Weekly Market Recap and Tom's Take, September 11, 2020

Corn into Cash Ag Nook money

MARKET UPDATE:

December corn gained 3 1/2 today, closing $3.68 1/2, 3.58, which is up 10 1/2 for the week. March corn was up 3 1/4 today, ending at $3.78 1/4, adding close to a dime this week.

November soybeans gained 18 1/2 today, to finish at $9.96, up another 28 week-on-week. January beans added 17 3/4 today and finished at $9.99 1/4, gaining almost 26 for the week.

The BIG story this week was the release of the USDA’s latest WASDE report today. This Worldwide Agriculture Supply and Demand Estimate has been anxiously anticipated for a while now, especially after the storms we saw on August 10th. The last WASDE was on August 12th, just 2 days after the derecho, and didn’t attempt to include any info from that storm event. Here is some of their data:

For corn, the USDA estimated this year's corn crop at 14.9 billion bushels using a yield of 178.5 bushels per acre, which is right in line with the expected estimates by trading companies. They also pegged U.S. corn ending stocks for 2020/21 at 2.503 billion bushels, down from 2.756 billion the previous month, and just above the average trade guesstimate of 2.451 billion. They did adjust harvested acres to 83.5 million, down from the previous number just above 84 million, but nowhere near the average estimate of 81.3 million. Most analysts try to project the “final” USDA numbers though, not necessarily this month’s number, so we should expect the acreage number to continue to fall in subsequent reports until we see the “final” numbers in January. On the demand side, there were some interesting notes as well as USDA increased its corn export target for next year by 100 million bushels, while cutting both feed and ethanol demand each by 100 million bushels. USDA's world stocks fell, largely due to the nearly 10 million metric ton reduction in U.S. production.

This year's soybean crop is expected to come in at 4.313 billion bushels on a yield of 51.9 bushels per acre, both of these slightly above the average trade guesses. There were no adjustments to harvested acres this month, staying at 83 million. This reduced the projected ending stocks for the 2020/21 U.S. crop to 460 million bushels, down 150 million since the August report. This was very close to the average trade estimates. They made no changes on the demand side for the U.S. in this report. World soybean ending stocks fell to 93.59 million metric tons (MMT), down from 95.36 last month, but slightly above the trade at 93.11. Most notably, USDA raised its 2020-21 Brazil soybean crop by 2 MMT to 133 MMT. USDA left Argentina's production unchanged at 53.5 MMT. Other changes in the global soybean balance sheet were minor.

For more items impacting corn and soybean values, check out our FREE weekly podcast, the Bull Bear Banter: https://landusexperience.podbean.com/

TOM’S TAKE:

Today, I have been wondering what else I can add this week. My thoughts continue to swirl around the soybean market. Let’s start with this: If, on August 5th, I had offered to pay you $9 for ANY or ALL of your 2020 soybeans, how many of them would you have sold? Keep in mind that November futures were about $8.80 that day and many of us never expected to get anything close to $9 for beans right out of the field. Don’t get me wrong, we’re buying some soybeans, but not anywhere near like I think we should be at these levels. There are just too many people that have become ultra-bullish. I keep thinking about that old saying when EVERYONE is crowding over to one side of the boat, it’s probably time to take the opposite approach. I know what you’re thinking, what if they go to $10 cash? Well, if they do, sell some more…I’m not advocating that you sell EVERYTHING you expect to harvest right now, but I do think you should either get started or add to your sales. Sell 500 bushels, sell a truckload, sell 5,000, but SELL SOMETHING. I really don’t think you’ll regret it. And, you won’t be paying storage on those bushels, either. Let me know your thoughts: Tom.Guinan@LandusCooperative.com

Thanks