Morning Comments January 13, 2021

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Yesterday’s WASDE report did not disappoint the bulls. The surprise, however, came in an unexpected area. National corn yield, which had been expected to decline by a bushel or less, was slashed by 3.8bpa to 172.0. Looking at data for key states, IA corn yield was down 6 to 178, MN was down 10 to 192, NE down 4 to 181, and IL down 3 to 192. So between a small adjustment lower to beginning stocks this year and the yield decline, available corn supply was cut 400Mln bu. The demand side of the corn ledger was lowered 250Mln bu, which many are skeptical of. The resulting ending stocks was projected at 1.552Bln. Much of the trade believes the corn export number of 2.550Bln is understated by at least 200Mln bu, based on sales pace and large existing sales book. If realized, this would leave ending stocks closer to 1.3Bln. It feels like this is what the market is trading on post-report and continued in overnight session last night. 

The soybean balance sheet had much less fanfare. Yield declined .5bpa as expected, and exports were increased…as expected. Ending stocks projected at 140Mln. Not really a surprise on beans, but was able to ride coattails of bullish corn report and heavy fund buying. Managed money bought in excess of 50,000 corn contracts and 40,000 soybean contracts yesterday alone, and are now on the doorstep of a record large corn long position. 

Producers rewarded the market move, as sales were moderate to heavy yesterday, both old crop and new crop. Corn basis weakened in many areas as a result, additionally this pushes ethanol margins deeper into the red until summer. Soy crush margins also getting hit hard the past week. So the demand theme here lately would be that exports continue to churn along, but domestically we see signals of slowdowns. Expect markets to remain volatile heading into acreage decision time and spring weather. 

Opening calls:

Corn: old crop up 14-17c, new crop up 2-3c

Beans: steady to up 3c