Corn’s Bullish Tone Continues With $7 Contract Highs

Source: By Todd Hultman, DTN Staff • Posted: Wednesday, May 5, 2021

Cash bids in the Texas Panhandle are now pushing $8 a bushel as feeders compete for grain. In the Western Corn Belt, cash prices are above $7 a bushel, especially at ethanol plants.

“Ethanol prices are staying high, and they are somewhat rallying with corn,” Hultman said. “So, the markets are staying healthy to keep the ethanol going. So, the demand is strong to keep producing ethanol.”

Hultman noted the ethanol and renewable identification number (RIN) prices continue to strengthen. The ethanol cash price has gone up 92 cents a gallon since January, to $2.47 now, and is running higher than gasoline. In the compliance market, 2020 D6 RINS have doubled since the beginning of the year to $1.59 each.

The weather issue in Brazil has placed even more importance on U.S. new-crop corn production. Corn planting in the U.S. jumped by 29 points in the past week to 46% complete. That is one of the fastest weekly gains on record and is 10 points ahead of average. Key corn-producing states Iowa and Minnesota were far above average at 69% and 60% planted, respectively, compared to their averages of 45% and 32%. Emergence on corn at 8% is close to average.

Many in the trade believe final plantings are apt to be much higher than the March intentions. Last week’s export inspections of 84.2 million bushels (mb) was a marketing-year high; China was the primary destination with Japan second. More positive news came from the Census Bureau, indicating U.S. ethanol exports in March were 133 million gallons compared to just 101.7 million in February. China imported 48.3 million gallons of that; for the first three months, China took 75.7 million gallons, the most since 2016. Ethanol domestic demand is expected to ramp up even further as cities reopen. The corn basis continues very stout as end users fight for supplies from tight-fisted producers. Funds came into Tuesday long an estimated 360,000 contracts and likely added to that bullish bet on Tuesday. DTN’s National Corn Index closed at $6.94 Monday evening, 15 cents over the July contract.

DTN’s Cash Market Moves column also looks at corn basis hitting levels not seen since 2013:

https://www.dtnpf.com/….

Todd Hultman can be reached at Todd.Hultman@dtn.com

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