Special Market Update

Corn

Old crop May corn started the week down 8.25c, closing at $5.69, while new crop corn traded unchanged, closing at $4.9650.

It was a “buy rumor, sell the fact” response to the Friday WASDE report. The report did raise corn demand and in turn cut the 20/21 carryout to 1.352B bushels, the issue is that the board has already priced in a carryout closer to 1.2-1.3, so as a result we are seeing a subsequent sell-off in futures. The old/new crop spread has also relaxed in the past two sessions as new crop corn holds its values relative to old crop still riding the bullish acreage estimate from March.

The market appears primed to enter in a planting window weather driven market. The weekly planting progress reports will be important in determining the tone for weekly trading. In technicals, the May board set new highs Friday ahead of the report, now it becomes a question if we hold above the $5.60 mark or do we fall back into the $5.30-5.60 range on front month corn which had been the feature for the previous couple months? A range bound trade through planting seems likely as weather markets can tend to be choppy and unpredictable.

Soybeans

The soybean market led the charge lower with May beans (SK21) trading 21c lower, closing at $13.82. While new crop November beans (SX21) were down 13c, closing at $12.5025.

The USDA seems content for the moment with the fundamental picture in soybeans as they again left the 20/21 soybean carryout unchanged in Friday’s WASDE report. The market had been expecting a slight cut with estimated down in the 110M area. This combined with some technical selling had the market off today. Overall, the soybean scenario in the U.S. remains fairly bullish in my mind with China beginning to book new crop 2021 purchases from the U.S. combined with an already bullish acre number leaves very little room for a planting/growing season error or we will be right back to a similar area on carryout in the 100-150M range. Like corn, the old crop/new crop soybean spread has relaxed considerably in recent weeks as the bullish scenario begins to leak into new crop beans.

In technicals, May beans had been trading a range from the upper $13 area ($13.90 or so) to the mid $14 area since the middle part of February. With today’s close of $13.82 we are testing the bottom of that range so the next few sessions will be interesting to see if support holds. The 50-day moving average at $14 has been supportive in the past. The market closed below this level on March 30^th for the first time since August 2020, only to pullback with a fury the day of the acreage report (up the limit 70c). Tomorrow’s session will be important to see how we react to another session closing below that moving average.