Special Market Update

Grain Market Commentary

Monday, February 22, 2021

by Chris Hillburn, Senior Merchant, The Andersons


Old crop May corn (CK21) traded 8.25 cents higher today. May corn now back in that resistance pocket of $5.50 to $5.55, so need closes above that for market to run higher.  

Ultimately the life of the contract high at $5.72 would be next target. Retracement of 61.8% back to the all-time high would take the lead month futures contract to $6.40.  

Fundamentally the market is not trading the February USDA ending stocks number and stocks to use ratios but instead is trading about 200 to 300 million bushels less of corn ending stocks, based on fundamental price models. Looking at export sales on the books at this point for corn, that number is now at 89% of USDA total estimates for the year. Unless there is a total collapse contrary to seasonal export patterns, appears that the Mr. Market is more correct than USDA export numbers. 

Watch weekly export inspections as they must maintain a strong pace. It’s one thing to have the sales in place but another to keep up with actually shipping those bushels. So far so good. 

Old crop corn still stuck in a range, $5.25 to 5.55 so market bounces back and forth until we see the SAM corn crop and/or China buying. 

The bigger move in corn from last week to this week has been in the new crop December 21 (CZ21). Today that contract touched $4.70, up 10 cents from Friday close. USDA Outlook Forum new crop balance sheet driving that move, with estimated corn planted acres at 92 million, a yield number of 179.5 bpa, demand base of 15.125 billion, leaving a projected ending stocks number for 2021/2022 at 1.552 billion. Taking those numbers at face value, not much room for a drop in yields in the new crop. Remember that the Outlook Forum is an armchair, SWAG model not based on survey information but just what the USDA crystal ball is telling them now. Acres actually planted can vary 2 million acres up or down.  The market is taking notice of projected ending stocks and definitely seeing bear spreading (sell front month and buy deferred month), leading to higher new crop prices. At the same time, the old crop is stuck in a trading range. 


May soybean (SK21) closed up 7.5 cents at $13.875. Interesting to note that the market actually has a carry from March to May soybeans, as opposed to the strong inverses that we have previously seen. Brazil still looks to have a big ysb crop coming if they can ever get it harvested. Old crop ysb stuck in a trading range from $13.50 to $14. Outlook Forum 21/22 estimate was for 90 million acres planted, bpa of 50.2 and an ending stocks number of 147 million bushels. Bottom line on this is that ysb need every acre they can get and any weather problem or less acres going to make this market extremely volatile. Impact of tight S and D on ysb is somewhat muted compared to past years, as SAM ysb production is now much larger than U.S. Every 6 months market sees another crop of ysb. Similar to the corn market, old crop ysb are stuck in a trading range, but Outlook Forum numbers on new crop are leading to bear spreading. November 21 soybeans (SX21) closed up 15.5 cents at $12.1175.