Ami Heesch

Jan 12, 2021

Highlights

Another wild day in the grain markets, to get the year off to a grand start. The corn, soybean, soyoil and wheat markets were higher on tighter than expected ending stocks.  The US stock market rose slightly as investors take caution from tensions in Washington (ahead of the swearing in of President Elect Joe Biden) and earnings reports on Friday.

 

 

  • Corn futures will see expanded limits of 40 cents beginning with tonight’s open at 7 PM Chicago Time.
  • The energy markets got some legs today with crude oil up 92 cents at 53.17/barrel.
  • US$ appears to have run out of gas, trading 407 lower at 90.06, the gold market is 5 bucks firmer at 1856, and the CD$ is up 0.00315 at 0.7858.
  • The Brazil Real rose nearly 3% against the US$, which is thought to be the biggest gains since June 2018.
  • DJIA up 56 at 30961, S&P steady at 3782, NASDAQ up 30 at 13066.

                                                                                   

     

    Corn

    Corn prices rose to highs not seen since 2014 on reductions to US and world supplies of corn. US yield was lowered after being unchanged in the USDA’s December report. Argentina and Brazil production totals were reduced after months of adverse weather conditions. Synthetically (via options) the corn market was said to have closed nearly 8 cents higher than the daily 25-cent limit up move.

  • Corn prices finished locked up their 25-cent daily trade limit in the front months: March at $5.17 ½, July at 5.16 ¼, December at $4.58 ½, up 17 ¾ cents.
  • Gulf premiums were 3-4 cents weaker for January.
  • The USDA lowered the 2020/21 corn yield 3.8 bushels per acre. Part of the reduction was offset from reductions in Feed/Residual (-50 mb), Ethanol Use (-100 mb) and Exports (-100 mb).
  • Current stocks to use sits at 106% versus 11.5% in December.
  • Argentina corn production was reported at 47.5 mmt, down from 49.0 mmt in December.
  • Brazil corn production was reported at 109.0 mmt, down from 110.0 mmt in December.
  • Ukraine corn production was left unchanged at 29.5 mmt.
  • Spreads: H/K 2 ¼ carry, K/N 4 inverse, N/U 43 ½ inverse, Z/H 4 carry.

     

    Oilseeds

    The soy complex traded sharply higher on reduced US and world ending stocks. Prices drew additional support form continued demand for US soybeans. Weather watchers continue to monitor SA weather, s nearby looks decent for moisture in Brazil, but extended maps suggest ongoing dryness for Argentina. US ending stocks are sitting at seven-year lows.  

     

  • Soybean prices: March at $14.23, up 50 ½ cents, July at $14.03 ¾, up 45 ½ cents, November at $11.74 ¾, up 19 ¾ cents.
  • The products were stronger with meal up 19-20 bucks and oil up 8 points.
  • Gulf premiums were unchanged for January.
  • USDA announced the sale of 120k tonnes of soybeans to Unknown for the 2020/21 marketing year.
  • The 2020/21 US ending stocks were reduced to 140 mb from a 5 mb increase in crush and a 30 mb increase to exports. This more than offset the 20 mb increase in imports.
  • Soyoil stocks were lowered 75 million pounds on lower bean production and increased biodiesel.
  • Canola traded higher in sympathy with the US soy complex. Prices drew additional support during December from strong global demand for oilseed products and decent crush margins. The march contract finished the day 14-15 bucks higher.
  • Spreads: H/K 4 ½ inverse, (last bid/ask looks to have been 7 ¼-9 ½ inverse).

     

     

    Wheat

    The wheat market moved higher on reduced US and world ending stocks and sharp rally in the row crops.  Prices drew additions support form rising global prices as Russia contemplates another hike to their wheat export tax beginning mid-February. Egypt canceled their wheat tender from yesterday, after receiving only 4 offers and at much higher values than the last time they sought after some wheat.

     

  • March closes: Mpls at $6.21, up 15 cents, KC at $6.22 ¼, up 28 ¼ cents, Chicago at $6.64 ¾, up 30 cents.   
  • Paris milling wheat values were up sharply on plans for an increase in Russia’s wheat export tax and spillover strength form the US grain markets.
  • Dec 1 stocks were 1.674 billion bushels, lower than what the trade was expecting.
  • The USDA lowered US and world ending stocks, by 26 mb and 2.6 mmt respectively.
  • All classes of US wheat saw reductions from the December report (HRW -14mb, HRW -5 mb, SRW 6 mb, White -1 mb and HAD -1 mb).
  • Spreads: Mpls H/K 8 carry, Kansa City H/K 3 ¾ carry, Chicago H/K ½ carry.