Mark's Market Talk
Apr 05, 2021
Last week I mentioned the upcoming USDA reports would be movers. We were not disappointed on that aspect as we saw limit up moves for corn and beans Wednesday following the release. The quarterly stocks report was somewhat in line with corn stocks down a little while bean stocks were a little higher than expected. The big news came in the planting intention report. According to the counters at the USDA we will plant 91.1 million acres of corn this year. That is only 300,000 more acres than were planted last year. More dramatic was it came in 2.2 million acres less than the average trade guess. As a matter of fact, it was lower than the lowest private estimate. I do not think this has ever happened and to be honest it leads you to second guess the UDSA math. It was a similar story on the bean side as the USDA predicted bean plantings of 87.6 million acres. This would be 4.5 million acres more than last year but 2.4 million less than the average trade guess. Again, you have to scratch your head and ask where did the other acres go? Wheat might pick up 1.5 million acres, but we still have 3 or 4 million lost acres floating around somewhere. The runup in commodity prices will encourage the planting of crops and reduce the amount of prevent plant acres. It would appear the USDA has an agenda, and it would most likely be to promote something being planted on every acre so we can maintain our cheap food policy. I hope that is not the case but the quickest way to get farmers to plant every acre possible is to stick a carrot out in front of them with higher new crop prices. We saw a similar situation a couple years ago when the USDA announced an incentive program that encouraged farmers to plant “something” rather than take prevent plant even though we were in the middle of a long- wet stretch at planting time. That failed to reward farmers as the increased acres depressed prices right thru harvest that year. Let’s hope they have the proof in their survey numbers to justify the report. After limit up action on Wednesday we saw a reversal on Thursday as bear spreading kicked in with old crop trending lower while new crop went a little higher. We closed out the 4- day trading week with May corn up 6 while Dec corn closed the week 15 higher. The price spreading in beans was a lot bigger as May beans were up 1 and Nov beans were 57 cents higher. Post report the focus has shifted from old crop to new crop. Going forward the volatility will shift to new crop also. Processor and export demands will dictate old crop basis, especially in the corn market. 2 dry plants are restarting this month as ethanol producers are seeing positive returns. China may buy some more corn though it may not happen until more is known about the South American crop. Should weather lower their prospects our corn will be more valuable. In this country the crops might be lost 2 or 3 times during the season which will lead to selling opportunities. Be prepared for this. Last week after a limit up move, we bought very little grain as everyone thought we were headed to the moon. Thursday’s markets should temper that thought just a little. The current prices are far better than we have seen in almost 8 years. We all hate selling on a down market but that beats selling at the bottom.