Mark's Market Talk
May 03, 2021
We finished last week with higher closes on both corn and beans. The facts first, July corn finished the week 41 cents higher while it ended April 1.26 higher. What a month! A year ago, July corn was 3.11 so we were 3.62 higher last Friday. Never in our wildest imaginations would we have seen this coming. Dec corn ended last week 11 cents higher as planting progress was fast and normally an early planted crop yields better so the gains here were tempered. July beans were 20 cents higher last week while Nov was steady. If we look back a year July beans were 8.50 compared to last Friday’s close of 15.34, a gain of 6.84. Again, who would have thought. As producers and marketers, we get frustrated trying to sell our crop in a down market. I am not sure it is any easier when the markets are high. Too many times you get hung up on hitting the high when you would be better off working on your average price. This week the CME will start using new amounts for limit moves. For corn it goes to 40 cents the first day and then goes to 60 cents the second day. That means the market could move 1.00 in 2 days, if it is headed down you may be locked out of selling until we come off the limit move. The bean limit will be 1.00 the first day and 1.50 the second so a 2-day limit move would be 2.50. If the market is headed south this could be a big hurt. The CME reviews this policy twice a year and they use a formula to set the limit moves. The higher the prices the higher the limits. We need to keep this in the back of our mind because it will happen at some point. We have seen some limit higher moves recently and it may only be a matter of time before we see some down moves. Weather continues to be a factor on both old and new crop corn. Brazil is hot and dry so their second crop corn is suffering, and the yield will be less than forecasted. Meanwhile demand for old crop has remained strong. The export, ethanol, and domestic corn demand are all vying for corn. We probably have enough corn to make it to harvest but it may not be in the right place and we will see hot basis levels in those areas. Bean stocks are very tight and with crush margins being almost record high the demand for beans is huge. The rumors of importing beans are true as it has started. These beans will take some edge of the demand in the southeast but basis levels at the interior plants should remain strong. There will be lots to think about as this season progresses.