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Corn Rises to 7-Year High as WASDE Rally Continues

01/13/2021 | 03:31pm

By Kirk Maltais

--Corn for March delivery rose 1.4% to $5.24 1/2 a bushel on the Chicago Board of Trade Wednesday as yesterday's data from the USDA fueled a rally.

--Wheat for March delivery fell 0.7% to $6.60 1/2 a bushel.

--Soybeans for March delivery fell 0.9% to $14.06 1/4 a bushel.

HIGHLIGHTS

Corn Pops: After closing limit-up yesterday, corn futures on the CBOT maintained upward momentum today. The main driver continues to be yesterday's USDA data showing corn ending stocks falling to their lowest level in 7 years. "The USDA had already been expected to paint a tighter picture of the situation on the grain and oilseed markets in its latest forecasts, but the extent of the adjustments has come as a surprise nonetheless," said Commerzbank. The continuing climb brings corn prices to their highest levels since 2013.

Hung Over: While corn futures extended their rally Wednesday, wheat and soybeans took a pause. "The USDA January Crop Report has passed, and the entire world has now been able to react to its bullish data," said AgResource. "This produced a short-term hangover as the market awaits new evidence that lofty prices are rationing demand." The firm says grain markets often take breaks like this before "pushing to new highs."

INSIGHTS

Tight Squeeze: The USDA confirmed a new flash sale of soybeans Wednesday morning - with 464,300 metric tons sold to unknown destinations. Of that, 396,300 tons are being delivered in the 2020/21 marketing year, while the remainder is being delivered in 2021/22. The large delivery comes as talk about demand rationing remains strong among grains traders, after yesterday's WASDE showed US ending stocks growing smaller. "With China still actively looking to buy U.S. beans and crushers still operating with positive margins, prices still need to go higher to slow demand," said Doug Bergman of RCM Alternatives.

Rising Tide: The prospects for the U.S. ethanol industry in 2021 are largely hinged on how promptly the US disseminates coronavirus vaccine and-- as the pandemic ends--how soon consumers begin to travel freely again. However, until then, the U.S. ethanol industry remains underwater - with inventories rising another 408,000 barrels to 23.69 million barrels this week. That's the highest they've been since early May last year. Even so, the agricultural market is optimistic that U.S. ethanol will bounce back this year. "For our clients, for the first time in awhile, there's a bullish sentiment among them," said Brian Philpot, CEO of AgAmerica Lending.

Picking Up Steam: After a down holiday week, grain export sales are expected to start picking up slightly from last week, according to grain traders surveyed by The Wall Street Journal. For the week ending January 7, soybean exports are predicted to total anywhere from 300,000 tons to 1.2 million tons, after posting sales of only a mere 116,800 metric tons last week. Meanwhile, corn sales are expected to stay consistent, with anywhere from 700,000 tons to 1.2 million tons predicted. While sales recover, grain prices have been on the rise - with corn, wheat, and soybeans finding multi-year highs this week.

AHEAD:

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

--The Chicago Board of Trade will be closed on Monday in observance of Martin Luther King Jr. Day. It will reopen Tuesday.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

01-13-21 1530ET

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