AgriVisor Market Recap

Thursday, April 22, 2021
Buyers continue to surface in the grains and soybeans, giving us fresh contract highs almost daily. The market is currently being led by soybeans, which are being led by the soy oil contract. Vegetable oils around the globe have rallied, pushing soy oil to a 10-year high. Smaller forecasts on the Argentine soybean crop was also supportive. The combination of these factors pushed futures considerably higher, with nearby corn reaching its daily 25-cent limit.  

Exports for the week ending April 15th were down from what we have seen in recent weeks indicating price rationing is starting to take place, especially with more inventory coming out of South America. Corn sales were split with 15.2 million bu (mbu) on old crop and 1.1 mbu of new crop. Soybean sales totaled 2.36 mbu old crop and 11.6 mbu new crop. Wheat bookings were divided with 8.8 mbu old crop and 13.7 mbu new crop. Even though total were down, all were above the volume needed to reach yearly USDA projections. 

Beef and pork export sales for the week were mixed. Beef sales totaled 24,600 metric tons, a 57% increase from the week before. Half of the beef sales were split between South Korea and Japan. Pork sales were a negative 22,100 metric tons though as even though we did see sales, including to China, heavy cancellations from Mexico took place. This stemmed from a previous reporting error however, and was quickly looked over by trade. 

One of the most questioned numbers in the global market right now is the size of the Brazilian corn crop which is currently predicted at 109 million metric tons (mmt). This ultimately hinges on the size of the Safrinha crop. Many analysts claim the crop will be smaller given recent weather and forecasts that indicate stress will continue. While yields may be down, Brazilian farmers are expanding plantings given record returns. Right now the break-even yield on corn in Brazil is 40 bushels per acre which has kept planting moving. 

We are also seeing debate on the Argentine corn crop size. Harvest is slow to advance in Argentina, with just 14% of the crop out compared to last year’s 33%. Yields are better than expected though, causing some firms to increase their crop projections. One of the is the Buenos Aries Ag Exchange, who puts the crop at 46 mmt, up 1 mmt from their previous prediction. This is still 1.5 mmt under the latest USDA crop estimate. 

The USDA attaché in Argentina has a different opinion on soybean production. That entity has lowered its crop forecast to 45 mmt as drought conditions persist. The attaché believes Argentina’s soybean production will rebound considerably next year though as weather returns to more normal patterns. It is also believed Argentina will seed 250,000 more acres to soybeans. It is believed this will produce a soybean crop between 51 and 52 mmt. 

Basis values across the interior United States are running at firmer than normal levels. The current average spot basis values are a negative 11 cents on corn and a negative 44 cents on soybeans. We are also seeing better than normal new crop basis values as buyers want to secure coverage sooner than normal. The current average new crop corn basis is a negative 27 cents compared to a negative 34 cents a year ago. New crop soybean basis is now a negative 50 cents compared to last year’s negative 67 cents. 

When it comes to feeding, one grain that is getting more attention is wheat usage. In the April balance sheets the USDA pegged wheat and residual demand on wheat at 100 mbu, a 25 mbu reduction from March. According to US feeders this number is too low. While an exact number has not been given, feeders claim they are using more wheat in rations, not less. 

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