The following market analysis is for the week ending Nov. 28.
CORN — The holiday-shortened trading week had something for everyone — higher one day, lower the next. Firm cash markets lent an air of support as well as spillover strength from the soybean pit for most of the week. Corn traded in the middle of the trading range of the last two weeks.
The Congressional Budget Office confirmed the accuracy of “leaked” preliminary acreage forecasts for next year. They expect 2015 corn acreage to fall by 900,000 acres to 90 million acres from this year’s 90.9 million planted acres. CBO is projecting 2015-16 carryout at 2.017 billion bushels. The 2015-16 average on-farm price for corn is $2.48 per bushel, down only 2 cents from this year.
These numbers will be tweaked before the official release in early February. I think the market was just looking for something to talk about when the numbers were made public. The U.S. Department of Agriculture is projecting 2014 net farm income at $96.9 billion, a decrease of 21 percent from 2013 and the lowest net income since 2010.
Weekly export sales were delayed until Friday due to the Thanksgiving holiday. Corn sales were better than expected at 37.2 million bushels, bringing the cumulative total for the year to 981.5 million bushels. The USDA is pegging this year’s exports at 1.75 billion bushels.
France loaded a cargo of feed wheat for South Korea this week, their first major shipment to that destination since the 1988-89 crop year. A total of 232 thousand metric tons of sorghum was sold to unknown destinations this week. This may be a short-term situation as China signed a phytosanitary agreement with Argentina this week that approves Argentina’s sorghum for import.
Weekly ethanol production was a record 982,000 barrels per day, up 12,000 barrels per day from the previous week. Despite record production, ethanol stocks were down by 1.5 percent to 17 million barrels. Since the beginning of the marketing year on Sept. 1, production has averaged at an annualized corn grind of 5.195 billion bushels versus the USDA forecast for 5.150 billion bushels.
In an interesting move, the Federal Aviation Administration is planning rules for drone operation. Mandates could include operators of drones would have to be licensed pilots. This could limit the use of drones in the agricultural sector or at least slow their implementation.
OUTLOOK: U.S. corn harvest was 94 percent complete as of Nov. 23. The states with the most bushels left to harvest are Wisconsin with 135 million bushels and Michigan with 112 million bushels. Major states Illinois and Iowa each have about 100 million bushels left to harvest with Minnesota at 50 million bushels. Seasonally, March corn has advanced from now until Dec. 23 in eight of the last 10 years, although not always in a straight uptrend. March corn closed 3 1⁄2 cents higher for the week at $3.88 3⁄4 per bushel with $4.00 seen as resistance and $3.60 per bushel as support. The USDA will release updated balance sheets on Dec. 10. Neither acreage nor yield will be adjusted on the December report. The next Farm Service Agency certified acreage report will be released on Dec. 15.
SOYBEANS — Soybeans got off to a slow start, but found their legs for a sharp move higher on Tuesday when the CBO released estimates for the 2015-16 crop. That gain was wiped out in post-Thanksgiving trading, sending January soybeans to a 23 cent loss for the week. It closed the week out at $10.16, near the $9.95/$10.00 support area.
A report from the CBO indicates next year’s soybean planted acreage will be down 2 million acres from this year’s 84.2 million acres. Carryout for 2015-16 is pegged at 395 million bushels, 55 million bushels lower than this year’s 450 million bushels ending stocks. The push higher from the CBO figures wasn’t enough for that buying to carry through since common opinion is for soybean acreage to be higher next year. The CBO’s average on-farm soybean price is projected to fall $1.08 to $8.92 per bushel.
The CBO will update their numbers in January and World Agricultural Supply and Demand Estimates will update their 2015-16 balance sheets Feb. 20.
South American weather has been conducive to planting and development. Brazil’s bean crop was estimated at 85 percent planted through Nov. 30. Argentina’s bean planting is 45 percent complete as their focus has switched from corn planting. Argentina’s corn planting is estimated at 41 percent complete, where it will likely remain until mid-December when bean planting is expected to wrap up.
Weekly soybean export sales were delayed until after Thanksgiving, coming in at 54.6 million bushels and better than expected. Meal sales were net cancellations of 22.3 tmt, but weekly meal shipments were a record high.
The spread of bird flu is beginning to catch the market’s eye relating to meal demand. A wild duck in Germany was found to have the flu and on death was reported in Egypt.
OUTLOOK: Weaker freight values, both rail and barge, and slow producer selling kept a basis bid under the market as board prices for the complex ended the week on a soft note. The collapse in the energy markets after the Organization of the Petroleum Exporting Countries decided to leave their production quotas unchanged, month-end occurring when many traders were on holiday, net meal sales cancellations, non-threatening South American weather, and a strong U.S. dollar may all have contributed to the post-holiday sell-off. If January beans break the $9.95-$10.00 area of support, the next support level is $9.60 per bushel; resistance continues at $10.55 per bushel.
Nystrom’s notes: Contract changes for the week ended Nov. 21: Chicago December wheat rallied 25 cents, Minneapolis was up 24 1⁄4 cents, Kansas City surged 33 cents higher. Wheat strength stemmed from chatter that Russia may restrict exports through new regulations. January crude oil plummeted $10.36 per barrel to close at $66.15 after hitting its lowest level since May 2000 at $65.69 per barrel. ULSD closed the week 22 cents lower, RBOB dropped 22 1⁄2 cents and natural gas tumbled 33 cents. OPEC’s decision to leave their production quota unchanged at 30 million barrels per day sent energies plunging in post-Thanksgiving trading.