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THE LAND — MAY 13/MAY 20, 2022
www.thelandonline.com — “Where Farm and Family Meet”
MARKETING
Grain Outlook Corn crop future is up in the air The following marketing analysis is for the week ending May 13. CORN — Corn extended the previous week’s losses as traders returned from the weekend and then spent the balance of the week trying to work out of the hole. On May 9, July corn traded to its lowest point since April 11 — along with equity and energy markets. It’s not unusual for corn prices to see a pullback in early May when planters begin to roll across the Midwest. Troublesome planting weather, ongoing events in Ukraine, dryness in Brazil, and positioning for the May 12 World Agriculture Supply and Demand Estimates report contributed to PHYLLIS NYSTROM CHS Hedging Inc. the recovery. The big news this St. Paul week was the WASDE report and planting delays, so we’ll dig into those first. The 2021-22 balance sheet was unchanged with the carryout at 1.44 billion bushels. The average farm price increased 10 cents to $5.90 per bushel. The trade was anticipating stocks to fall to 1.403 billion bushels. World ending stocks climbed to 309.4 million metric tons from 305.5 mmt previously, and 303.2 mmt estimated. China’s corn imports were unchanged at 23 mmt. Brazil’s corn crop was left at 116 mmt and Argentina’s production was unchanged at 53 mmt. Ukraine’s corn exports were left unchanged at 23 mmt. The 2022-23 U.S. corn balance sheet held one of the biggest surprises when the U.S. Department of Agriculture slashed the yield 4 bushels per acre to 177 bu./acre! The average estimate was 179.6 bu./ acre. This is only the sixth time they have lowered the yield from trendline on the May report. Acreage was as expected at 89.5 million acres. Production was 14.46 billion vs. 14.77 billion estimated. The year-onyear cut to feed and residual of 275 million bushels to 5.35 billion bushels caught traders’ attention. There is skepticism that a decline as aggressive as this (nearly 5 percent) is warranted this early. Ending stocks were 1.36 billion bushels compared with 1.335 billion estimated. For 2022-23, world ending stocks were pegged at 305.1 mmt vs. 296.1 mmt estimated. This would be down from the projected 309.4 mmt this year. China’s corn imports showed a year-on-year decline to 18 mmt vs. 23 mmt in 2021-22. Brazil’s corn crop is fore-
Cash Grain Markets corn/change* St. Cloud $7.76 +.08 Madison $7.87 +.09 Redwood Falls $7.91 +.15 Fergus Falls $7.71 +.08 Morris $7.91 +.18 Tracy $7.88 +.18 Average:
soybeans/change* $16.53 $16.23 $16.33 $16.28 $16.33 $16.28
+.52 +.47 +.57 +.47 +.53 +.58
$7.84
$16.33
Year Ago Average: $6.97
$15.36
Grain prices are effective cash close on May 17. *Cash grain price change represents a two-week period.
bushels. China has purchased 86.6 million bushels of new crop U.S. corn vs. zero last year. We finally saw our first daily export sales flash this week since April 28 when China bought 2.7 million bushels of old crop corn and 21.4 million bushels for new crop. Dry weather is affecting Brazil’s safrinha corn crop and now there’s the possibility of a frost as early as next week. Conab cut its Brazilian corn estimate this week to 114.6 mmt. The USDA left its outlook unchanged on the May report at 116 mmt. Brazil’s first corn harvest as of May 9 was right on the average at 89 percent complete. President Biden, in his speech from an Illinois farm the intention to double funding for domestic fertilizer production to $500 million, provide more access to farm management tools for plant and soil needs, and increase the number of counties eligible for double cropping insurance. Will this help add production? Outlook: December corn posted a reversal higher on the weekly technical chart after setting a new contract high at $7.58.5 per bushel. For the week, July corn fell 3.5 cents to $7.81.25 and December rallied 28 cents to close at $7.48.75 per bushel. Planting weather and progress in the United States will be watched closely over the next two weeks. Brazil’s safrinha corn crop status will also be monitored. The market will be wanting to see continued demand both domestically and on the export side. Historically, corn bounces after its early May setback. Developments in Ukraine will also demand attention. President Biden said in his speech this week the United States is seeking ways to help Ukraine export 20 mmt of grain through alternative channels. Ukrainian President Zelenskyy predicts world food shortages will get worse if Ukraine can’t export its grain. Russia continues to attack and block the port of Odesa. We need favorable crop conditions to avoid ending stocks falling below 1 billion bushels and we haven’t started with them. Outside macroeconomic factors will likely spillover to influence commodity prices as well. Buckle up, the ride hasn’t come to a complete stop. SOYBEANS — Soybeans followed the same pattern as corn with big losses on May 9 followed by four straight higher closes. Soybean planting was 12 percent complete as of May 8 compared to 24 percent on average and 16 percent expected. Illinois was 11 percent planted vs. 30 percent on average and Iowa was 7 percent planted vs. 34 percent on average. Emergence was 3 percent vs. 4 percent on average. Covid lockdowns continue to be enforced in China as they pursue a zero-tolerance policy. This is hurting demand for commodity imports as well as causing big delays throughout the world supply chain. We saw China buy 4.85 million bushels of old crop soybeans late in the week. This was the first announced sale in
cast to jump to 126 mmt and Argentina’s to 55 mmt. Ukraine’s crop was estimated at 19.5 mmt with exports at less than half of this year at just 9 mmt. U.S. corn planting as of May 8 was only 22 percent complete compared to 50 percent on average and 25 percent expected. This was the second-slowest planting pace since 1993. Iowa was 14 percent planted vs. 63 percent average; Illinois 15 percent planted vs. 58 percent average; and Minnesota 9 percent planted vs. 48 percent average. The fastest week-on-week corn planting progress in the United States was the week of May 19, 2013, when we planted 43 percent of the crop. The average planting for May 15 is 67 percent complete which means we’d have to make record progress of 45 percent in a week marred by heavy damaging storms in the upper Midwest throughout the week. In Minnesota, the most we’ve planted in a week is 65 percent; 64 percent in Iowa; and 57 percent in Illinois (data is courtesy of the Senate Ag committee). According to a study, corn yields can decline by 0.3 percent per day when planting is delayed in early May and rises to 1 percent per day by the end of May. Corn emergence on May 8 was only 5 percent vs. 15 percent on average. There is talk we may lose corn acres to another crop, or not get planted at all, in parts of the Dakotas and Minnesota. Will the lure of high prices make growers more willing to plant later, or will input costs/availability and insurance dates limit that choice? Weekly export inspections (what is shipped) were as expected this week at 54.8 million bushels. Total inspections for the marketing year are 1.495 billion bushels of the 2.6 billion bushel export forecast. Weekly export sales for old crop were a marketing year low at 7.6 million bushels. Cumulative old crop sales are 2.3 billion bushels. Weekly sales need to average 10.2 million bushels per week to reach the USDA target at 2.5 billion bushels. China has purchased approximately 561 million bushels of old crop U.S. corn so far. New crop sales were 1.8 million bushels to bring cumulative sales to 196.5 million See NYSTROM, pg. 17
Information in the above column is the writer’s opinion. It is no way guaranteed and should not be interpreted as buy/sell advice. Futures trading always involves a certain degree of risk.
