Mar 02, 2021

February Grain Crush Expected to Be Lower

Ethanol plants are expected to increase production ahead of upcoming driving season

Crop Insurance Price Guarantees Set

  • The floor prices, below which operators with insurance receive payments, are at $4.58 per bushel for corn and $11.87 a bushel for soybeans.
  • The prices reflect the average settlement for December corn futures and November soybean futures during the month of February.
  • The guarantee price for corn is up about 18% from $3.88 in 2020, while the soybean price surged 29% from $9.17 last year.
  • In February alone, November soybean futures increased 7.0% while the corn market was up 5.7%.
  • The price ratio between February soybean prices and corn prices ended the month at 2.59, the highest since 1989.
  • In last month’s USDA Outlook Forum, corn acres were projected at 92 million, up from 90.8 million in 2020, and soybean acres at 90 million, up from 83.1 million in 2020.
  • The deadline to buy a crop insurance policy is March 15.

FBN’s Take On What It Means: USDA is starting to survey producers for the Prospective Planting report due at the end of the month. The bean/corn price ratio leans a little bit in favor of planting more soybeans, but there are several other factors that will also weigh into producers’ decisions such as costs and crop rotations. Increased export demand and domestic use is still expected to keep year-end supplies tight even with the increased planting which should serve to support prices into the growing season.

FBN
FBN

U.S. Grain and Soy Crushing

  • USDA’s Grain Crush report showed corn used for ethanol in January at 416 million bushels compared to 432 million in December and 469 million last year.
  • Usage implied the ethanol yield at 2.93 gallons/bushel, which is up from 2.92 gallons last month and above the 2.90 million average for the marketing year.
  • February’s grain crush is expected to be lower again after the extreme cold led to slowdowns and stoppages at several plants.
  • The NASS Fats and Oils Jan industry soy crush was a new monthly record at 196.5 million bushels, 7.7 million higher aboves last year’s record level.
  • The 6.34 million bushels per day crush was up from 6.23 million in December and tied for the second largest in any month.
  • Cumulative Sep–Jan crush is a record 948.3 million bushels, and USDA is currently forecasting total crop year crush at 2,200 million.
  • Soy crush will need to average 178.8 million bushels/month compared to the average of 167 million for the next 7 months to reach the projection.

FBN’s Take On What It Means: Ethanol plants are expected to increase production ahead of the upcoming driving season. Decent soy crush margins, good supply due to active bean movement and increased product demand have been encouraging big crush rates. Even though board crush slipped in February, the decline was not enough to slow processors. Overall there has been little indication that prices are significantly limiting demand which is supportive to prices.

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Kevin McNew

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Magazine

Marketwatch: Jan, 18

US Corn Price Idx: ZCPAUS.CM

open: 5.7667
high: 5.8486
low: 5.7266
close: 5.8288

US Soybean Price Idx: ZSPAUS.CM

open: 13.366
high: 13.376
low: 13.2328
close: 13.2696

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.3061
high: 7.3384
low: 7.2334
close: 7.2454

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.0114
high: 7.0566
low: 6.9566
close: 7.0014