Fundamentally Speaking

Following up on a rally that started mid-August of last year, most individual members of the grain and oilseeds complex posted good gains for 2021, continuing to trade at historically high levels. Even with a COVID situation that never seems to go away, U.S. and world GDP rebounded strongly from last year's pandemic-reduced levels, triggering good demand for these and other commodities.

Upside action was augmented by short crops in some key producing regions of the globe and support from the outside markets as we end this year with all major stock indices close or at new record highs, crude oil recently having attained seven-year peaks and, for most of the year, a flat to depreciating U.S. dollar.

This graphic shows the percent price change for continuous corn, soybean, soybean oil, soybean meal and all three classes of wheat futures, including soft red winter in Chicago, hard red winter in Kansas City and hard red spring in Minneapolis, for the first and second halves of 2021 and for the full year on the left-hand axis. On the right hand axis is the average 2021 price as a percent of the average 5- and 10-year prices.

At one point during the year, all markets had moved to their highest levels since the 2013/14 period, but oats and soybean oil exceeded that, scoring the highest prices ever for those contracts.

Oat futures basically doubled in value and, as of Dec. 28, were up 97.4% for the year with a mere 7.9% advance in the first half of 2021, then followed by an 83.1% gain from the first of July to the end of December. The average oat price this past season was 53.3% above the five-year average price and 55.2% higher than the average 2012-2021 price.

Soybean oil was also a stellar performer as it too traded at its highest levels ever this past year and posted the best gains for the first half of the year at up 51.8% and 32% better for the whole year with the 2021 average price 60% above its five-year average and 53.2% higher than its 10-year average.

Minneapolis wheat had the second-best gains for the year, up 67% with gains of 45% from Jan. 1 to June 30 followed by an advance of 15% for the second half of the year. Note that oats and hard red spring wheat are grown primarily in the Northern Plains, which by far had the worst growing weather this past season with historic drought across much of the Dakotas and Minnesota.

Corn and soybeans in 2021 did trade at their second highest levels ever, but those gains came in the first half of 2021 as both posted losses for the second half of the year while soybean meal was the only one to close 2021 at a lower price than where it started as losses first half of year were not fully made up in the July-December 2021 period.

(c) Copyright 2021 DTN, LLC. All rights reserved.