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May 03, 2021

Ag Prices Start Strong Adding to Last Week’s Recovery

Trade continues to worry about production issues in Brazil and world stocks getting tighter

Prices Surge on Strong Cash Corn

  • July corn futures rose 3% over the last three sessions including a limit-up move on Friday.

  • The July contract increased nearly 20% in April and new-crop December corn was up 18%.

  • Speculators have actually reduced net long positions while commercials, who are naturally short hedged have been large net buyers.

  • The surge higher has forced end users without coverage to acquire supplies at higher and higher prices.

  • Total export commitments are already at 2,666 million bushels vs the USDA's 2,675 million forecast, which will likely be raised in future reports.

  • Sales for 2021/22 are at 106 million bushels compared to 107 million bushels for new crop at this time last year.

  • Corn usage for ethanol was 76 higher than last year's COVID low of the year, and is on pace to reach the USDA projection of 4,975 million bushels.

  • Feed mills are increasing the use of more relatively cheap wheat in livestock rations as corn grows too expensive.

FBN’s Take On What It Means: The trade continues to worry about production issues in Brazil and the tightness of world stocks getting even tighter. CONAB and USDA will issue updated forecasts next week. We expect prices will continue to be supported until there is more known about the severity of the losses or until prices reach a level high enough to limit demand.

FBN

Ukraine Prices on the Rise

  • Wheat export prices increased $14 per tonne, and feed wheat rose by $12 last week.

  • Corn bid export prices rose by $13 over the past week, while bid prices for Ukrainian-origin barley rose by $6.

  • Rapeseed export prices for the exporter’s 2021 crop are up about $100 over the past 20 days.

  • There are concerns about a weaker harvest in the United States, the European Union and Brazil.

  • The current government forecast is for the area to be down 10% versus last year at around one million hectares.

  • The government has projected total grain exports could decline to 45.7 million tonnes in 2020/21 from 57 million tonnes last year.

FBN’s Take On What It Means: The higher prices are not surprising given the global balance sheets outlook for the coming crop year. The EU crop again is expected to be short and supplies in the US and Ukraine will be exceptionally tight heading into the crop year. Expect US new-crop prices also to gain.

FBN Market Advisory services are offered by FBN BR LLC, dba FBN Brokerage, FBN BR and FBN Market Advisory (NFA ID: 0508695)

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Kevin McNew

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Magazine

Marketwatch: Dec, 04

cmdty National Corn Price Idx: ZCPAUS.CM

open: 5.6684
high: 5.7321
low: 5.6559
close: 5.7046

cmdty National Soybean Price Idx: ZSPAUS.CM

open: 12.266
high: 12.366
low: 12.2585
close: 12.34

cmdty National Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 8.1277
high: 8.243
low: 7.9921
close: 8.0144

cmdty National Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.6225
high: 7.7249
low: 7.4749
close: 7.5391