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Record demand for corn, beans and wheat continues around the globe
 
By Karl Setzer
 
The United States continues to see record demand for its corn, soybeans, and wheat in the global market. Current cumulative corn sales stand at 470 million bu (mbu) which is 185 mbu ahead of last year’s pace. Soybean bookings currently total 1.18 billion bu, a large 493 mbu more than a year ago. Wheat sales are also up on the year by 7 mbu with a 505 mbu total. The question is how long these demand levels will hold, especially on soybeans, with the South American harvest nearing. 
Given this large start to the export program, sales for the remainder of the marketing year do not have to be sizable to meet USDA projections. At the present time the United States only needs to sell 29 mbu of corn and 7 mbu of soybeans per week to reach their projections. Wheat sales only need to average 11 mbu per week. The United States needs to see higher export loadings though, especially on corn. Corn loadings need to average 58 mbu per week for the rest of the marketing year which is about twice what we have seen in recent weeks. Soybean loadings need to average 28 mbu and wheat needs to average 20 mbu, both of which will be easier to meet. 
The December National Oilseed Processor Association soybean crush data was released with record usage. Soybean crush for the month totaled 183.16 million bu, and while just under estimates, was the highest ever for the month of December. It was also the 2nd highest monthly total ever. By comparison, soybean crush in December 2020 totaled 174.8 mbu. For the calendar year NOPA members crushed a record 2.08 billion bu of soybeans, breaking the previous record of 1.97 bbu set in 2018. 
Given the recent soybean crush rate we have seen, total crush for the first quarter will likely total 560 mbu. This would be 7% greater than a year ago. The USDA is currently projecting a 2.195 billion bu crush demand for the entire marketing year. Given the start we have seen, we will need demand for the rest of the marketing year to fall below a year ago to not surpass this projection, which seems unlikely. This means not only are soybean exports likely underestimated at the present time, but so is domestic usage, making the 175 mbu carryout estimate even less accurate. 
Most of the attention on the South American crops is on Brazil but we are now seeing more attention on Argentina. Argentina continues to avoid making sales in protest of high tax rates and uncertainty over this year’s production. Only 10% of this year’s soybean crop in Argentina has been sold compared to the normal 20% at this time. Argentine farmers also have a large volume of old crop bushels they have not marketed. The question now is when these sales may start as storage will soon become a concern. 
Another unknown in Argentina is on the country’s corn crop. Old crop carryout in Argentina is only expected to be half of what it was just four years ago this year at 2.9 million metric tons (mmt). This does not leave the country much of a cushion going into the new crop year where production is also being debated. The USDA is projecting an Argentine corn crop of 49 mmt and exports of 34 mmt for this coming marketing year. Sources in Argentina believe both will be smaller and exports may only total 27 mmt. This would open the door for more US trade into the global market. 
Trade is once again focusing on new crop acres and if we will have enough to help rebuild commodity reserves, especially on soybeans. Right now the ratio between corn and soybeans is at 2.6:1 which does not indicate a push by either side. There are thoughts the United States needs close to 90 million soybean acres to satisfy usage which seems like a stretch at this time. Given the high volume of fall applied fertilizer it may be even more difficult to sway acres to soybeans from corn. 
More interest is being placed on the 10 million acres of prevent plant corn from last year and how they will be used this year. There are hopes that the majority of these will end up being seeded to soybeans as that is the commodity that is currently needed the most. While this is possible, the soy complex still needs to push values to ensure soybeans are the better economical crop. 
Another source of potential acres being monitored is those already seeded to winter wheat. The USDA is predicting winter wheat seedings of 32 million for the United States this year, well above the number that was planted a year ago. Wheat returns are more favorable at the present time, but thoughts are if soybeans continue to rally some farmers will convert these fields to soybeans next spring. While this is possible, the condition of the wheat crop when it emerges from dormancy and futures at that time will determine how many acres shift, if any. 
RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named.  This is not independent research and is provided as a service.  As such, this is considered a solicitation.
1/25/2021