Good Morning!
What a week so far! I had to speak on Monday to a group from Compeer in Minnesota at 1 pm. While they were great, it’s not a whole lot of fun delivering the news of what the USDA report gave us here in January. I have four meetings this week to speak at, and while I enjoy speaking, it’s a tough gig after the way we got our teeth kicked in this week. The weather has been great for travel, so there’s always that. However, I have to miss a ballgame this week, which is something I try to avoid at all costs. I’m blessed with a good support group at home, my 13-year-old Toby and 9-year-old Abileen take care of the outside chores for the most part even when I’m home, while our older son Beau keeps watch on the cows at his place. It sure makes it nice to know things are taken care of when I’m on the road. I appreciate the feedback from you all-please keep the lines of communication open, especially with the challenges we are currently facing. For more information on AgMarket, click here. https://hubs.li/Q03qt2Qd0
For those still wanting to sign up for the conference, the dates are Feb 1st and 2nd. https://web.cvent.com/event/327d2477-70a8-48b2-a270-5fb9e53dbe52/summary
The markets were no fun on Monday due to an upper-cut from the USDA. While we may not all agree on their numbers, they are the numbers we are going to trade. I know many are skeptical, but the fact remains we grew a huge crop last year. Weather in South America is much the same with some forecasts calling for rain to finally fall on some of the drier areas of Argentina. Outside markets should have provided a mixed bias:
CORN
The corn market has had an awful week due to the report on Monday. Fortunately, Tuesday wasn’t near as bad as we saw March corn closing 1 ¾ lower at $4.19 ¾. This was 3 off the high and 2 ½ off the low. Corn export inspections were strong and back above expectations at 1.529 mmt. While inspections were solid, the USDA didn’t have one bit of good news in the report. From increasing yield to 186.5 to raising harvested acres by 1.2 million acres, the net result was production over 17 bbu and a stocks number of 2.227 bbu, which is 198 mbu more than a month ago levels. The quarterly stocks report showed 1.2 bbu more corn than we had a year ago, so there’s no doubt the USDA sees this marketing year as one in which we need significant demand. The only increase in demand was feed and residual at 6.2 bbu, which is up from 6.1 last month. I have admit-I was wrong about this report. I felt they would lower yield and also lower demand, but me and my team were too low on both yield and stocks. At this point, it may take some time to chew through this corn we have on hand. For those holding cash, you’ll likely see some basis appreciation, but expecting a big rally will be tough to do. We need a production issue somewhere in the world this coming year-that much is for sure. I’d move some corn if you need to and if you don’t, you might consider having some patience until we wade through all of this Jan/Feb delivery corn. Let’s be clear-this was a bearish report. While we have a good chunk of our old-crop marketed, we don’t have much new. We’ll see how this market plays out in the coming weeks and maybe we get some bounces to sell. On Tuesday, Dec26 corn settled 5 ¾ lower at $4.45 ¾.
SOYBEANS
Soybeans lost ground on Monday but nowhere near as bad as what we saw for the corn market. On Tuesday, beans had a worse day than corn with March beans down 10 ¼ at $10.38 ¾. This was 13 ¾ off the high and 1 off the low. March soybean meal was down 6.7 at 291.6, while soy oil was up .93 at 51.20. The weekly inspections showed beans at 1.489 mmt, which was above expectations. This USDA didn’t deliver near the knockout punch for beans we saw with regards to corn. For yield, we were unchanged at 53, while harvested acres went up just .1 million acres at 80.4. Exports were adjusted 60 mb lower, so stocks came in at 350 mb or that 60 mb above last month. The USDA raised Brazil’s bean crop to 178 mmt but kept world stocks at 124.4 mmt or a million above last year. The report for beans wasn’t near as bearish, so we’ve essentially lost about the same on beans as what we have for corn. With the big Brazilian crop on the way, it sure makes for tough sledding for those looking for a rally. Hopefully, we see some sort of supply disruption for beans as beans also have strong demand at this point. On Tuesday, Nov26 beans closed 8 ¾ lower at $10.58 ¼.
Matt Bennett
815-665-0462 – Work
@chief321 - Twitter
mbennett@agmarket.net – E-mail