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In our latest podcast we go over the inflation trade and why we like gold (standard and micro contracts). We talk about ideas for crude oil as it trades in a tight range. Then we move onto the corn, soybean, and wheat markets. Finally we take a peak on our initial thoughts for 2021-22 corn and soybeans. Make sure you take a listen to this week’s Turner’s Take.
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Iowa Derecho Damage
The jury is still out on the wind damage to corn in Iowa and NW Illinois. The ranges of estimates range from 150mm to 500mm bushels. That is a huge divergence and it puts possible ending stocks in a range of 2.25 and 2.6 billion bushels. The ProFarmer Crop Tour will be in Iowa tomorrow and all of Ag Twitter will be focuses on the pictures and reports coming from the fields.
Soybeans and Wheat have also been rallying but not due to wind damage. The weather is hot and dry and soybeans need another shower or two in the Midwest to finish the crop. Soybeans should stay elevated until we see rain materialize.
Wheat had been strong due to Chinese buying HRW from the US and rising EU cash prices. Rallies over $5.50 in July 21 will be difficult to sustain due to the large global and US wheat balance sheets. We made our first new crop 2021 sales yesterday at $5.40 in July 21 SRW wheat. Our next target is $5.50 basis July 2021 SRW wheat.
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2021-2022 Corn and Soybeans
This is our first look at the 2021-2022 crop for corn and soybeans. These are just estimates based on price and profitability. This is not from a survey. Every year we start off our estimates for the next year based on how the market should price next year’s corn and soybeans to get an appropriate balance in supply and demand. This is not an exact science but more often than not we are very close to the Ag Forum estimates in late February.
We have corn acres going from 92mm to 89mm. At a trend line yield that means we produce as much as we use next year. So if ending stocks are 2.5 billion this year, our ending stocks for next year will start off at 2.5 billion too. We have soybeans increasing form 84mm to 88mm next year. With a 50 trend line yield ending stocks come down 75mm year over year.
Our initial view is corn acres need to come down to 86mm before we can talk about selling $4.00 new crop corn. Forward sales and hedges above $3.80 may prove to be a good marketing move if corn acres are 89mm or higher. Soybeans have the potential to run into the mid to high $9s if acres are 88mm or lower. More marketing upside potential currently exist for soybeans in our 2021-2022 estimates.
After reviewing this data our next target for 2021-22 corn sales is $3.80 bases Dec 2021 futures. Our next target for 2021-22 soybean sales is $9.50 basis Nov 2021 futures.
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About Turner’s Take Podcast and Newsletter
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Craig Turner – Commodity Futures Broker
Turner’s Take Ag Marketing: https://www.turnerstakeag.com
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Twitter: @Turners_Take
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Turner’s Take Newsletter & Podcast - Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.
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