Weekly Grain Comments   Brian Pike CFE  01/09/21 11:01:30 AM

Grain Comments for the Week of January 4, 2021
  • Looking Ahead:
    • USDA Annual Crop Production & Quarterly Stocks report next Tuesday (1/12) at Noon.
  • On the Macro Market Side: US$ Index has a slightly firmer tone since Wednesday this week.
    • Currently near 89.8-90.0 compared to the 5 year low at 88.2 in February 2018.
    • A firmer US$ corresponds with grain markets putting the breaks on mid week.
Corn Highlights
  • Corn futures broke through $5.00 this week with March’21 Futures peaking at 5.0275.
  • The last time futures were above $5.00 was in May 2014 when they peaked at ~5.20.
  • Would view the 5.20 area as a resistance point at least for the near-term future.
  • Brazil Update – there may be some fear entering the market that Brazil will begin to receive some rain once their soybeans are ready to harvest. IF this does occur, then farmers will be forced to delay Safrinha corn planting even further – we’ll be watching this closely over the next few weeks.
  • Argentina Update – The port strike ended late last year however Corn Export Restrictions have been put in place that state limited volumes of corn can be exported before their Corn harvest in March. There is talk of a ‘farmer strike’ next week and subsequently, there’s speculation that Gov’t officials will lift the export restrictions to prevent the strike.
  • US Corn Exports Sales this week were less than stellar
    • 29.5 Million Bushel Sales this week vs the expected range of 24-47 Million Bushels.
  • For producers with unpriced old crop corn – would strongly suggest scaling into the market if you haven’t done so recently. With hedge funds currently at a net long position, they have the capacity to liquidate their position in a hurry if given any sort of bearish market info.
    • Minimum Price or Min/Max contracts are available if you wish to ‘stay in the market’ while having some protection. Nevertheless, rewarding a $5.00 cash market at least to some degree makes sense.
  • For new crop bushels, would recommend being 15-20% hedged at or near current levels – especially for the producer with limited on-farm storage.
Soybean Highlights
  • Old crop soybean futures peaked at 13.86 this week.
    • Note the 62% retracement on the 10 year chart is ~14.00 and the 76% retracement level is ~15.40. Both of these values will serve as target/resistance areas.
  • Brazil Update – Last month, the USDA pegged production at 133 MMT. The trade guess ahead of next week’s report ranges from 127-131.5 MMT. IF the USDA estimate is 131.5+, we could potentially see some weakness in next week’s trade.
    • Additionally, Brazil will ramp up harvest in the next several weeks.
  • US Soybean Export Sales were not good this week.
    • 1.4 Million Bushel Sales vs the expected range of 15-29 Million Bushels.
  • For producers with more than 10-25% of their old crop left to sell, would recommend scale up target orders near the 62% & 76% retracement levels discussed above. If you have less than 10-25% left to price and are comfortable with the risk, then it may be ok to “watch and see” at least until we have a better handle on total S.American production.
  • For new crop bushels – As with corn, would recommend being 15-20% hedged especially for producers with limited farm storage. Cash targets at levels $0.50 - $1.00 higher than the current market may be a good place for the next 5-10% of your production.
Have a great weekend!!

Brian Pike
(616) 374-8061
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