10 minute read
Marketing
The following marketing analysis is for the week ending April 22.
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CORN — It had been nearly a decade since we had seen spot board prices at these levels before prices retreated from those highs in the second half of the week. The lead corn contract hasn’t traded this high since the drought in August 2012. Disappointing weekly export sales drew concern that prices may finally be affecting demand. However, the next day the U.S. Department of Agriculture announced huge corn sales to China and prices still declined.
China purchased nearly 29 million bushels of old crop corn and 24 million bushels of new PHYLLIS NYSTROM crop corn. Mexico also booked 3.5 CHS Hedging inC. million bushels of old crop and St. Paul 7.5 million bushels of new crop in what was considered routine business.
On-going demand, weather delaying U.S. weather, the war in Ukraine, and drier conditions in South America’s safrinha corn crop areas have all contributed to underlying strength. Fund longs have not been given a reason to significantly reduce those positions; but late in the week, we did see some profit taking.
A weaker U.S. dollar was a supportive factor to higher markets early in the week, but the U.S. dollar index rallied to a two-year high by the end of the week, lending pressure to commodities. Comments by Federal Reserve Chairman Powell about a 50-point basis hike in interest rates were cited as a factor in the dollar’s upswing.
The war in Ukraine intensified during the week with a new offensive by Russia. There were reports that three of seven Ukrainian grain export facilities have been damaged. This situation shows no sign of abating and how much Ukraine will harvest and plant this year are unknown. Ukraine has reportedly begun corn planting with the deputy agricultural minister estimating 3 million hectares or about 25 percent of expected acreage has been planted to spring crops. The USDA said this week that without boots on the ground in Russia (personnel were evacuated when the invasion occurred) crop forecasting will be very difficult.
South American weather isn’t on the front page yet, but it is gaining attention. It’s estimated a third of
Cash Grain Markets
corn/change* soybeans/change*
Stewartville $7.57 +.46 $16.41 +.60 Edgerton $7.84 +.29 $16.07 +.11 Jackson $7.94 +.37 $15.97 +.12 Hope $7.67 +.22 $16.04 +.12 Cannon Falls $7.46 +.27 $16.34 +.28 Sleepy Eye $7.78 +.29 $16.08 +.10 Average: $7.71 $16.15 Year Ago Average: $6.51 $15.15
Grain prices are effective cash close on April 26. *Cash grain price change represents a two-week period.
Brazil’s safrinha corn crop in northeast Brazil needs rain and stress may increase; however, rain in the southern third of Brazil will help corn pollination. The majority of Brazil’s safrinha corn is expected to pollinate by May 5. Parts of Argentina are also experiencing dryness which could lower corn yields. As of April 18, Argentina’s corn conditions fell 2 percent to 18 percent good/excellent, according to the Buenos Aires Grain Exchange. Its corn harvest was 23 percent complete vs. 27 percent on average with yields running 100.6 bushels per acre. The Rosario Grain Exchange raised its Argentine corn production from 47.7 million metric tons to 49.2 mmt and vs. USDA at 53 mmt.
U.S. corn planting was 4 percent complete as of April 17 compared to 6 percent on average, expectations for 5 percent complete, and 7 percent complete last year. No corn planting was reported in the “I” states or Minnesota. Missouri had 4 percent of the corn planted, 2 percent in Nebraska, 12 percent in Kansas, and 64 percent complete in Texas.
Weekly export sales were disappointing at 34.6 million bushels for old crop and 15.3 million bushels for new crop. Old crop sales are 2.23 billion bushels and down 16 percent from last year. We need 12.3 million bushels of weekly sales to reach the USDA target of 2.5 billion bushels. New crop cumulative sales are 132.4 million bushels vs. just 83.9 million bushels last year.
Weekly ethanol production was down 48,000 barrels per day to 947,000 bpd and a bigger decline than anticipated. This was the fourth weekly decrease in a row and the lowest production number in 29 weeks. Ethanol stocks fell 461,000 barrels to 24.3 million barrels. This was a 13-week low, but stocks are still the second highest for this week. Margins were unchanged on the week at 17 cents per gallon. Gasoline demand increased 132,000 bpd at 8.8 million bpd and is 2.6 percent below last year for this week.
May corn traded as high as $8.19.75 per bushel with a high closing price of $8.15.75 per bushel. The highest the lead corn contract has ever traded was $8.43.75 per bushel on Aug. 10, 2012. The highest a December corn contract has ever traded was $8.49 per bushel on that same date. This week, December corn traded to a new contract high of $7.55 per bushel.
Outlook: July and December corn set new high closes and new contract highs this week. Looking down the curve, December 2023 corn had a 21-session streak of higher closes broken at mid-week. December 2024 closed higher 23 out of 24 sessions as of April 20’s close. Uptrend momentum waned into the weekend and may put long position holders on notice that the market doesn’t have to go straight up.
U.S. weather and planting progress will be top of mind of traders as ideas for early planting are erased. I would say it’s too early to throw in the towel on the crop, but in a year when we wanted/ needed ideal conditions, we’re not seeing them yet. The later the planting date, the less likely it is we’ll see acres move from soybeans to corn. If the weather is favorable and prices favor corn, we usually see a few extra corn acres go in.
The day-to-day updates on the war in Ukraine have likely been factored into prices as traders wait for the next “big” event, whatever that may be, and whenever it may happen. The war should provide underlying support in general and limit setbacks. Until the heavily long funds are provided a reason to exit or lighten their positions significantly, the uptrend remains in place. Continue to monitor U.S. planting progress and weather forecasts. This week’s action may slow fund buying, but not eliminate it. Don’t get caught wishing for prices to come back because “they have to” when making your marketing decisions.
The next World Agriculture Supply and Demand Estimates report will be released on May 12 and will include our first look at the 2022-23 balance sheets. Traders will be eager to see what the USDA does with Ukraine and Russian production and export numbers.
SOYBEANS — Soybeans edged toward the contract highs set the day after Russia invaded Ukraine on the same list of factors that rallied the corn market. An added factor to begin the week was the flash export sales announcements on Good Friday. While there weren’t any trading hours on Good Friday, the USDA announced the sale of 30.8 million bushels of soybeans with 4.5 million to China for old crop, 19.8 million to China for new crop, and 6.5 million bushels to unknown for old crop. The March National Oilseed Processors Association Crush report was also released on Good Friday. It was a record for March at 181.7 million bushels and near the trade estimate of 182 million bushels. March soyoil stocks were the lowest since November at 1.9 billion
NYSTROM, from pg. 15
pounds and below the trade estimate of 2.07 billion pounds.
In an unexpected announcement ahead of the weekend, Indonesia announced they will ban exports of cooking oil and its raw material beginning April 28. Indonesia is the world’s largest exporter of palm oil. President Widodo said they would monitor the policy until the country has an “abundant and affordable” supply of cooking oil.
The USDA released its first crop progress report for soybeans this week. As of April 17, 1 percent of U.S. soybean planting was complete vs. 2 percent on average, 2 percent expected, and 3 percent last year. As of April 21, the Rosario Grain Exchange put Argentina’s soybean harvest at 27 percent complete vs. 23 percent on average. The Rosario Grain Exchange estimates Argentina’s soybean production at 41.2 mmt vs. 30 mmt previously. The two grain exchanges in Argentina are not in total agreement. The BAGE estimates Argentina’s bean yield at 46.7 bu./acre for a crop of 42 mmt with 31 percent of the crop harvested and 84 percent mature. They rated the soybean crop at 18 percent good/ excellent, down 5 percent from last week. The USDA is at 43.5 mmt. Brazil’s soybean harvest is nearing completion.
Weekly export sales were 16.9 million bushels for old crop and 45.6 million bushels for new crop. Old crop cumulative sales are 2.1 billion bushels and down only 6 percent from last year. We need 2.2 million bushels of weekly sales to attain the USDA’s 2.115 billion bushel forecast. New crop total sales are 373.4 million bushels vs. 227.5 million bushels on the books last year.
China’s ag ministry stated they expect China’s soybean acreage to increase 16.7 percent this coming year with production reaching 20.6 mmt, up 26 percent from last year’s 16.4 mmt production. If accurate, its soybean imports could fall to 95.1 mmt from 96.5 mmt in 2021. There has been talk that China’s demand this summer may not be as high as expected. Their hog and processing crush margins are in the red for June/July and the government has encourage feeders to use alternative sources of protein in feed rations. Traders estimate China has covered just 20 percent of its June through September needs which are expected to be 7-8 mmt per month.
The highest price a lead soybean contract has ever traded is $17.94.75 per bushel on Sept. 4, 2012. This highest a November soybean contract has traded was $17.89 per bushel on the same date.
Outlook: July and November soybeans set new high closes this week but have yet to get back to the spike higher on Feb. 24. Soyoil contracts set new contract highs during the week and again after the Indonesian announcement. The technical key reversals lower established across the soybean market to end the week may make new longs nervous. Bulls like to be fed daily and will be watching U.S. planting weather closely. Even bullish markets take a break now and then. It will take a few more sessions to see if this is a break or if we’ve seen our highs for now. Manage your own risk, but don’t miss out on locking in good prices out of the field for fall delivery.
For the week, May soybeans jumped 33.75 cents to close at $17.16, July rallied 22.75 cents to $16.88, and November managed to close 3.75 cents higher at $15.05.25 per bushel.
The FBI is warning the agricultural industry of potential increases in ransomware attacks during planting and harvest seasons. They stated, “A significant disruption of grain production could impact the entire food chain.”
Weekly price changes in July wheat for the week ended April 22: Chicago wheat down 29.25 cents at $10.75.25, Kansas City 7.75 cents lower at $11.49.5, and Minneapolis rallied 16 cents to $11.62.75 per bushel. v
www.TheLandOnline.com Swine & U
SWINE & U, from pg. 12
questions, Chryseis Modderman: cmodderm@umn. edu, and Melissa Wilson: wilso984@umn.edu, and their latest findings are available through the U of M Extension Crops website at https://extension. umn.edu/crop-production.
Diane DeWitte is a Swine Educator with the University of Minnesota Extension, based in Mankato. She can be reached at stouf002@umn.edu. v Farm Programs
THIESSE, from pg. 14
flags on the horizon. These include rapidly increasing input expenses and land costs, potential future declines in grain and livestock market prices, and likely lower levels of government payments.
Complete farm management results are available through the University of Minnesota Center for Farm Management FINBIN Program at http://www. finbin.umn.edu/
Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com. v
