AgriVisor Market Recap

Thursday, April 15, 2021
Futures were again higher to start today’s session with spot corn trading above $6.00 for the first time in eight years. Ongoing weather concerns in parts of the global market provided additional support. We did not see follow though buying on this move though which kept a lid on values during day trade. While current conditions are not conducive to US planting, next week we are expected to see a sizable jump in activity, even if temperatures remain cool. Low weekly export sales and building political tensions between the US and Russia also limited today’s trade, mainly in corn. 

Export sales for the week ending April 8th were on the low side of expectations. Corn bookings only totaled 12.9 million bu (mbu) on old crop and 2.07 mbu for new crop. Soybean sales came in at 3.32 mbu old crop and 9.76 mbu new crop. Wheat sales had a net negative 2 mbu on old crop due to cancellations but new crop bookings came in at 10 mbu. The rally we have seen in futures and elevated competition from South America were the leading causes of the sluggish demand. 

Meat sales for the week were also on the light side, especially for pork. Pork sales totaled 17,200 metric tons for the week, down 48% from the previous week and a marketing year low. Top buyers were Mexico and Japan. Trade was quick to note there were no sales to China. Beef sales totaled 15,700 metric tons, down 14% from the previous week. Japan was the top buyer, but we did see large sales to China as well. 

The National Oilseed Processor Association (NOPA) crush report for March was not quite as friendly as trade had hoped for. Soybean crush for the month totaled 177.98 mbu, considerably higher than the February total, but just under trade estimates. Soy oil reserves held by NOPA members increased from February as well, coming in at 1.77 billion pounds compared to 1.75 billion in February. Meal exports were up in the month climbing from 837,800 tons in February to 937,000 tons in March. 

The US planting pace is already becoming a market factor. As of last Sunday a reported 4% of the US corn crop had been seeded. While this was just under trade estimates, it was higher than the average pace for this time. While it is very early in the planting season and typically this would not receive much attention, any factor that may reduce the size of either corn or soybeans this year is receiving a reaction. 

A bigger question is what impact the current planting pace and weather conditions may have on acreage. Historically if we see delays to corn plantings, we see acres shift to soybeans as that crop has a shorter growing season. This change can be heavily determined by futures spreads as well. The current spread between corn and soybeans is 2.5:1, which does not favor one crop or the other. The possibility of acres shifting will be debated right up to the official revisions on June 30th. 

We are starting to see several comparisons between this marketing year and last, and higher commodity usage numbers as a result. While these numbers seem supportive, they are a bit misleading. Last year’s commodity demand at this time was being heavily impacted by Covid-19 restrictions and closures that impacted the US economy. The US ethanol industry is a perfect example of this and how production this year is much larger than last year. To get a more accurate reading on commodity usage we need to compare to 2019, which is inline with current ethanol manufacturing. 

Another economy we are seeing recover from last year is in China. As a result, China is increasing its imports of grain, oilseeds, and meats. China is also seeing an increase in its exports, giving the indication the entire global economy is improving. While this news is positive for commodity demand, the recovery is also generating inflation worries, which may temper long-term demand. This is a fine line the global economy will face for the foreseeable future. 

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