Mark's Market Talk

Feb 15, 2021

Last Tuesday the USDA released their February grain stocks report. The markets had traded higher right into the report that morning. However, the corn market sunk rather fast as the USDA did not reduce the carryout near as much as the average trade number. They only increased the corn exports 50 million bushels, not 200 or more that was expected. That left the estimated carryout at 1.5 billion bushels instead of the 1.2or 1.3 that the trade expected. So who is right? It all depends on the Chinese and whether they actually take all of the corn they bought in the last month and maybe buy more. For months we have had the largest and cheapest supply of corn in the world. Now Argentina suddenly is harvesting some corn and pricing it below the US. They will not have enough to satisfy the world so we will continue to sell corn. The bigger question might be whether Brazil can get their corn crop planted in time to beat the summer heat at pollination. March corn ended the week 9 cents lower while Dec corn was 3 cents lower. A week ago some were looking for us to move higher to the 6.00 level. Now most are hoping we can keep the front month above 5.00. The inverse to December was 75 cents last Friday. It does not need to move together immediately, but it will at some point. We may be able to move new crop higher into the planting intentions report in March. After that the weather will be the moving factor. In the same report the USDA came closer to matching the trade estimate on the bean carryout as their number was 120 million bushels compared to the 119 expected. This allowed beans to finish the week higher as March was 4 cents higher while Nov closed 9 cents higher. Old crop strength is coming from further export sales as the South American harvest has been very slow due to wet weather. A possible issue could surface once they get things in high gear. With SA pricing beans below the US, will the Chinese cancel US purchases, or will the tight timing force them to take delivery of what they have bought. This could change the whole picture and suddenly we might have more than enough beans to get to new crop. This week is a 4 day trade week due to the Presidents Holiday. It might be a good time for a breather.