Morning Comments April 12, 2021

Red Barn Behind Field

Corn popped higher last night (and has since sold off) while soybeans struggled throughout the session, likely traders still digesting Friday’s USDA report. That report pretty much confirmed what the trade has already known: it will be tight. 

If you take a step back, a soybean carryout of 120mbu and a corn carryout of 1.35bbu, while tight, seems to be viewed as “doable” and didn’t give the market much reason to leg higher. Remember the old saying: “you have to feed a bull market everyday”, and that report didn’t do it. 

From here on out, we could be stuck in an old-fashioned weather market with all eyes on the 6-10- and 8-14-day forecasts as well as long-term outlooks. Plenty of questions to answer- will the Brazilian drought continue? If so, where does the world find corn, what’s the backup plan- is it wheat? Will the U.S. get the planted acres needed for next year? Will those yields be at, above, or below trendline? The futures market will likely remain volatile and any severe breaks should find willing buyers, willing to take the risk of being long, at least until those questions have answers.

Currently:

Corn is trading 2 to 5c lower

Soybeans is trading 15 to 20c lower