Charts of the Day – April 14, 2021
Afternoon Market Commentary – April 14, 2021
by: Chris Betz
|Old Crop (futures month, change, settle price)||CK1||14’0||594’0||SK1||20’4||1410’0||WK1||18’2||648’0|
|New Crop (futures month, change, settle price)||CZ1||7’0||511’2||SX1||12’6||1264’0||WN1||16’6||650’2|
Technical Thoughts – April 8, 2021
By: Ken Lake
Corn and soybean markets are anxiously awaiting Friday’s WASDE report as we have seen values pace sideways since the March 31st Planting Intentions and Stocks report. This report has the potential to see revisions in old crop stocks. New crop projections will be out in the May WASDE report.
CK21 moving sideways just above the 10 and 20-day moving average, 554, 551. Upside targets are still in play, 605, 615, 625. Friday’s WASDE report holds the key for the coming days trade in old crop corn.
SK21 is tracking its 10 and 20-day moving average, 1411, 1406. Friday’s WASDE report is very important for old crop soybean contracts. The trade expects to see a revision lower in stocks. We will need to see a number lower than 120 million bushels to boost values. Most analysts believe that is likely. Upside targets are still in play, 1551, 1580, 1607.
CZ21 has been trading around the previous contract high, 485, since the March 31st report. The 10-day moving average is poised to turn bullish. Momentum indicators are over-bought. As planting the 2021 crop ramps up, the market will be sensitive to planting progress. I would anticipate rapidly exceeding a 5-year average planting pace based on generally suitable planting conditions throughout the grain belt. That will be somewhat bearish but this market will quickly turn to growing season weather when we approach 50% planted and will be very sensitive to any problems. Upside targets are still in play, 503, 509, 514, 533.
SX21, like CZ21, is tracking its contract high, 1265. The 10-day moving average crossed above the 20-day moving average at 1236/1241. 1241 is support. This contract is looking for direction but upside targets are intact, 1328, 1347, 1366. This contract will be the most volatile of the Ag complex. Analysts agree that 87 million acres of US soybeans is insufficient in rebuilding depleted world stocks. The Brazilian’s are about to complete what was an historically large soybean harvest with no ill effect on values. There is significant upside potential in SX21.
Fertilizer Update – February 23, 2021
By: John Ezinga
As your inside planning for the coming year, it might be a good time to make sure your fertilizer needs are covered. There is a case on all three major ingredients for significantly higher prices and/or outright shortages.
Below are some charts you have seen from me over the years to help you decide timing decisions on purchasing your inputs. Note that they have all moved from the green “buy zone” to the neutral or red “caution zone. With corn, soybeans and wheat all recently setting new highs you can bet the fertilizer manufacturers will want to keep marching prices higher to match. These charts can help you manage your spreads of your inputs and outputs…it is good practice to manage your spreads for long term profitability.
28% and Urea have been very volatile over the past 6 weeks. We went into year end with good forward contracting at good relationships with corn. Nice job by the farmer to take advantage of that spread.
As we entered January the prices quickly found there legs and marched higher to the tune of around $100 a ton in urea and $60 bucks up on 28%. Currently nitrogen producers are finding more profitability in selling their contracted natural gas into the home heating market. So as production is shut in for the cold weather spot shortage may hamper demand if spring were to break all at once. We are weeks away from demand in the south and this will test the depth of the N market. If you see price spikes in March it will certainly lead to supply constraints for us in the north come May. US prices are below world values so I would expect prices to remain firm right thru planting on both products. As you can see from the charts below there is still plenty of room to run up prices without getting way out of line compared to past ratios.
MAP and 10-34-00
So the story behind this one is simple. Mosaic asked for tariff protection from good old Uncle Sam and of course during an election year he will oblige. Tariffs were passed and we had a record spring/fall usage season and now Mosaic is crying they don’t have production to meet demand (big shocker!!) Prices have screamed higher since mid-December, going from $375 for fall application to well over $600 for spring delivery. The liquid side of the market came late to the party but 10-34-00 has climbed from $325 to $550 in the last 20 days!! Again I urge you to confirm with your supplier on availability of your inputs. I do not see relief for this market and would not be surprised if it rallied a bit more if corn does the same.
The rally in potash started in the summer of 2016 when potash bottomed out around $250 ton. Prices have been steadily moving higher over past 4 years and then caught a real bid this January as end users looked to refill for spring. There have been no supply constraints with potash….it is a marker where supply is controlled to keep new production from coming online. Canadian producers lost track of demand and looked up to see that the barns were all emptied last fall and the logistics to fill them by spring were impossible. So the cure became higher prices to ration demand(go figure)! Whether or not they can refill by spring is still in the air but I expect the perception of shortages has already achieved its objective of higher prices. Nutrien who is the 800 pound gorilla formed when PCS bought Agrium (who owns CPS) raised prices $50 bucks last week and would you guess…Mosaic followed right in their footsteps to match the price increase!(who says there is no competition? LOL) As you can see from chart below there is lots of room yet to the upside in potash and be too far out of line. My guess is they will press this higher every chance they can as long as corn keeps rallying.
I do not expect any major supply issues in the micros and or sulfur products.
If you have not bought your inputs yet you may decide to pull some nutrients from the soil bank or at a minimum only spread removal values. Whichever you decide keep the idea of spreading Pell Gyp in your mind. Getting sulfur and calcium out in a plant available form that also helps utilize existing P and K in your soils is a cost efficient strategy in years where fertilizer prices have got out of hand. Spreading 200# per acre cost about $22.50 and gets you your needed 34# of actual sulfur and 42# of actual calcium.