Closing Comments: 4/1/2021

After posting double-digit April Fools gains in Wednesday night trading, old-crop corn & soybeans reversed to losses with soybeans leading the downward move on Thursday. Thursday morning’s USDA Weekly Export Sales report weighed on old-crop beans after USDA reported only 3.873 mb of 2020/21 bean sales. While fractionally above the previous week & 6.3-times larger than weekly sales needed to reach USDA’s export forecast, the smaller bean sales allowed traders to focus on the expected record bean crop being harvested in Brazil & the onset of bean harvest in Argentina. Corn also faltered by midmorning despite weekly old-crop corn export sales of 29.105 mb—48-times the weekly average needed to reach the 2020/21 export projection.  Cumulative 2020/21 corn & soybean sales already exceed their previous actual full-year export totals by 150 mb & 60 mb, respectively.  That news was not enough to prevent some traders from taking profits to the bank ahead of the 3-day holiday weekend.  Markets are closed for Good Friday Holiday on Friday, so some pre-holiday weekend & first-of-month positioning are taking place. Wheat extended Wednesday night losses as traders took advantage of Wednesday’s double-digit post-report gains following USDA’s shockingly low corn & soybean Prospective Planting estimates.  At the 7:45 am pause in electronic trading, May corn futures were up 12c, July corn was 11.75c higher, Dec. corn was up 14.75c, May beans were unchanged, July beans were 2.75c higher, Nov. beans were up 17.25c, May soymeal was $0.20/ton lower, May soyoil was down 0.22c/lb., May SRW wheat was 2.25c weaker & July SRW wheat was down 1.25c.  At Thursday’s close, May corn futures were down 4.5c, July corn was 2.25, Dec. corn was 7c higher, May beans were down 34.75c, July beans were 31 lower, Nov. beans were up 7.5c, May soymeal was down $13.00/ton, May soyoil was 79c/lb. lower, May SRW wheat was down 7c & July SRW wheat was 5.25c lower.  Despite the enormous volatility seen in pre- & post-report activity, continuation charts of corn were up 7.25c, soybeans were up 1.5c & wheat was down 2.25c for the week. 
 
Thursday’s post-report weakness in old-crop months reflects potential competition from South American supplies.  For what it’s worth, past years of similar corn & soybean stocks tightness didn’t register price peaks until May-June. Strength in new-crop contracts recognizes that more corn & soybean
planted acreage are needed in 2021. In soybeans, if one uses USDA’s yield & usage forecasts from the February Ag Forum, new-crop bean carryover would fall to 15 mb—an impossibly low number. 
 
Recapping Wednesday’s data, farmers told USDA they would plant 91.144 mil.ac. of corn--up only 325,000 ac. (+0.4%) from last year & 2.0 mil.ac. below trade expectations.  Farmers told USDA on March they intended to plant 87.600 mil.ac. of soybeans--up 4.516 mil. (+4.5%) from 2020 & 2.4 mil.ac. below the pre-report consensus forecast.  Analysts who expected far more corn acres probably didn’t pencil $700/ton for anhydrous ammonia when calculating their estimates.  Farmers did.  USDA’s Ag Forum economists & analysts who expected even bigger bean acreage missed farmers’ historical tendency to under-report bean planting intentions.  Farmers told USDA they also intended to boost sorghum planting by 1.06 mil.ac. (+18.0%) to 6.940 mil.ac. & wheat acres by 2.009 mil.ac. (+4.5%) to a 3-year-high 46.358 mil.ac. in 2021.  Although farmers indicated they would plant 6.598 mil. more acres of the 9 major crops, traders had fully expected producers would expand 2021 plantings by more than 10 mil.ac.  Dry weather in the Northern Plains could still make that happen if it allows Prairie potholes to get planted this year. There were regional shifts in acreage away from minor crops towards corn, milo & soybeans. Northern producers said they would cut planted acreage of oats (-396,000 ac., -14.0%), barley (-31,000 ac., -1.1%) & sunflowers  (-503,000 ac., -29.2%).  Southern farmers told USDA they would cut cotton sowings by 56,000 ac. (-0.5%) & rice seedings by 326,000 ac. (-10.7%). 
 
Wednesday’s reaction to the 11 am data was swift. Corn & soybeans locked limit-up & wheat followed to double-digit gains within minutes of the Prospective Planting report. Corn also drew support from March 1 stockpiles that were about 77 mb lower-than-expected, while soybean stocks were about 3.2 mb above the average trade guess.  USDA lowered Dec. 1 corn stocks by 28 mb, but increased Dec. 1 soybean stockpiles by 13.4 mb, hinting of potential yield adjustments in September. The fact that March 1 stocks were lower than pre-report estimates suggests Dec-February domestic corn & soybean feed use was undiminished by 7-year-highs in prices.  Wheat prices also jumped in post-report trading even though farmers said they would plant about 1.2 mil.ac. more wheat than traders expected & March 1 wheat stocks were 42.3 mb larger than traders forecast. With corn & beans locked limit-up into the close for the first times since 2011 & 2009, respectively, deep-in-the-money options pricing suggested that corn futures would have traded 8-13c higher & soybeans 3-5c higher had futures been allowed to trade more than their daily limits. That’s what happened in the opening minutes of Wednesday evening trading. At Wednesday’s close, May 21 thru July 22 corn futures were up 25c, May 21 thru Jan. 22 beans were up 70c, May soymeal was up $25.ton, May soyoil was up 2.46c/lb., May SRW wheat soared 16.25c & July SRW wheat surged 16c higher.   
 
Wednesday strong gains were a sharp contrast to Tuesday’s trading activity. Grain futures crashed lower ahead of the USDA reports, echoing losses in the energy & metals markets, as traders reacted to continued strength in the US dollar by liquidating long positions ahead of Wednesday’s USDA Prospective Planting & March 1 Grain Stocks data.  Pre-report losses showed traders were wary that USDA would unleash an end-March bearish surprise that either “found” more grain stockpiles existed on March 1 than what previously released supply/demand reports would suggest or that USDA will report US farmers plan to plant far more corn, soybeans & wheat than forecast at USDA’s Ag Forum in February.  With Tuesday’s sell-off to oversold chart momentum levels, May corn futures ended at its lowest level since March 12, May beans slid to their lowest close since Feb. 11 & May SRW wheat settled at its lowest price since Dec. 16.  At Tuesday’s close, May corn futures dove 7.5c lower, July & Dec. corn each tumbled 8.75c, May beans plunged down 26.25c, July beans plummeted 27.5c lower, Nov. beans careened 18.25c lower, May soymeal ticked $0.10/ton higher, May soyoil was limit-down 2.50c/lb., May soft red winter wheat lost 15c & July SRW wheat declined 12.25c.  
 
Thursday’s USDA Weekly Export Sales data for the week ended March 25 were solidly within trade expectations.  Old-crop corn sales were a 3-week-low 29.105 mb & an additional 2.362 of new-crop corn was booked--within pre-report trade expectations for 23.6-59.1 mb of total sales & 48-times the 0.6 mb of old-crop corn needed weekly to reach USDA’s 2600 mb export projection. Cumulative corn sales of 2,587.5 mb are the largest ever by 508.0 mb at market week #30 & well above the 2,438 mb record corn exports seen in 2017/18. Grain sorghum sales were a 2-week-high 4.764 mb, 2.5-times the 1.9 mb needed weekly to reach USDA’s 295 mb export forecast. Cumulative milo sales have reached 251.5 mb, the highest for market week #30 since 2015/16’s 256.0 mb.  Weekly soybean sales edged to 3.873 mb, up slightly from the previous week’s 5-week-low.  That was still 6.3-times the 0.6 mb of sales needed weekly thru the end of August to reach USDA’s 2,250 mb export forecast. Cumulative bean sales stand at 2,235.5 mb, 60 mb above record 2016/17’s 2,165 mb export total & 226.8 mb above the market week #30 records of that year.  Wheat sales fell to a 4-week-low 9.190 mb, but that was still 1.5-times the needed weekly sales thru the end of May. Cumulative wheat sales now stand at 922.4 mb, a 4-year-high for market week #43. China cancelled 2.716 mb corn (year-to-total 912.757 mb), bought 4.556 mb beans (YTD 1324.544 mb), purchased 4.777 mb wheat (switched from unknown destinations, YTD 119.671 mb), booked 6.929 mb old- & 2.480 mb new-crop milo (2020/21 YTD 220.324 mb), added 13,500 running bales of cotton (16.3% of total weekly sales), bought 29,700 mt of pork (48.7% of total sales), purchased 5,900 mt beef (31.6% of total sales) & procured 193,900 cattle hides (54.2% of total sales).
 
Wednesday’s EIA Weekly Petroleum Status report also provided a bullish influence for corn.  The US Energy Dept. agency indicated that ethanol output rebounded to a 2-weekhigh 283.710 mil.gal. in the week ended March 26, but ethanol stockpiles slid to 886.788 mil.gal.—the lowest since Nov. 20.  While weekly ethanol production was up 4.66% for the week & higher year-on-year (up 14.88%!) for the first time in more than a year, it was still the second-lowest same-week output since 2015.  Ethanol stockpiles were down 3.19% for the week & 17.90% below last year.  Weekly ethanol production & stockpile data will have very favorable comparisons to 2020 for at least the next 4 months. 
 
In export news, USDA did not report any daily export sales on Wednesday or Thursday. On Tuesday, The farm agency announced on Tuesday that 3.968 mb of 2020/21 US corn were sold to unknown destinations.  South Korean flour millers bought 1.873 mb of US wheat & 1.102 mb of Canadian wheat on Wednesday & an additional 2.559 mb of US milling wheat on Thursday. South Korean feed mills also purchased 60,000 mt of soymeal on Thursday.  Algeria bought 18.372 mb of optional-origin milling wheat with the EU expected to fill most of the orders. Saudi Arabia’s state grain buyer tendered for 10.839 mb of milling wheat on Thursday.  Feed processors in Thailand sought & rejected all offers for 18.519 mb of feed wheat on Wednesday, citing too-high prices. 
 
Locally, corn basis rose 1c, & soybean & wheat basis levels were steady on Tuesday. On Wednesday, corn & wheat basis levels were steady, & bean basis rose a penny.   
 
Would you like CBOT futures prices reported to your phone? Top Ag can send you nearby & harvest futures prices for corn, soybeans & wheat at 9:45 am, 11:15 am & 1:45 pm each day.  We provide the service for free, but you may have to pay for text messages--depending upon your phone plan. Call Scott or Jacob at Okawville at 243-5293 or Mike at Trenton at 224-7332 & we'll get you set up!  
 
"Top Ag Comments" are written by David Marshall, AgTraderTalk LLC, Nashville, IL.  To learn more about his farm marketing advisory or commodity brokerage services, contact him at dmarshall@agtradertalk.com or call (618) 327-4370 (voice/fax) or (618) 314-0918 (cell). This commentary is not intended for specific trading strategies. We strive to insure this information is reliable, but we cannot guarantee its accuracy or completeness.  Commodity trading involves risks. You should fully understand those risks before trading.