Large 2021 Crop Estimates Pressure Grain Prices

Good Morning from Allendale, Inc. with the early morning commentary for January 25, 2021.

Grain Markets are mixed this morning as bargain buying is mixed with strong rains in Argentina and Brazil.  In addition, new analyst estimates for 2021 crops were released showing more than expected increases to acreage totals this year.

Last week, March corn futures were down 33.75 cents, March soybeans were down $1.07, March wheat down 40.50 cents, March soymeal was down $42.00 and March soyoil was up 30 points.

CFTC Commitments of Traders showed funds new net positions of long +349,495 corn contracts, long +151,898 soybean contracts, long +20,618 wheat contracts, long +46,227 live cattle contracts and long +36,078 lean hog contracts.

USDA Weekly Export report showed strong sales with  corn sales of 1,484,000 tonnes (expecting 600,000 to 1,200,000 tonnes), soybeans at 2,648,700 (expecting 1,100,000 to 2,100,000 tonnes) and wheat sales at 329,600 tonnes (expecting 300,000 to 650,000 tonnes).

Informa last week pegged 2021 corn area at 94.2 million acres (+3.4 ma over last year), soybean area at 90.1 million acres (+7.0 ma over last year) and wheat area at 45.3 ma (+1.0 ma over last year).  This is a combined gain of 11.4 million acres over 2020.  Hard red spring wheat area at 11.490 million acres (-0.2 ma over last year).

Sovecon showed 2021 Russian wheat crop at 77.7 million metric tonnes (+0.9 mmt from prior estimate) due to improved weather, but well below last year’s crop of 85.9 mmt.

USDA Monthly Cattle on Feed report showed bearish numbers with On Feed at 100.1 (99.4 average estimate, 100.0 last month) at 11.965 million head.  Placements at 100.8 (97.0 average estimate, 90.9 last month) at 1.842 million head.  Marketings at 101.0 (100.6 average estimate, 98.1 last month) at 1.853 million head.

Lean hog futures finished sharply higher for the week after reports of new ASF findings in China and 10 new COVID cases discovered in a Chinese chicken plant in the city of Harbin.

Wholesale beef prices have seen solid gains over the last two weeks.  Choice has advanced 16.25 over this time.  Wholesale beef is now 4% over last year.

Dressed beef values finished higher with choice up 1.62 and select up 3.06.  The Feeder cattle index is 133.99.  Pork cut-out values were up 2.57.

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