Washington – January 6, 2021
South American weather concerns moved the market up
USA Futures quote
Corn moved up 9,25 cents;
Soybeans moved up 35 cents;
Soy oil up $1.00/lb;
Soymeal up $8,2/ton;
Wheat moved up 11,25 cents/b.
Wheat
In addiction to the market turmoil from Argentina events, a weakening dollar and looming Russian export tax contributed to price strength in the wheat complex yestarday.
Mixed winter wheat conditions in top U.S. wheat producing states also underpinned the morning’s gains.
Condition ratings for U.S. winter wheat in the Plains were released by US Ag yesterday and found crop conditions improving in Kansas and Nebraska, but little improvement elsewhere.
As of January 3, 46% of Kansas’ winter wheat crop was in good to excellent condition, up 13% from USA’s last crop ratings in late November.
Crops in Nebraska improved 1% to 38% good to excellent. The states are two of the largest hard red winter wheat producers in the U.S.
But amid persistent drought ratings declined in other key wheat producing states.
In Illinois, where the most soft red winter wheat is grown, only 50% of winter wheat crops were in good to excellent condition, down 29% from November 29, 2020.
Colorado, Montana, North Dakota and South Dakota all saw rating reductions to their respective winter wheat crops.
Condition ratings were not available for winter wheat crops in Texas and Oklahoma.
Despite some ice in Eastern regions and pest damage in the South, Ukrainian winter grain crops are largely in good condition due in large part to warmer winter weather.
Winter wheat acreage is down 8% from a year ago to 15.1 million acres after a dry planting season limited sowing abilities in the Black Sea country.
Ukraine’s exportable wheat prices reached a six-year high yesterday as strong international demand, limited Russian stocks, and rising global prices lifted wheat offerings around the world.
Monday’s prices reached $7.29/bushel in the Black Sea.
Ukraine is the world’s sixth largest exporter of wheat.
Corn
Corn prices held their strength at six-and-a-half year highs this morning on Argentine corn export ban concerns, a weaker dollar, and lingering dryness in South America.
In this context, March corn futures rose $0.925/bushel to $4.93 on the concerns while May futures rose $0.80/bushel to $4.92.
Monthly corn consumption figures for ethanol released from USDA yesterday pointed to a continued recovery for the ethanol sector in the pandemic era.
For November 2020, nearly 431.7 million bushels of corn were consumed for ethanol feedstocks.
The total was slightly lower than the previous month’s volume of 432.7 million bushels and over 5% lower than November 2019.
Ethanol production typically increases in November, driven by a boost in Thanksgiving holiday travel.
But with many Americans limiting travel and gatherings amid surging COVID-19 cases, ethanol is one of the first industries to suffer.
Marketing year to date corn consumption for ethanol remains 2.8% lower than the same time a year ago as vaccine rollouts ramp up.
For a second time in the last month of 2020, the Trump administration failed to outline required biofuel blending volumes for refiners in 2021.
Trump’s Environmental Protection Agency (EPA) had planned on setting Renewable Volume Obligations for 2021 by November 30 but missed the deadline due to pandemic complications.
The modified deadline was December 31.
The recent price surge makes biofuel blending more expensive for fuel companies and comes at a time when global energy demand is suffering amid the ongoing coronavirus pandemic.
Yesterday’s price highs – coupled with the lack of biofuel support from Trump’s EPA – will likely intensify headwinds for biofuel producers, as well as the farmers that supply them, over the coming months.
