On Wednesday, the CME Group’s farm markets are following the soybean trade higher.
In early trading, the March corn futures are 2½¢ higher at $4.94¾. May corn futures are 2¼¢ higher at $4.94¾. For the past 12 months, corn has jumped 28%.
March soybean futures are 14¢ higher at $13.61½. May soybean futures are 12¾¢ higher at $13.59½. With this latest rally, it brings the last 12-month price action to a 43% increase in the soybean market, and 43% in the soymeal market.
March wheat futures are 1¾¢ higher at $6.55¼.
March soymeal futures are $3.60 short term higher at $435.40.
March soy oil futures are 0.55¢ higher at 44.15¢ per pound.
In the outside markets, the NYMEX crude oil market is $0.02 per barrel higher (+0.04%) at $49.95. The U.S. dollar is lower, and the Dow Jones Industrials are 46 points higher (+0.15%) 30,438 points.
On Wednesday, private exporters reported to the USDA export sales of 102,616 metric tons of corn for delivery to unknown destinations during the 2020/2021 marketing year.
The marketing year for corn began Sept. 1.
Bob Linneman, Kluis Advisors, says that this week’s rally is grounded in global crop concerns.
“Trade concern about weather and yield potential in Argentina were the main driving forces. Corn had a 14¢ trading range and closed 8¢ higher, soybeans had a 60¢ trading range and closed 34¢ higher, while wheat futures closed 8¢ to 12¢ higher,” Linneman stated in a daily note to customers.
Kluis added, “The USDA Crop Production and supply/demand reports next week need to be very bullish to keep this rally going. The Relative Strength Index (RSI) is a momentum indicator that I watch. The RSI index shows an extremely overbought market on the daily, weekly, and monthly charts.”
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Tuesday’s Grain Market Review
On Tuesday, the CME Group’s farm markets close off their daily highs, still sharply higher.
At the close, the March corn futures finished 8¢ higher at $4.91¾. May corn futures ended 8¼¢ higher at $4.92¾.
March soybean futures closed 34¢ higher at $13.47½. May soybean futures closed 35¢ higher at $13.46½.
March wheat futures finished 12¢ higher at $6.54¼.
March soymeal futures closed $8.10 short term higher at $431.80.
March soy oil futures closed 1.47¢ higher at 43.60¢ per pound.
In the outside markets, the NYMEX crude oil market is $2.29 per barrel higher (+4.81%) at $49.91. The U.S. dollar is lower, and the Dow Jones Industrials are 259 points higher (+0.82%) 30,473 points.
Al Kluis, Kluis Advisors, says that the outside investors still have their prints on the market.
“The latest CFTC report showed funds adding to their long positions in corn and soybeans, but the net position was less than expected. If the funds jump back into the market in a big way, then it can take prices higher, because farmers are not reluctant sellers,” Kluis stated in a daily note to customers.
Kluis added, “The most recent report from my source on South America’s crop shows projections moving lower. The size of the Argentine corn and soybean crops have dropped by 1 million metric tons, and the size of the Brazilian soybean crop has dropped by 2 MMT. For all of South America, the total corn crop is now 5 million metric tons (200 million bushels) less than last year and the total soybean crop is just 10 million bushels higher than last year and trending lower.”
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Monday’s Grain Market Review
On Monday, the CME Group’s soybean markets closed off their daily highs, as South America’s crop continues to battle dry weather.
At the close, the March corn futures closed ¼¢ lower at $4.83. May corn futures finished 1¢ higher at $4.84¼.
March soybean futures settled 2¢ higher at $13.13, after reaching as high as $13.42. May soybean futures settled 4½¢ higher at $13.11¼, below its daily high of $13.39.
March wheat futures closed 1½¢ higher at $6.42¼.
March soymeal futures closed $5.70 short term lower at $423.70.
March soy oil futures settled 0.27¢ lower at 42.13¢ per pound.
In the outside markets, the NYMEX crude oil market is $1.03 per barrel lower (-2.14%) at $47.49. The U.S. dollar is lower, and the Dow Jones Industrials are 552 points lower (-1.81%) 30,054 points.
Britt O’Connell, ever.ag, says that volatile is the best way to describe the grain markets, as of late.
“The overnight trade saw both corn and soybeans post significant gains that started to fade as we entered into the midday trade. Soybeans continue to be the leader while corn and wheat have been benefactors of the move. Fears of tightening U.S. stocks paired with concerns over South America’s crop fanned the flames in the bean market. On January 12, the USDA will take its monthly evaluation of the U.S. supply and demand balance sheet. The January report has historically proven to be volatile and, as it stands today, seems reasonable to assume for this year,” O’Connell says.
Should the USDA trim either production or raise demand, both exports and crush have been strong for soybeans, ending stocks are at risk of falling below 100 million bushels, she says.
“If the ending stocks are estimated below 100 million bushels, it would be a level not seen since the recovery of the 2012 drought and massive corn acres planted in 2013. That year soybean stocks ended the year at a mere 92 million. Some analysts believe the number could be as small as 75 million bushels,” O’Connell says.
Meanwhile, corn hasn’t carried much of a story, but as the report approaches, analysts are expecting the USDA to lower ending stocks, likely a combination of production reduction and possibly raising the export estimates, she says.
“Strong Chinese corn demand will remain the greatest reason to be optimistic for higher corn prices,” O’Connell says.
Al Kluis, Kluis Advisors, says that the grain markets are off to a great start.
“For the first time ever, I see a gap on my weekly, monthly, and even yearly continuation charts for corn and soybeans. The bull spreads firming in corn and soybean futures show continued strong demand. I see no evidence yet of price rationing. The gap higher sets up our next price targets,” Kluis stated in a daily note to customers.
Kluis added, “I am watching weather and crop conditions in Argentina where I see no major rain events in the forecast. Now their yield potential will continue to drop. Corn production in the five main grain-producing countries is already below last year. It is just a matter of weeks until the soybean production falls as well.”
