TGIF. Well, close enough. It sure feels like a full week of trading. Crazy, but true the November 21 soybean contract traded $1.01 from yesterday’s low to this morning’s high. Back in 2001 the new crop November contract traded the whole year inside a dollar range ( $4.17 1/2 to $5.17 1/2). Share that at the Easter Dinner table on Sunday and someone might be impressed. So, at the high today the May soybean contract was up nearly 20 cents and then finished 35 lower. The grains were volatile as well with nearby corn up 21 cents at the high, down 8 at the low and then settled 4 1/2 lower. It wasn’t quite as wild in wheat with the nearby Chicago contract up about 8 at the high, down 17 at the low and then closed 7 cents lower. Both nearby KC and MPLS contracts ended about 11 cents lower on the day.
The DJIA traded a fairly narrow range today closing 172 points higher at the 33,153 level just shy of the previous record close. The S&P 500 did score a new record high and got up and over the 4,000 point level for the first time ever. Energy prices were up today. Nearby crude was up $2.29 and settled at $61.45 which is up more than four bucks from last week’s low. RBOB gasoline futures were up a strong six cents today. That makes it a net 12-cent move from last week’s low. Ethanol futures keep moving higher, too. The nearby contract traded as high as $1.91 today which is a level we haven’t seen in more than six years.
USDA reported pathetic export sales figures this morning. Everything was on the low end of expectations. In fact, beans and bean oil were below all trade guesses. We’ll keep reminding everyone that corn and soybean sales HAVE to be low each week to keep the USDA from bumping year-end projections higher. Corn sales to date are now at 99.5% of the total 2.6 billion bushels expected by Aug 31. Soybean sales to date are at 99.4% of the total expected.
The trade is still trying to absorb the shocking acreage estimates from yesterday. We plugged in the 91.1 million corn acres along with a trend-line yield of 172 (same yield as last year) using a conservative usage of 14.87 billion bushels and we end up with a carryout of 978 million bushels. If realized, this translates into a 24-day supply and will rank as the second tightest ever. For soybeans, we plugged in the 87.6 million acres along with a trend-line yield of 51 (second only to the record 52 bpa set in 2016) using a conservative usage of 4.7 billion bushels and we end up with a carryout of 26 million bushels. If realized, this translates into a TWO-DAY supply and will obviously rank as THE tightest ever. Of course, this cannot happen. The USDA will never show the carryout this low. Something’s gotta give. First thing the trade will try to do is “buy acres” with higher prices. We believe the current $12.63 level is not high enough to accomplish this. A move to the $13 level seems likely. While it seems the upside is wide open, we must remind ourselves that fundamentals shift through time. What we see today as an impossibly tight supply for soybeans can change for various reasons.
Here’s an interesting chart from Farm Bureau Chief Economist John Newton showing how much China will need to buy in 2021 to abide by the Trump Phase 1 trade deal in Year 2. They fell short of meeting the goal for Year 1. But, at least they’re trying to show some serious effort in 2021. They bought 230 million bushels of U.S. corn in January and 152 million bushels in March. Even so, as highlighted in the table below………the Chinese are still 28% off the pace necessary to reach $40 billion worth of ag goods by year-end. If only we knew for sure…..will the Chinese keep coming? From the week of the first large purchase of corn by China (last week of January) to today’s high the May corn contract moved 82 cents while the May soybean contract rallied $1.44! We’d sure like to see China help “feed our bull” in the coming months with regular and significant purchases.
Here’s an updated price table showing where recent highs and lows reside along with closing prices this afternoon. Remarkable to recognize (again) that the two-month high and low for new crop soybeans were hit yesterday and today. Just missed today reaching the $14.60 high set back in February for nearby beans. Hopefully, these highs you see below (for corn and soybeans, anyway) are retested in the near future. We’d sure like see $5.00 new crop December futures. That hasn’t been possible in a calendar year since 2014.
Finally, we’ll leave you with these overlay charts showing 2008 price history with 2021 to date. We posted these here several weeks ago and some of you have expressed interest in how they look now. It’s remarkable to see such high correlation (97% for corn). It’s also interesting to see how high futures got in 2008 and then how far they fell by harvest!
Easter Holiday Trading Schedule
Thursday April 1st – Regular close at 1:20 pm CT, no overnight trade
Friday April 2nd – Closed for Good Friday
Sunday April 4th – Regular open at 7 pm CT
That’s all for now. Have a Happy Easter everyone! See you here again Monday afternoon.
