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Corn, soybean markets close on daily highs | Friday, May 7, 2021

What price chokes demand, analyst asks.

On Friday, the CME Group's farm markets finish sharply higher.

At the close, the July corn futures ended 12 1/2¢ higher at $7.31. New crop September futures closed 7 3/4¢ higher at $6.53 1/2. December corn futures finished 10 1/4¢ higher at $6.35. 
July soybean futures settled 20 1/4¢ higher at $15.89 3/4. August soybean futures settled 21 3/4¢ higher at $15.37 1/2. New crop November soybean futures finished 24 1/2¢ higher at $14.33 1/4.

July wheat futures ended 8 1/2¢ higher at $7.61 3/4. 

July soymeal futures settled $14.50 per short ton lower at $441.80.

July soy oil futures closed +0.13 higher at 64.48¢ per pound.

In the outside markets, the NYMEX crude oil market is +0.08 higher (+0.12%) at $64.79. The U.S. dollar is lower, and the Dow Jones Industrials are 220 points higher (+0.64%) at 34,768 points.

On Friday, private exporters reported to the USDA the following activity:

  • Export sales of 1,360,000 metric tons (53.5 million bushels) of corn for delivery to China during the 2021/2022 marketing year; and
  • Export sales of 188,468 metric tons (7.4 million bushels) of corn for delivery to unknown destination. Of the total, 86,868 metric tons is for delivery during the 2020/2021 marketing year and 101,600 metric tons is for delivery during the 2021/2022 marketing year.
  • The marketing year for corn began Sept. 1.

Michael Dunphy,, says that the markets finished higher, as they get set for next week's USDA Supply/Demand Report.

"This morning's large flash sale to China was a welcomed sight, and shows the strong buying of US corn by the Chinese should continue into new crop. Today's trade felt like a buy the rumor, sell the fact market following the release of these sales. Ultimately, futures recovered and made a very strong close after setting new contract highs once again," Dunphy says. 

Dunphy added, "Next week's WASDE report is highly anticipated, as we will get the first look at the USDA's 2021 crop supply and demand estimates. The current average trade guess of about 1.34 billion bushels of ending stocks supports current futures prices, and may allow the market to trade some additional risk premium should dry conditions persist in the western corn belt. Yield and final planted acreage are still in question, but these two unknowns will provide a significant amount of volatility in the futures markets until late in the summer."

Bob Linneman, Kluis Advisors, says that the market participants are still trying to figure out what price level chokes demand.

“The grain bulls enjoyed another stronger close on Thursday. Corn and wheat were mostly 8 to 10¢ better, while soybeans ended the day about 25¢ stronger. The corn-to-soybean ratio dipped under 2.25 overnight. At this point, the recent change in the ratio may not have much impact on acres switching. Availability and cost of fertilizer have become the roadblock for many farmers. Traders are still concerned that the fast planting pace will lead to more total acres planted than what the USDA suggested in the March "Prospective Plantings" report," Linneman stated in a note to customers.  

Linneman added, "The bulls have added nearly a $1 in new crop corn and just more than a $1 in new crop beans in the last seven trading sessions. How much higher can we go before demand is truly choked off? Widening basis will be a good indicator to suggest enough is enough."

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