Weekly Commodity Report

01/08/2021

WEEKLY COMMODITY REPORT: JANUARY 8th 2020.

 

  • The financial and economic uncertainties of transition to a Biden-Harris Administration are diminishing but the impact of the escalating COVID-19 pandemic continues to escalate. The commodity market this past week was influenced by exports.

 

  • The direction of agricultural and trade policy to be implemented in 2021 will emerge following the confirmation of Tom Vilsack as USDA Secretary and Michael Regan as the Administrator of the EPA together with other Cabinet appointments and their subordinates relevant to agriculture.  Following the result of the January 5th Georgia runoff elections for the Senate, the nominees by President-elect Biden will likely be approved.

 

  • U.S producers are now receiving and conversely livestock producers are paying close to $5.00 per bushel for corn and $13.80 per bushel for soybeans plus transport and basis.

 

  • Corn and soybeans were respectively 10.4 percent and 4.9 percent above the previous week representing the highest levels in three years. Soybean meal rose by 2.5 percent, reflecting the rise in the price of soybeans. Factors influencing prices this past week included export orders, projected ending stocks, and anticipation of the January 12th WASDE Report.

 

  • According to the USDA FAS Export Report for the week ending December 31st 2020 export orders for corn amounted to 748,900 metric tons (29.7 million bushels) with 1.03 million metric tons (40.5 million bushels) actually shipped. Over the past week export orders for soybeans attained 37,000 metric tons (1.4 million bushels) with 1.86 metric tons (68.2 million bushels) actually shipped.

 

The following quotations for delivery in the months as indicated were posted by the CME at 14H30 on January 8th 2021 compared with values posted at close of trading on December 31st 2020  (in parentheses) reflecting specified months in 2021 for delivery.

 

 

COMMODITY

 

Corn (cents per bushel)

 March 497      (450)      

May    498

Soybeans (cents per bushel)

 Jan.   1,378  (1,314)

March  1,377  (1310)

Soybean meal ($ per ton)

 Jan.     445       (434)

March     440     (429)

 

Changes in the price of corn, soybeans and soybean meal over five trading days this past week were:-

 

COMMODITY    CHANGE FROM PAST WEEK

Corn:                  March quotation up 47 cents per bushel         (+10.4 percent)

Soybeans:         Jan.  quotation up 64 cents per bushel             (+4.9 percent )

Soybean Meal: Jan. quotation up $11 per ton                             (+2.5 percent )

 

  • For each 10 cent per bushel change in corn:-

 

The cost of egg production would change by 0.45 cent per dozen

 

The cost of broiler production would change by 0.25 cent per pound live weight

 

 

  • For each $10 per ton change in the price of soybean meal:-

 

The cost of egg production would change by 0.44 cent per dozen

 

The cost of broiler production would change by 0.25 cent per pound live weight

 

This week the changes in the prices of corn and soybean meal would raise nest-run production cost for eggs by 2.6 cents per dozen and for broilers 1.5 cents per live pound. Over the past two weeks escalation in the price of major ingredient have added 4.9 cents per dozen and 2.8 cents per liveweight lb.

 

According to the December 10th WASDE, corn harvested in calendar 2020 will attain 14,507 million bushels with ending stocks projected at 1,702 million bushels. Final values will be modified by export volume and domestic use and the January 12th WASDE. Compared with December 31st., at 14H30 the CME quotation for corn on January 8th was up 47 cents per bushel for March delivery to 497 cents.

 

The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 requirement accepting a nominal ten percent addition to gasoline. A significant proportion of the U.S. ethanol fermentation capacity is off-line or operating at lower than capacity at present and the outlook for increased demand is questionable. According to the U.S. Energy Information Agency the industry produced on average 935,000 barrels per day for the week ending December 31st. Ethanol stocks stood at 23.3 million barrels on January 1st 2021. Ethanol was priced at $1.34 per gallon on January 8th unchanged from December 31st and compared with a five-year low of $0.92 per gallon on March 26th. Concurrently gasoline at $1.50 per gallon (quoted, New York Harbor) is 8 cents per gallon higher than ethanol but has a 63 percent higher BTU rating.  

 

With more plants producing ethanol in the 4th quarter, DDGS is now available but at a higher price than in the third quarter. Eastern Corn-belt product was priced at $208 per ton on January 6th 2021,  $4 per ton higher than the previous week and $53 per ton more expensive than January 7th 2019.

 

 Soybeans are the beneficiary of demand by China with price rising to 1,378 cents per bushel on January 8th for current month delivery. The USDA documented a 2020 crop of 4,170 million bushels. Ending stocks according to the December 10th WASDE projection will attain 175 million bushels, down from the November projection of 190 million bushels.

 

On January 6th 2021 Meat and Bone meal quoted Central U.S. attained $365 per ton, up $15 per ton from the previous week and up $145 per ton from January 7th 2020.

 

On January 8th the BRL exchange with the CNY was 0.83, (down CNY 0.04 from the previous week). The conversion of the US$ to the CNY was set at 6.48 on January 8th, up CNY 0.05            from the previous week.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipates that soybean imports by China will amount to 95 million metric tons during the 2020-2021 market year.

 

For the 2019/2020 market year China imported 2.1 million metric tons of corn from the U.S., 4.8 percent of total exports of 43.3 million tons, but 12 percent less than in the 2018/2019 market year. The U.S. Grains Council documented sales of U.S. corn to China through December 31st 2020 in the 2020/2021 year amounting to 11.7 million metric tons (460 million bushels) with 65 percent yet to be shipped.

 

For the 2019/2020 market year China imported 16.3 million metric tons of soybeans from the U.S., 36.2 percent of total exports of 44.9 million metric tons, but 3.9 percent less than in the 2018/2019 market year.

 

 

COMMENTS

 

Subscribers are referred to the December 10th WASDE #607 under the STATISTICS TAB. The January WASDE will be reviewed in the next Edition

 

Approximately $16 billion was disbursed under the Coronavirus Food Assistance Program (CFAP) in early 2020. An additional $14 Billion relief package was announced by the Administration on September 18th with all of the allotment having been distributed.






































































































































































































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