ACI Market Commentary 4/29/21

Apr 29, 2021

Agronomy, Crop Management, Grain, Market Update, Soybean, Technology

CORN 

$3, $4, $5, $6, $7, $8 cash corn all in play for the 2021 crop year. If you want to look at your potential revenue per acre this year, it is going to be a bell-shaped curve and it is likely going to look very good with December corn already printing trades $1.35 above the spring crop insurance price. Getting bulled up? We are too. Old crop futures and basis continue to hit unprecedented levels around the country. If we are not running out of corn, it sure does feel like we are. The market might be late, but it will not be wrong, we need to buy more corn acres and have favorable weather in this country going forward to resolve the balance sheet. We still have plenty of corn seed and fertilizer in house, call your local agronomist if you would like to switch more acres. 

December ’22 and ’23 futures are also trading much higher than we would typically see this early. Look at selling a small portion of your expected production at these levels. Worried about input prices? Call your Edward Jones guy up and tell him to place some buy orders on Mosaic and CF Industries. 

WE STILL LIKE THE CROP. 

SOYBEANS 

Soybeans take the back seat this week with futures 80-100 cents off the highs. Crush margins stay firm as the domestic market continues to scratch for what stocks remain. Chinese and other pacific rim importers continue to put on a book of new crop which has supported basis levels. There are many unknowns in 21/22 balance sheet with potentially large shifts in acres, yield and exports expected to come. 

WHEAT 

Last time we wrote to you, the party was just getting started with wheat. We were feeling bullish but are still surprised to see our lovely Minneapolis wheat market already trading at $7 handle this early in the growing season. If the wheat is planted and it is too late to switch acres to corn/soybeans, it is worth looking at getting some hedges in place. While we still see the potential for a fundamentally bullish story unfolding in the Dakotas/Canadian plains this summer, wheat is wheat, we have plenty around and it has tended to underperform. 

MACRO 

Equities experience their first risk-off day in quite some time as Joe announces his plan to increase capital gains tax rates on those with incomes over $1M (Keep in mind this is .3% of U.S. Population). This turned out to be a one-day event as investors continue to take asset prices higher. USD has continued to slide downward, this should help commodities going forward.

We continue to hold our bullish outlook on this market. Price movement tends to dictate market sentiment. At the end of the day, we strongly believe managing risk and raising the best crop possible is the path the highest returns this growing season. Be wary of brokers looking to pump up transaction fees and keep a cool head in this market.

Have a good weekend! 

Grain Team – Aaron, Brentt, Connor, Dallas, Hank, James, Jenna, and Kevin