This Week in Commodities 12-17-2021

Corn slightly higher once again this week

Front-month March corn futures added 3-1/4 cents this week to close at 593-1/4. December 2022 corn futures shed 4-1/2 cents this week to close at 546-1/2. Front-month corn futures inched higher this week on limited market news. Volume on corn contracts traded per day was light this week as the “holiday trade” continued. US weekly corn export sales reached a marketing-year high of 76.7 million bushels this week. Strong demand, both foreign and domestic, continues to support basis levels around much of the country.

Iowa farmland jumped 29% in 2021 to an average of $9,751 per acre, according to Iowa State University’s annual survey. Strong commodity prices, government aid payments, big crop yields, and inflation pushed farmland to a record in the nation’s largest corn-producing state.

Soybeans higher this week

Front-month January soybean futures added 17-1/2 cents this week to close at 1285-1/4. New crop November 2022 futures shed two cents this week to close at 1246-3/4. Soybeans closed higher for a third week in a row this week and have posted over 70 cents in gains for the month of December. Strong export demand and increasing dryness in South America have helped beans move higher so far this month. Even with the dryness in Brazil, they are expected to produce yet another record crop.

The US confirmed the sale of 132,000 tons of soybean for delivery to China as well as a soybean oil sale to India this morning. NOPA crush numbers released for the month of November this week came in at 179.46 million bushels, down about 1% from last November and over two million bushels below the average trade guess.

 

Wheats mixed this week

March CBOT wheat futures shed 10-1/4 cents this week to close at 775. March KC wheat futures added 4-1/2 cents this week to close at 810. March spring wheat futures added 3/4 of a cent this week to close at 1022-1/2. Extreme winds swept across the central US on December 15, shedding some of the HRW crop and exposing roots in some areas. Hardiness concerns were already starting to mount, as abnormally dry/drought conditions cover 53% of US winter wheat areas. Questions of damage done by the recent winds and dryness will have to wait until spring to get a better read on the crop coming out of dormancy. CBOT wheat prices remain $1/bushel off of their late November highs.

 

All Eyes On Monday’s Milk Production Report

January and February 2022 class III milk futures posted a down week this week as cheese sellers pushed the market about 5c lower from Wednesday to Friday. The cheese price just can’t gain enough momentum to push higher and now is back within the range it’s been in all year. Cheese still hasn’t made a new high for the year since October, despite the fact that class III is knocking on the door at $20 per cwt. With cheese back near $1.75/lb, fair value for class III milk is much lower than current levels. The market is still getting support from expectations for lower milk production, lower cow numbers, high feed costs, and a roaring class IV trade. However, if the market doesn’t see another catalyst soon, the class III trade could be due for a correction lower.

This is why next Monday’s milk production report is so important. The report from October showed cow numbers down for the fifth month in a row, along with production down 0.50% from the same month last year. Should November show similar numbers, it would be the first time since 2019 that US milk production has tightened two consecutive months. Additionally, the fact that cow numbers are now below where they were last year is bullish. Should we see another cut in cow numbers for November, it could produce more buying in the market. The report is due out next Monday at 2pm CST and will likely have a large impact on which way this market breaks moving forward.

Author

Keegan Madigan

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