Midday Comments: 2/17/2021

Wheat is giving back Tuesday’s gains & corn & soybeans are under modest pressure on Wednesday as news is quiet & traders are wary of what USDA economists will predict at their Annual Agricultural Forum to be presented virtually on Thursday-Friday.  The holiday has delayed until Thursday the released of the EIA Weekly Petroleum Status report.  Given the storm-related disruptions to the nation’s energy & transportation grid, traders look for ethanol output & usage to be lower in this week data.  This week’s USDA Weekly Export Sales report will be delayed to Friday as well.  With China still on holiday & US reports delayed, traders spent much of the overnight session & Wednesday’s regular session undoing some of Tuesday’s action.  In the absence of fundamental news. At the 7:45 am pause in electronic trading, corn futures were 2.5 to 3c lower, beans futures were 1c to 4.5c lower, & SRW wheat futures were down 4c to 9c. At 11:48 am, March corn futures were down 2c, July & Dec. corn were each 1.25c lower, March beans was down 5.25c, July beans was 2.75c lower, Nov. beans was 1c lower, March soymeal was $1.40/ton higher, March soyoil was 0.48c/lb. lower, March SRW wheat careened 18.25c lower & July SRW wheat was down 14.75c.  The closer we get to the end of February, the more likely will be liquidation of March futures ahead of first notice day.
 
USDA Ag Forum conference projections for 2021 acreage will be released at 7 am CST on Thursday.  Supply-demand forecasts will be issued on Friday.  According to a pre-forum survey released by Bloomberg News, trade consensus expects USDA to forecast 2021 corn planted acreage at 92.9 mil.ac., production at 15,243 mb & 2021/22 corn ending stocks at 1,725 mb.  That would compare to 2020/21 corn plantings of 90.8 mil.ac., output at 14,182 mb & projected Aug. 31, 2021 corn stocks of 1,502 mb.  The average Bloomberg survey guess sees new-crop bean planting at 89.8 mil.ac., production at 4,520 mb & 8/31/22 bean ending stocks at 179 mb.  Last year, US farmers planted 83.1 mil.ac., harvested 4,135 mb of beans with the Feb. 9 WASDE report seeing 120 mb of beans carried over on 8/31/21.  Ahead of the forum, trade analysts’ average prediction sees 45.3 mil.ac. total wheat acres sowed for 2021/22, 1,874 mb of wheat to be harvested & 769 mb of wheat stocks on hand on May 31, 2022.  USDA has previously reported that 44.3 mil.ac. of US wheat were seeded for 2020/21, 1,826 mb of old-crop were produced & end-May 2021 stockpiles will be 836 mb.  In recent years, USDA has been generous in its expectations for planting intentions & yields based on trendlines, but less aggressive in its usage forecasts.  We doubt they will “change their stripes” in this year’s event given the recent 7-year price highs that grains achieved. 
  
In export news, USDA has not reported any daily export sales thus far this week. Grain merchants report that South Korean feed mills bought 2.716 mb of optional-origin corn for June arrival on Wednesday. The US is ultimately seen as the source for the grain. Algeria is thought to be buying French wheat on Wednesday, but final totals are not yet available.  China remains on Lunar New Year holiday thru Thursday. Argentina & Brazil have returned to work following “Fat Tuesday” celebrations yesterday.
 
In production news, state agricultural officials in Mato Grosso report that soybean harvest is now 22.3% completed, nearly doubling the previous week’s total.  Soybean yields have averaged about 51.2 bu/ac. so far. Uruguayan soybean acreage is expected to rise 7% this year, & recent rainfall has bolstered crop yield prospects.  Weather over the next 20-30 days will be key to yield potential. Argentina weather still looks mostly dry for the next week & some models are adding more heat than previously predicted.  Cooler-than-normal conditions during the past week had limited concerns about reduced rainfall. 
 
In the US, near-record snow coverage is calling into question how much damage this week’s Arctic blast caused to the winter wheat crop.  In hard red winter wheat country, Kansas has sufficient snow coverage only in the southeastern 20%, far southwestern & far northern parts of the state.  By contrast, most of the Nebraska, Texas & Oklahoma HRW wheat crop has at least 2-4” of snow on the ground.  The western half of Montana has good snow coverage, but the extreme northeastern part of the state has bare ground.  Virtually all the soft red winter wheat crop from Louisiana & Mississippi to Minnesota & eastward thru the Great Lakes & Ohio River Valley is blanketed with snow.  Wheat futures rallied sharply on Tuesday, but gave back those gains as winterkill worries faded on Wednesday.
 
Weather is disrupting normal activity across much of the US Midwest, South & East Coast. Some ethanol plants have shut down & resold previously contracted natural gas supplies at much higher spot prices.  Kill capacity has been cut at beef & pork processing facilities as deliveries were reduced by icy, snow-packed roads & utility services were cut.  Ice & cold temps have severely restricted barge loadings on the Illinois River. St. Louis terminals are still struggling with barge arrivals & logistics on Wednesday.  Most have shortened their operating hours as they work thru icy, brutally cold conditions & the St. Louis harbor remains essentially closed.
 
Locally, corn basis was 2c lower, & soybean & wheat basis levels were steady on Tuesday. St. Louis corn basis retested its winter high on Tuesday, but the facility that offered the best bid is closed right now, unable to get barges. 
 
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! 
 
"Closing Comments" are written by David Marshall, First Choice Commodities LLC, Nashville, IL.  To learn more about his farm marketing advisory or commodity brokerage services, contact him at dmarshall@firstchoicecommodities.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.