Midday Comments: 3/24/2021

Soybean futures continued Tuesday’s rebound on Wednesday, but corn traded narrowly mixed on both sides of unchanged & wheat has given back Tuesday’s rally as traders continue to position for the month-end USDA reports. Soybeans bounced as soyoil futures resumed its uptrend & soymeal remained little changed. With soy product values underpinning board crush margins, soybeans were able to rally.  Wednesday morning’s EIA Petroleum Status report took some steam out of the corn market after the data indicated last week’s ethanol output slipped to a 3-week-low 271.0368 mil.gal. (-5.05% for the week) & ethanol stocks rose to a 2-week high 915.978 mil.gal. (+2.20% for the week). Pre-report analyst surveys had forecast ethanol production would rise & stockpiles decline.  Weekly ethanol production was down 8.26% from last year, but stocks were 9.66% below March 20, 2020 levels. Traders could take solace from the fact that 2021 vs., 2020 ethanol production & stockpile comparisons will look fabulous for the rest of the 2020/21 marketing year starting with next week’s report.  Wheat prices were again on the defensive as precipitation moved into the panhandles of Texas & Oklahoma this morning.  Traders shrugged off winter wheat condition improvement that was reported for Texas, Oklahoma & Kansas on Monday afternoon, but additional rainfall should sustain those trends. At the 7:45 am pause in electronic trading, May corn futures were down 1.75c, Dec. corn was 1/4c lower, May beans were up 2.75c, Nov. beans were 2.25c higher, May soymeal was up $3.00/ton, May soyoil was down 0.36c/lb., May SRW wheat was 6.5c lower & July SRW wheat was down 5.5c.  By 10:45 am, May corn futures were down 1.75c, July corn was 1c lower, Dec. corn was down 2.75c, May beans was up 3c, July beans were 4.5c higher, Nov. beans was up 175c, May soymeal was down $0.70/ton, May soyoil was 0.54c/lb. higher, May SRW wheat was down 7.25c & July SRW wheat was 5.75c lower.
 
Recapping yesterday’s price activity, grains posted a “Turnaround Tuesday” as traders took profits following Monday’s price swoon.  News was limited as prices continued to chop between recent highs & lows & traders readied their portfolios for next week’s USDA Prospective Planting & March 1 quarterly Grain Stocks reports.  At Tuesday’s close, May corn futures gained 2.25c, July corn rose 2.75c, Dec. corn was up 1.75c, May beans were 5.75c higher, July beans rallied 7.25c, Nov. beans were up 7.50c, May soymeal rebounded $2.20/ton, May soyoil gained 0.65c/lb., May soft red winter wheat recovered 7.5c & July SRW wheat was 7c higher.  
 
Livestock futures were solidly higher on Tuesday as traders reacted to Monday afternoon’s monthly USDA Cold Storage data.  That report indicated that frozen pork supplies rose 33.973 mil.lbs. during February to 491.481 mil.lbs., but were down 157.494 mil.lbs. (-24.3%) from Feb. 29, 2020 stockpiles. Frozen beef stockpiles declined 8.458 mil.lbs. (-1.6%) for the month to 510.896 mil.lbs., but were up 16.303 mil.lbs. (+3.3%) from last year.  End-Feb. frozen chicken supplies dropped 48.080 mil.lbs. (-5.9%) to 769.238 mil.lbs., down 155.195 mil.lbs. from last year.  Frozen turkey stocks continued their seasonal build, up 18.730 mil.lbs. (+6.2%) to 320.139 mil.lbs. at the end of Feb., but that was down 20.570 mil.lbs. from last year’s level.  With both frozen red meat & poultry stockpiles down sharply from last year & current livestock output showing evidence of year-on-year reductions, April lean hogs futures jumped $1.425/cwt & April live cattle futures rallied $0.35/cwt on the report.  
 
In export news, USDA has not reported any daily export sales so far this week. There was trade chatter on Tuesday that China was inquiring about corn prices for June shipment from the Gulf, but basis levels showed no sign of any buying program.  South Korean feed mills bought 4.813 mb of optional-origin feed wheat this week for Oct. arrival. That nation also tendered this week for 1.286 mb of milling wheat to be sourced from the US & Canada.  Philippine processors reportedly sought & rejected as too high all offers for 5.695 mb of a mix of feed & milling wheat for April-June delivery.  Thailand feed mills also tendered for 15.800 mb of feed wheat on Tuesday, & apparently passed on all offers. The Brazilian trade association ANEC expects 16.1 mmt of soybeans & only .115 mmt of corn to be exported by that nation in March.  Brazilian port basis levels have been under pressure recently as China has been slow to return to the Brazilian markets.  Brazilian analyst Safras e Mercado pegs Brazil’s soybean harvest at 60% completed, up 14% for the week, but 8% behind 2020 & 3% below average.  The analyst reports that Safrinha corn planting is now 47% completed, up 12% from last year.  First crop corn harvest is estimated at 55% done, up 2% from last year & 1% behind average.  Argentina reported that it crushed 2.85 mmt of soybeans in February, up 8% from last year & the largest Feb. crush since 2016’s 3.21 mmt.  So far in its 2020/21 marketing year, Argentina has crushed 12.98 mmt of beans, down 11% from last year.  US soybean crush & exports have filled that void. Palm oil output is expected to recover in coming months as weather in Malaysia & Indonesia improves, pressuring vegoil prices.  While vegoil supplies are currently tight, that situation is seen easing during the last half of 2021 by renowned oilseed analyst Dorab Mistry. Separately, Oil World analyst Thomas Mielke projected on Wednesday that global soybean production would rebound to 379 mmt in 2021, up 25 mmt from last year.
 
After grain basis was unchanged on Monday, local corn basis declined 3c on Tuesday as soybean & wheat basis levels remained steady. St. Louis terminals were struggling to get barges on Wednesday & several announced plans to shut off truck receipts at noon.  St. Louis soybean basis has been under pressure—down 16c since March 1--as US exports have slowed amid more competition from both Illinois River & South American supplies. St. Louis corn basis has slipped 3c this week, but is still 4c above March 1 levels as March US corn exports have been record-high for any 3-week period.
 
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"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.