5 February 2021

Posted on by
  • HEADLINES: US census December exports surprisingly large, thank China; Stats Canada data bullish canola/oats/wheat; demand rationing?
  • Low volume and mixed values rule Chicago at midday. Nearby corn futures are sagging on modest profit taking (by the bulls) against $5.50 March while soy/wheat futures push higher on firming cash basis and feedlot demand for new crop wheat in the Plains. Plain’s corn supplies are going to be extremely tight by summer with cash basis bids of $0.40-0.80 over July Chicago. The new crop HRW wheat at $0.25-0.40 under July KC futures is attractive if elevators will commit to selling months of feed use in advance. Remember that wheat holds a protein advantage to corn and offers 10% more ruminant feed value. We look for a mostly higher Chicago close as traders want to be long ahead of the USDA report and dry weather forecasts for Argentina. The reason that US soybean futures have held in a range for the past 3 weeks is the hope for record large S American soy and corn crops. If there is any indication that is not the case, a new strong Chicago price rationing rally will likely unfold.
  • Chicago brokers estimate that funds have bought 2,100 contracts of wheat and 3,100 contracts of soybeans while selling 1,300 contracts of corn. In the products, funds have sold 1,100 contracts of soyoil and bought 2,400 contracts of soymeal. The market has a firm tone at midday with a close above $13.81 March soybeans indicating a new uptrend.
  • FAS reported that the US sold 101,600 mt of 2020/21 US corn to an unknown destination overnight. The buyer is rumoured to be Japan or South Korea.
  • The US Census Bureau estimated that the US shipped out 181.7 million bu of corn, 71.9 million bu of wheat, and a record 398 million bu of US soybeans during December. FGIS reported December US corn exports of 163.9 million bu (Census total was 17.8 million bu larger). The Census December soybean exports were a hefty 30 million bu larger. Weekly inspection revisions and monthly Census US soybean exports have been well above initial exports which only adds to the bullish demand outlooks for both corn/soybeans. The US has exported record amounts of US soybeans in each month since August. January US soybean exports are also shockingly large at 341-345 million bu, another record. The US looks to have exported just over a 1,850 million bu of soybeans through January, a remarkable record.
  • China also imported around 13 million gallons of ethanol during December, another larger than expected total. Through Year 1 of the Phase One agreement, China has taken $28.75 billion of US ag goods according to USDA data. Although the total fell short of the initial Year One Pledge of $36.5 billion, China’s ag purchase pace was enormous since July and shows no sign of slowing in early 2021. We look for China to take $43.5 billion of US ag goods in 2021 which based on current prices could work out to 44-47 million mt of US soybeans and 24-28 million mt of corn. China is likely to adhere to their Phase One Agreement in year 2, $43.5 billion, which offers massive demand for new crop US corn and soybeans. This is why new crop Nov soybeans and Dec corn is pacing today’s Chicago rally.
  • Stats Canada estimated their December wheat stocks at 24.8 million mt (down 100,000 mt from last year), and below trade estimates. Canola (rapeseed) stocks were just 12.1 million mt, down just over 2.0 million. Even Canadian oat stocks were lower at 2.7 million mt. There are cash connected rumours that China has been booking Canadian wheat in recent weeks. Confirmation will come with export loading data.
  • An above normal rainfall pattern starts across all of N Brazil today which will linger into late February. The rainy/cloudy days will slow the harvest across Mato Grosso. The 11-15 day forecast is also wet which could hamper delivery of soybeans during early March. An arid forecast is offered for the entirety of Argentina and most of RGDS in S Brazil. A front passes Feb 11-12 which could produce 0.2-1.00″ of rain. Otherwise, limited rain is anticipated.
  • Ongoing record large US demand shows no sign of slowing with the NOPA January crush rate to be record large on Feb 15. CONAB’s Brazil corn/soy estimates are released on 11 February, Thursday with the USDA out on Tuesday. Research suggests staying bullish as US cash markets tighten. Buy small breaks with new crop soybeans to pace a February rally on the need to secure acres.
To download our weekly update as a PDF file please click on the link below: