March corn closed down 2 3/4 cents and December corn was down 3/4 cent. March soybeans closed down 8 3/4 cents and November soybeans were down 2 1/2 cents. March KC wheat closed up 12 1/4 cents, March Chicago wheat was up 17 1/4 cents and March Minneapolis wheat was up 8 3/4 cents. The March U.S. Dollar Index is trading down 0.33 at 90.62. The Dow Jones Industrial Average is down 100.31 points at 31,512.71. April gold is up $1.40 at $1,774.20, March silver is down $0.20 at $27.12 and March copper is up $0.0905. March crude oil is down $0.67 at $60.47, March heating oil is down $0.0058, March RBOB gasoline is down $0.0113 and March natural gas is down $0.149.
Corn:
March corn ended down 2 3/4 cents at $5.50 1/4 Thursday, another day of quiet trading as USDA kicked off the first day of its 97th annual Ag Outlook Forum. USDA Chief Economist Dr. Seth Meyer gave a brief market outlook, providing some teasers ahead of Friday’s more detailed commodity outlooks. Meyer set a corn planting estimate of 92.0 million acres and average farm price estimate of $4.20 a bushel for 2021-22. Both estimates are too early to have impact on prices but do set a tone for the new-crop conversation until we learn more about the season. The planting estimate combined with a trendline yield suggests a 15.1 billion bushel (bb) corn crop in 2021, probably enough to add 400 hundred million bushels (mb) to ending stocks if demand stays steady. That is a lot of assumptions for now and the market will need to see more proof as the year goes on. On the demand side, the U.S. Energy Department said ethanol production fell from 937,000 to 911,000 barrels per day last week and is down 12% from a year ago. U.S. ethanol inventory increased from 23.8 million barrels to 24.3 million barrels, the highest level since May. On the other hand, demand from China continues to look bullish for corn. May corn on China’s Dalian exchange returned from the New Year holiday and closed up 1.1% Thursday, reaching the equivalent of $11.01 a bushel. Central Brazil received more heavy rain overnight and there is still more in the seven-day forecast, adding to harvest difficulties. Moderate amounts are expected in southern Brazil and light amounts in Argentina. Late Thursday, the Buenos Aires Grain Exchange said 12% of Argentina’s corn crop was rated poor or very poor, up from 9% the previous week and likely related to Argentina’s drier weather. Fundamentally, corn prices are trading higher than USDA’s ending stocks estimate would normally support, but there is bullish potential for corn exports to be adjusted higher. From a technical view, the market acts as if corn supplies are tighter than USDA estimates. March corn is in an uptrend and has traded above the 30-day average since August. The 30-day average is now at $5.31. DTN’s National Corn Index closed at $5.36 Wednesday evening, near its seven-year high and 17 cents below the March contract. March crude oil is trading down 67 cents a barrel after the U.S. Energy Department (DOE) said crude oil supplies were down 7.3 million barrels last week to 461.8 million barrels. March natural gas is down 14.9 cents, even after DOE said gas in storage dropped 237 billion cubic feet in the week ended Friday, Feb. 12.
Soybeans:
March soybeans closed down 8 3/4 cents at $13.75 Thursday, dragged lower by a $5.80 loss in March soybean meal. It is interesting March meal is down $3.50 so far in 2021, while crush remains active in the U.S. and Argentina shows the ability to bounce back from earlier strikes. The bottom line continues to be that U.S. soybean supplies are extremely tight and it is difficult to see how that will change anytime soon. Chief Economist Meyer estimated 90.0 million acres of soybeans will be planted this spring, a number that suggests a 4.50 bb soybean crop in 2021 if a trendline yield is achieved. Given USDA currently expects 4.575 bb of demand in 2020-21 and the actual number is probably higher, a 4.50 bb crop is not enough to add to ending stocks in 2021-22. The demand estimate is difficult to rely on, but 92.0 million soybean acres are needed just to maintain soybean supplies at their present tight level. March soybeans on China’s Dalian exchange closed 3% higher Thursday, ending at the equivalent of $18.68 a bushel. Judging by the high price, China’s appetite for soybeans is as strong as ever, not slowed by 1.32 bb of U.S. purchases so far in 2020-21. Late Thursday, the Buenos Aires Grain Exchange said 11% of the soybean crop was rated poor or very poor, up from 8% the previous week. The seven-day forecast expects only light rain amounts for Argentina. Fundamentally, U.S. soybean supplies remain extremely tight at a time when Brazil continues to struggle to harvest its record crop. From a technical view, March soybean prices are holding sideways in 2021, staying one cent above the same 30-day average that has defined the price uptrend since mid-August. DTN’s National Soybean Index closed at $13.42 Wednesday, down from its six-year high and 42 cents below the March contract. Due to this week’s holiday schedule, USDA’s weekly export sales will be released Friday morning.
Wheat:
March KC wheat closed 12 1/4 cents higher at $6.36 3/4 Thursday, regaining support as the market reconsiders possible damage to the winter wheat crop from the recent stretch of bitter cold conditions. Winter wheat is known for being hardy and has seen cold weather in February before, but the record lows of late present another level of stress, especially for parts of the western Plains that were chronically dry before the cold invaded. Thursday’s U.S. Drought Monitor did not show much change in drought conditions that continue to afflict the western edge of winter wheat areas. The Climate Prediction Center also said it now expects drought in the region to hang on until at least the end of May — a fresh concern for both corn and wheat crops. USDA’s early outlook session estimated 45.0 million acres of U.S. wheat plantings for 2021-22 and an average farm price estimate of $5.50 a bushel, the highest wheat has seen in several years if it proves true. Of course, weather conditions this spring will have a lot to say about where prices go and will be watched closely. March Chicago wheat was the leading percentage gainer among Thursday’s grain contracts, closing 18 1/2 cents higher at $6.62 1/2 with support from domestic demand. On Wednesday, the Chicago Board of Trade reported 19.335 mb of deliverable stocks of SRW wheat as of Feb. 12, down 431,000 bushels from the previous week and 11% less than a year ago. Technically speaking, the trends remain up for all three March contracts of U.S. wheat with prices holding above their recent lows. DTN’s National HRW Index closed at $5.98 Wednesday, down from its six-year high. DTN’s National SRW Index closed at $6.27, also down from its highest price in six years.
