Jan 06, 2021

Markets Continue to Charge Higher

Several markets hit multi-year highs for nearby contracts

Markets Hitting Multi-Year Highs

  • Thanks primarily to dry weather concerns in South America, grain markets continue to rally into the new year.
  • Several markets hit multi-year highs for nearby contracts.
  • Soybean futures traded at 6 1/2 year highs on Tuesday when looking at the continuous chart or the highest level since June 2014.
  • Corn futures traded just shy of the $5 mark Tuesday, and have traded above that level overnight.
  • The continuous Chicago wheat contract hit a six-year high.
  • Fundamentally, supply risk is present for soybeans, and corn.
  • Wheat largely has been along for the ride though several exporters have lower supplies today versus a year ago.

FBN’s Take On What It Means: The fundamentals are not expected to shift dramatically in the coming weeks with weather for Argentina still less than ideal and demand out of China still strong. We will have several USDA reports on January 12 which could alter the current price outlook. For now, we see futures maintaining these levels with short-term risk to the upside.

FBN

USDA Grain Crushing Report

  • USDA reported 431.7 million bushels of corn was used for ethanol production in November.
  • Corn usage was down slightly from 434.2 million bushels in October, and 25 million bushels less than the 456.7 million used in November last year.
  • September usage was down only 4.2 million bushels and October was 4.9 million bushels lower than last year.
  • For the first quarter of the marketing year corn for ethanol usage was 1,267 million bushels, down 34.1 million bushels from 1,302 million last year.
  • Usage for the rest of the season needs to total 3,783 million bushels, 232 million bushels more than last year, in order to reach the USDA's 5,050 million bushel annual forecast.
  • Ethanol production will need to average nearly 281 million gallons/week for through August to reach the USDA's projection.

FBN’s Take On What It Means: Ethanol production remains lower than last year and declining margins are not an incentive to ramp up production (see chart below). It will be challenging for the industry to meet the USDA’s current forecast, but there is an outlook for increased demand as progress is made against the coronavirus.

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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