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Review of Agriculture Commodity Prices - February 2021

Review of Agriculture Commodity Prices – February 2021

Corn

The price of corn increased 3.96% in the month of February and is up 51% since February 2020.  Possibly unsurprising, the Global food prices rose for an either consecutive month in January to their highest level since July 2014.[1]

The largest issues in the corn market were Chinese demand and South American production.  China is poised to hike corn acreage by more than 667,000 hectares in 2021.[2]  China continues to look to boost domestic food production as they seek food security.  Notwithstanding this increase, it is likely that corn prices will go higher due to this demand. 

Brazil’s 2020/21 corn crop will reach a record 108.2 million tonnes in 2021.  Approximately 19.44 million hectares (up 1 million hectares) will be seeded to corn.[3]

Mexico’s corn imports are expected to drop 9% this year, as the Mexican government wants to discourage the use of genetically modified grains[4].  Local production is expected to make up the short fall.  

Outlook – the outlook for corn is strong.

Soybeans

The price of soybeans increased 4.42% in the month of February and is up 63% since February 2020.

The largest issue in the soybean market were Chinese demand, US Demand and South American production.
China’s soybeans futures hit record highs at the end of February based on tight supply as more corn is expected to be planted at the expense of soybeans.[5]  However, China did miss its Phase 1 trade target having bought $28.75 billion of agricultural goods in 2020.[6]  The target was $36.5 billion. 

The United States is expected to plant record U.S. Soy and Corn acreage in 2021.  Is it estimated that U.S. Farmers will plant 182 million acres of corn and soybeans.[7]  The National Oilseed Processors Association announced that they crushed 184.654 million of bushels of soybeans in January, up from 183.159 in December 2020 and 176.940 million bushels in January 2020.[8]

South American production was slowed by rain.  Brazilian Soybean harvest is at 35% complete verses 40% last year.[9]

Outlook – The outlook for soybeans also looks strong.

Wheat

The price of wheat increased 2.18% in the month of February and is up 26% since February,2020.

The largest issue in wheat in February are global production.  The International Grains Council (IGC) raised its forecast for global wheat production in 2020.21 by 5 million tonnes to 773 million tonnes.[10]  In addition to this, the French wheat crop remain in good condition as winter ends.  An estimated 87% of French soft wheat crops were in good or excellent condition by February 22, 2021.[11]

Australia is set to harvest a record amount of wheat in 2020/21.  Output is expected to reach 33.34 million tonnes by July 2021, surpassing the previous record of 31.8 million tonnes in 2016/17. Sseason.[12]  However, next year, Australia expected wheat production to fall 25% in 2021/22 as La Nina eases.[13]

Outlook – out of the 3 commodities, wheat has the weakest outlook.
 
 
[1] Reuters Inside Agriculture – February 5, 2021
[2] Reuters Inside Agriculture – February 26, 2021
[3] Reuters Inside Agriculture – February 24, 2021
[4] Reuters Inside Agriculture – February 2, 2021
[5] Reuters Inside Agriculture – March 1, 2021
[6] Reuters Inside Agriculture – February 8, 2021
[7] Reuters Inside Agriculture – February 19, 2021
[8] Reuters Inside Agriculture – February 17, 2021
[10] Reuters Inside Agriculture – February 26, 2021
[11] Reuters Inside Agriculture – March 1, 2021.
[12] Reuters Inside Agriculture – February 16, 2021
[13] Reuters Inside Agriculture – March 2, 2021