocks are expected to come in near 859 million bushels as compared with 862 million bushels in the December update. Managed money is estimated at a record net long for corn, soybeans, and wheat. This leaves all three commodities susceptible to profit-taking on a disappointing report. March CBOT wheat closed right on downside report to end the week with first resistance coming in at this Tuesday’s close of 654.
2021 Average Finishes Near All-Time High
The Class III milk market exploded higher on Tuesday after the announcement that they would be extending the farm to families program of cheese purchases to a fifth round. February was up as much as $1.20 at one point on Wednesday, as the spot cheese market moved sharply higher on the news as well. With this extension of the farm to families program, there is a high likelihood that the market will look to go back to a heavily inverted curve. This would mean that the front-month and second-month contracts hold higher prices and fall back much lower as you look at the more deferred contracts.
The 2021 Class III average finished the week only a penny and a half off of its all-time high from earlier this week at $17.90. The strategy of holding off in the market while using stops as a backup to get protection continues to work in the bullish market environment. The spot market finished higher in every product other than butter this week. The largest winner of the week was cheese up 18.875 cents at $1.785/lb. Whey finished at a new high for a combined 2020/21 at $0.50/lb. Powder finally had a weekly close above resistance of $1.15/lb at $1.19/lb. This could open the door for further upside in the market.
Author
Keegan Madigan