Next week and into month end the trade will hear increased noise on prospective plantings for corn and soybeans. Our quarterly grain stocks and prospective plantings report released the last business day is one the of the most anticipated for the grain trade for the year. This year its heightened given the massive rally we have seen since Mid-August. High prices seem to increase the interest and potentially the bets going into this report and beyond. That does not mean we will have a sizable move on report day. There is increased rumor that low ending stocks or soybeans carry-out for old crop beans has spurred talk within the trade of the US importing beans from South America this summer, This would bridge any potential gap of shortages until US harvest this Fall. The end of month on farm stocks report from USDA may heighten this potential if numbers are seen as bullish vs expectations.
For new crop beans, Nov 21 futures settled at 12.20 today while spot old crop settled at 1416 today. Given higher prices as one reason, producers indicated they intend to plant 88.9 million
acres to soybeans in 2021, up 5.8 million acres (7%) from last year. This is just one survey, but just about everyone agrees that plantings will be at least 7 percent higher with some estimates have it near ten percent or above 90 million acres. Trendline yield for beans per the USDA outlook forum at 50.8 bushels per acre. This would result per the USDA that ending stocks being raised to 145 million bushels. Currently old crop carry is at 120 million with stocks to usage at 2.6 percent which has tied the all-time record low. New crop is projected at 145 million bushels and a stocks to usage at 3.2 percent. Now a lot can happen from now until harvest, but given the numbers at present, the low carry-out on the balance sheet leaves no margin for error in production this crop year. A hot and dry summer in the Midwest could send beans deep into the teens come July/August.
I included a futures spread below. November 21 versus November 22 beans. It settled at 101.4 Nov 21 over. If this spread holds 88 over, which is trendline support, I suspect it will work higher to the 1.30/1/50 range. Again my opinion here. Give me a call and we can discuss this potential and some option ideas to take advantage of a possible new crop rally. In my opinion.
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