Grain Market Outlook: Will the End of 2021 Match 2020?
Soybean prices saw strength this week while corn prices drifted lower.
For the week ending Dec. 3., March corn prices were down 6.75¢ and May corn prices were down 8.25¢. January soybean prices were up 16¢, and March soybean prices were up 9.75¢. March wheat prices were up 34.25¢.
“Volatility is the name of the game, but I will say that volatility has been somewhat orderly,” says Jamie Wasemiller, market analyst with Gulke Group. “The market's done a fairly good job of trading kind of in a sideways trading range over the last few months, waiting for new information.”
In corn, prices are approach resistance levels, he says. A positive trend is high ethanol margins.
“From an ethanol standpoint, I think we've only seen ethanol margins this high or better, maybe one time and I think was back in 2014 or 2015,” Wasemiller says.
If those profits continue, he says, ending stocks could drop a bit lower, which would support the market.
While soybean prices ended the week high, they are still in a sideways trading range.
“We've dropped down about three times now in the last couple months to some support levels and we held those support levels and bounced off there,” he says. “So, the market feels like it wants to hear some positive news that's going to help us punch to that next step to the upside.”
Wasemiller says there are a few key factors are helping soybean prices stay elevated. Those include dry weather in South America and early 2022 acreage estimates calling for more corn acres versus soybeans.
“I'm not quite in that acreage camp yet but that discussion is certainly bullish for the soy complex, as a whole,” he says.
Will 2021 Look Like 2020?
The market trends that ended 2020 are starting to surface in the last few weeks of 2021. Could prices follow a similar pattern?
“First we have to look at where the markets are now versus where they were a year ago,” Wasemiller says. “Can we have a rally here? Or is the best we can hope for is that we mitigate the downside? If we do have a rally, can we sustain it? Those are the questions.”
The current drought conversation in South America and some parts of the U.S. is supporting prices. But how long can we continue that hype of drought conditions? Can it be to the level that we saw versus a year ago?
Another key factor to watch will be Chinese buying of U.S. corn and soybeans.
“How can these markets sustain these prices or rally when it looks like the buying out of China will not be as significant as it was before? We are about the phase-one agreement we had with China,” he says. “They didn’t buy their full commitment for that agreement. Will the U.S. hold China to the remainder of those dollars? Or will just forgive them?”
Canada Crop Estimates
Stats Canada came out with their latest monthly field crop estimates. Wasemiller says some of the highlights include:
- Canola output at 12.59 million metric tons (MMT), which was much less than last year’s 19.5 MMT. The marketplace expected it to be down at about 12.8 MMT, he says.
- All wheat production estimate at 21.6 MMT, which was actually higher than analysts’ estimates. Right or wrong, he says, if Canada came in at a number higher than market expectations there's a decent chance that North Dakota, Montana or other neighboring U.S. states will have higher spring wheat yield numbers.
Wasemiller says another factor to watch will be how Canadian transportation rebounds from the significant rains of the last two weeks.
“They have actually washed out quite a few of the railroad tracks,” he says. “So that is going to have an effect potentially on basis up North.”
Check the latest market prices in AgWeb's Commodity Markets Center.
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