The wheat market closes lower Friday following a week that could be described as erratic. Tuesday wheat traded higher on US and Black Sea winter kills concerns. Wednesday wheat pulled back thinking we had over hyped the winter weather. Thursday higher once again thanks to winter kill concerns. Finally, some news that was not entirely winter weather related came from Friday’s USDA Outlook forum. Yield for the 2021 crop was estimated at 49.1 bpa and an estimated 45 million acres planted. See chart. 
Corn came back from the three-day weekend with a strong start, but couldn’t hold on to the momentum ending up 4¢ for the week. China was still on their Lunar New Year, so nothing exciting on the export sales this week to help keep the bulls fed. The USDA had their annual Ag Forum this week and released their first new crop numbers, using 92 million acres of corn and 90 million of soybeans as the starting points. That would be about a 8 million acre swing in acres from this year, most of that coming from prevent plant acres and some spring wheat acres up North. With those acres we would need trend-line yields to keep carryout numbers similar to where they are now. The drought conditions in the map below are going to be something to watch when looking at new crop futures. 
Looking back on the corn market action for some perspective, and it has been a remarkable bullish ride. Since to August 12, 2020 the current nearby corn contract (ZCH21) has appreciated more than $2.00/bushel. Supply and demand has become out of balance with supply issues in the US and increased demand coming from mainly China. This has brought opportunities to market the 2020 crop at levels we have not seen in quite some time. From analyzing Farmers Coop’s grain positions, we know that much of the 2020 crop has already been marketed by the producer.

With much of the 2020 corn crop in the review mirror the focus should be on the 2021 crop. When looking forward to the future we need to understand the difference between the futures months and what that means in relations to when a crop is delivered.  
While the 2020 crop has appreciated more than a $2.00/bu since August 12, 2020 the Dec’21 (ZCZ21) has appreciated less than half of that, $0.97/bu. This reflects the markets demand for corn now and discounts corn in the future with anticipation that supply and demand will become more in balance.

We encourage looking at your breakeven and make sound marketing decisions that work for your operation. This chart below illustrates the new crop corn contract Dec’21 (ZCZ21) as the blue line. The green line is the 5 year average. As you can see the market is well above the 5 year average
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