Morning Comments January 4, 2021

Grain Cornfield Wlandus Cooperative 2016

Up, Up, and Away.  Welcome to 2021. 

Both corn and beans are gapping higher to open up the new year. Managed money continues to add to their long positions, as they have bought an additional 100,000 corn contracts and 50,000 soybean contracts combined in the past 2 holiday-shortened weeks. Short hedgers have been making huge margin calls and are stress testing borrowing ability requirements. 

January 12 WASDE supply demand report will be key, current market values are pricing in considerably tighter balance sheets on both corn and soybeans. Expectations are for yield declines and demand increases to both corn and soy. Watch for any basis weakness as a signal that this market has gone high enough to begin to slow demand. Exports pace will be at capacity until at least April, although domestic ethanol margins are still pretty deep in the red. 

Energies and equities starting off this week higher as well on vaccine optimism. 

Opening calls:

Corn 4 to 7 higher

Beans 25 to 30 higher