3 Big Things Today, February 10, 2021

Soybeans, Grains Lower Overnight; Farm Economy Gets Bump From Strong Demand

1. Soybeans, Grains Drop Overnight Following USDA Report

Soybeans and grains dropped in overnight trading after yesterday’s World Agricultural Supply and Demand Estimates (WASDE) report from the U.S. Department of Agriculture.

The USDA in its monthly report pegged soybean stockpiles at 120 million bushels, just below expectations for 123 million bushels and the previous month’s 140 million.

Corn inventories were seen at 1.5 billion bushels, well above trade expectations for 1.39 billion bushels but still lower than January’s estimate for 1.55 billion bushels.

Wheat ending stocks are seen at 836 million bushels, just above expectations for 834 million bushels and the previous month’s 836 million.

Prices also may be declining as some speculative investors who were long the market, or had bet on higher prices, liquidate their positions after soybeans earlier this week hit a three-week high and corn reached its highest price since mid-2013.

Soybean futures for March delivery dropped 8½¢ to $13.93¼ a bushel overnight on the Chicago Board of Trade. Soymeal lost $4.60 to $434.10 a short ton and soy oil fell 0.23¢ to 46.29¢ a pound.

Corn for March delivery fell 8¢ to $5.48¼ a bushel.  

READ MORE: Marketeye: Soybeans shave off 24 cents Wednesday

Wheat futures for March delivery lost 8½¢ to $6.41 a bushel, while Kansas City futures declined 7¼¢ to $6.26¼ a bushel.

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2. Rising Prices, Strong Demand, Low Interest Rates Benefiting Ag Economy  

Higher agricultural commodity prices in the last three months of 2020 driven by strong demand gave U.S. farm economics a boost, according to a report from the Federal Reserve Bank of Kansas City.

Profitability due to rising futures and government payments provided support for farmers in the fourth quarter which, along with rising real estate prices, could end years of financial stress for some producers, the Fed branch said.

U.S. corn exports in the 2020-2021 marketing year that ends on Aug. 31 are forecast by the government at 2.6 billion bushels, up from the previous year’s 1.78 billion bushels. Ending stockpiles are seen by the USDA at 1.5 billion bushels, down from 1.92 billion at the end of the prior marketing year.

Soybean shipments are pegged at 2.25 billion bushels, up from 1.68 billion a year earlier. Inventories are expected to drop to 120 million bushels, down from 525 million last year.

“A surge in the prices of corn and soybeans, supported by robust global demand and relatively tight inventories, helped boost expectations for farm income to the highest mark since 2013,” the KC Fed said.

The price at the end of September for the most-active corn contract was hovering around $3.80 a bushel and now stands at about $5.50 a bushel. Soybean futures have jumped about 32% during that same time frame, and wheat futures have gained 11%.

As a broad index, agricultural prices increased about 10% quarter-over-quarter in the three months that ended on Dec. 31, according to the KC Fed.

The number of chapter 12 bankruptcy filings in the U.S. fell to 552 last year from 595 in 2019. Lower interest rates also are playing a part as the average non-real estate rate dropped to 3.1% from 4.6% the previous year.

The farm-debt-to-income ratio dropped to 3.6 from 5.0 a year earlier, the Fed said.

“Increases in financial stress showed early signs of moderating with a lower debt-to-income level and historically low interest rates,” the agency said in its report.

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3. Windchill Advisories, Warnings in Effect in Northern Midwest

Bitter cold continues in parts of the western and upper Midwest today while storms rumble across some southern Corn Belt states, according to the National Weather Service.

Windchill advisories are in effect for much of western Nebraska, a good chunk of the Dakotas, and east into Minnesota and Wisconsin this morning, weather maps show.

In western South Dakota and Nebraska, windchills are expected to be as low as -40°F. over the next few days, the NWS said in a report this morning. A windchill advisory in the region is in place until 11 a.m. Monday.

“The coldest windchills are expected on Friday and Saturday mornings,” the agency said. “Additionally, a long duration of light snow tonight through Friday night could result in up to 3 inches of snow by Saturday morning.”

Windchill warnings are in effect along the Canadian border in north-central and northwestern Minnesota and northeastern North Dakota, where windchills are forecast at -50°F.

Farther south, meanwhile, a winter storm warning is in effect from West Texas through Oklahoma, southern Missouri, and southern Illinois, all the way to the Mid-Atlantic region, according to the NWS.

In southeast Missouri, another inch of snow is expected today on top of what has already fallen, the agency said. “Significant” ice is expected with almost .5 inch possible in the area, the NWS said.

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