The Post Derecho Year Surprised Most Analysts, Get In Touch With Us Now
By Matt Brandyberry
The countdown is on. In last year’s August monthly crops reporting, corn yield was set above 180 bushels per acre. Then a rare storm, Derecho, passed through much of the Midwest causing destruction to buildings and crops. As harvest progressed, yields were found considerably lower than anticipated. World ending stocks also dwindled because of unexpected weather across the globe was not fit for bin-busting yields. Similar weather events have played out in 2021.
This year, as lower domestic yields are seen, and voids of product to fulfill demands occur around the world, domestic corn ending stock estimates fell from nearly 3 billion bushels to just 1 billion bushels for the same crop year. This is the carry-in number for new crop. Soybean ending stocks a few years back were predicted above 900 million bushels and are now closer to 150 million bushels. Wheat ending stocks have also been lowered considerably.
Sounds very bullish, but one question you may ask is whether a lot of the bullishness has already been factored into the market price. You may be hearing some bearish factors as you hop on the combine and fill up on new crops this fall harvest.
1) DEC 21 corn futures hit contract highs on May 7, 2021. DEC 21 wheat futures also scored contract highs on May 7. NOV 21 soybeans futures hit contract highs on June 7 this year. Since that timeframe, we’ve seen lower highs on upswings.
2) Charts show a massive gap formed July 5. Except for wheat futures, price action has been at or below the gap which has acted as resistance.
3) The frantic pace of exports has slowed somewhat. July was a slow export sales month. At the beginning of August, more export activity was noted, and with new supplies on the way, this activity could continue.
By sticking with the Grain Marketing Plus framework, marketing decisions can be eased. If storage allows and the crop is found to be shorter than expected, global demand picks back up, or yields drop slightly, then post harvest prices for crops should continue to find support. Prices across the board have found support at levels not received in a long, long time.
Producers need to get a marketing plan in place for crop year 2022 and lock in a small percentage, because the board has moved up considerably. Contact Theresa Seiler or myself for our latest marketing advice for your particular operation.
