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Review of Agricultural Commodity Prices - October 2021

Review of Agriculture Commodity Prices – October 2021

Corn

The cash price of corn is up 5.98% in October and is up 40% since October 31, 2020.

The largest issues in the corn market were weather and production.

In terms of weather, China reported heavy rains which brings into question the quality of the corn crop.[1]  China was expected to harvest record corn crops after a difficult year last year.  Conversely, rain helped Argentina farmers plant into good moisture.[2]  By October 28th, 26% of the corn crop was planted in Argentina compared to 27% planted at the same time last year.[3]  Brazil had 65% of their corn planted as of October 29th compared to 51% last year.[4]

In terms of production, the International Grains Council increased their estimate for corn for 2021/22 to 1.21 billion tonnes, up 1 million tonnes.[5]  Also, Strategie Grains increased the European Union estimate corn crop to be 67.5 million tonnes, up from 64.9 million tonnes expected previously and above the 2020 crop of 64.6 million tonnes.  Finally, US ethanol production has continued to recover post pandemic, with ethanol production close to record levels. With an estimated 1106k barrels per day production in the US, this is now just shy of the all time record set in late 2017.[6]

Outlook: The weakest of the 3 commodities

Soybeans

The cash price of soybeans is down 1.23% in October and is up 15% since October 31, 2020.

The largest issues in the soybean market were production and costs.

In terms of production, as of October 27th, Brazil was 38% complete in soybean planting verses 23% last year.  This is the second fastest planting season on record.[7]  However, National Oceanic and Atmospheric Administration declared that La Nina has returned and that is will be moderate. La Nina's are generally associated with below normal rainfall in southern Brazil and in Argentina with above normal rainfall in northern and northeastern Brazil.[8]  Also in terms of production, National Oilseeds Production Association announced crushed 153.800 million bushels of soybeans last month, down 3.2% from the 158.843 million bushels crushed in August and 4.8% below the 161.491 million bushels in crushed September 2020.[9]

In terms of costs, the Food and Agriculture Organization (FAO) announced that World food prices rose for a second consecutive month in September to reach a 10-year peak, driven by gains for cereals and vegetable oils.[10]  In the United States, U.S. farmers are pre-buying seeds and chemicals they need earlier than normal due to supply chain issues.  Seed costs are expected to increase by 5%. [11]  Finally, the cost for Brazilian soybeans is estimated to be 27 bushes an acre, the most expensive crop ever.[12]

Outlook: The outlook is good for soybeans.

Wheat

The cash price of wheat is up 4.95% in October and is up 9% since October 31, 2020.

The largest issues in the wheat market was weather.

Russia will harvest approximately 123 million tonnes of grain in 2021 which is lower than last year. [13]Russia is the world's largest wheat exporter, supplying it mainly to the Middle East, Africa and Asia. The Russian Agricutlure ministry also indicated that farmers in Russia have so far sown winter grains on 17.5 million hectares for next year's crop, down from 18.2 million hectares last year[14].

Conversely, China indicated that rain has delayed wheat planting in main production regions in China. They have completed 26% of winter wheat planting across the nation by Oct. 19, slower by 27 percentage points than normal years, due to constant rains since September.[15]

Finally , England indicated that The wheat area in England for this year's harvest rose 31% from 2020 to 1.66 million hectares.[16]

Outlook: Wheat has a very strong outlook.



 
 
[1] Reuters Inside commodities – October 11, 2021
 
[2] Reuters Inside commodities – October 15, 2021
[3] www.soybeanandcornadvisor.com – October 28, 2021
[4] www.soybeanandcornadvisor.com – October 29, 2021
[5] Reuters Inside Commodities – October 22, 2021
[6] CRM Agri weekly highlights – October 29, 2021
 
[7] www.Soybeanandcornadvisor.com – October 27, 2021
 
[8] www. Soybeanandcornadvisor.com – October 18, 2021
 
[9] Reuters Inside commodities – October 13, 2201
 
[10] Reuters Inside commodities – October 8, 2021
 
[11] Reuters Inside commodities – October 20, 2021
 
[12] www. Soybeanandcornadvisor.com – October 4, 2021
 
[13] Reuters inside commodities – October 29, 2021
[14] Reuters Inside commodities – October 28, 2021
 
[15] Reuters Inside commodities – October 21, 2021
 
[16] Reuters Inside Commodities – oct 1, 2021