Cereal Market Commentary
Monday, April 12, 2021
by Rhett Montgomery, Associate Dealer, The Andersons
May old crop corn started the week down 8.25c, closing at $5.69, while new crop corn traded flat, closing at $4.9650.
It was a “buy the rumour, sell the fact” response to the Friday WASDE Report. The report increased the demand for corn and in turn reduced the carry from 20/21 to 1.352 billion bushels, the problem is that the board has already priced a carry closer to 1.2-1.3 , so as a result, we are seeing a subsequent sale. in futures contracts. The spread between old and new crop has also eased over the past two sessions, with new crop corn holding its values relative to the old crop, still on the bullish acreage estimate. March.
The market looks set to enter a planting window weather driven market. Weekly planting progress reports will be important in setting the tone of the weekly exchanges. In technicals, the May board set new highs on Friday ahead of the report, now the question is whether we hold above the $5.60 mark or fall back into the 5 range, $30 to $5.60 on the previous month’s corn which had been the feature of the previous. some months? Limited planting trade seems likely as weather markets can tend to be choppy and unpredictable.
The soybean market led the charge lower, with May Beans (SK21) trading down 21c, closing at $13.82. While November Bean New Crop (SX21) was down 13c, closing at $12.5025.
The USDA appears content with the fundamental picture for soybeans for now as it again left the 20/21 soybean stock unchanged in Friday’s WASDE report. The market was expecting a slight decline with an estimated decline in the 110M area. This, combined with some technical selling, caused the market to drop today. Overall, the U.S. soybean scenario remains fairly optimistic in my mind, with China beginning to book purchases of the 2021 new crop in the U.S., combined with already bullish acres, leaving very little room for a planting/growing season error or we will immediately revert to a similar zone when carrying over into the 100-150M range. As with corn, the gap between the old and new crop soybeans has eased significantly in recent weeks as the bullish scenario begins to trickle down to new crop beans.
In the technicals, the May Beans had been trading in a range from the upper $13 area (around $13.90) to the middle $14 area since the middle of February. With today’s close of $13.82, we are testing the bottom of this range, so the next few sessions will be interesting to see if support holds. The 50-day moving average at $14 has been favorable in the past. The market closed below this level on March 30and for the first time since August 2020, only to pull back in fury on acreage report day (to the 70c limit). Tomorrow’s session will be important to see how we react to another session closing below this moving average.